Are we getting to the point where whole cities going bankrupt is a ho-hum topic? Stockton, San Bernardino and Mammoth Lake have all gone down that road now and over the next few years, dozens and dozens of cities – and then eventually WHOLE STATES — are likely to follow them.
Why? It’s the same old story, over and over again.
Atwater, California, is going broke under the weight of public employee costs, lost revenue and a stagnant economy, pushing it toward becoming the state’s fourth city to seek bankruptcy protection.
…Atwater’s public employee pensions and retirement costs also are on the rise. The city’s contribution rate to the California Public Employees’ Retirement System rose after the fund suffered a record loss of 23.4 percent in 2009.
Under labor contracts, the city pays all of an employee’s 8 percent mandatory contribution for pension costs and 7 percentage points of the 9 percent for police and firefighters. Health-care premiums for city workers increased by 15 percent in 2011 and are forecast to jump 10 percent next year.
To help balance the books, Atwater has mostly depleted its cash reserves, fired 30 percent of its 120 workers since 2008 and may need to trim another third, Faul said.
Public sector unions are breaking budgets all across the country. Time and time again, politicians have handed out generous benefit deals that achieved short term goals, but were terribly expensive over the long haul. Unfortunately, if you live long enough, the “long haul” becomes the “now” and there are armies of retired union workers who are owed generous benefits until they die even though they are no longer producing anything. Then, to paraphrase Margaret Thatcher, they “run out of other people’s money” and it becomes impossible to take care of the producers, much less the “used to be producers.”
That’s what happened in Stockton, San Bernardino, and Mammoth Lake. It’s what is about to happen in Atwater.
So, here’s the question of the day: Are we going to get so used to seeing these bankruptcies that it will be boring — without ever doing anything of significance to fix the problem? It’s not healthy or sane, but God help us all, that seems to be the direction we’re going in.