Less Money, Less Safe

For many Wall Street analysts, it seems, GDP, retail sales, industrial production and a host of other statistics are just numbers on a page or trendlines on a graph. These individuals don't seem to bother with -- or even care about -- what they really mean (unless, of course, their own economic wellbeing is at risk as a result).

Yet there are important social implications associated with the kind of dramatic downturn we've seen in house prices and the seismic shift that has taken place with regard to consumer spending habits (as I also noted in my book). Among them is a painful and relentless deterioration of municipal budgets, which in turn is putting many parts of the community at risk.

In a nutshell, we are starting to see state and local governments cut back on a variety of essential services. The list includes, as the following report, "California Cities Cut Police Budgets," in today's Wall Street Journal reveals, those functions that are essential to maintaining public order and the safety of the man (or woman) on the street.

Housing Downturn, Weak Economy Sap Revenues, Forcing Public-Safety Reductions

When the economic crisis deepened this fall, this city already was losing scores of police and firefighters because it could no longer afford the rich salaries and benefits it offered after the Sept. 11, 2001, attacks. Now, with crime on the rise and tax revenue sinking, this San Francisco Bay area city faces more cuts in police and fire department budgets.

Like other California cities, Vallejo is targeting police and fire budgets, and has cut law-enforcement community services and youth-service programs.
It is a scenario being closely watched by the many other California municipalities that offered the same lucrative pay packages -- and that now face the same fiscal pressures.

With a slowing economy and housing prices in decline -- cutting into tax revenue -- Vallejo, a bedroom community of about 120,000 without a big sales-tax base, is running out of options and has targeted public-safety budgets that in the past were off-limits to the budget ax.

The main factor driving away police officers in Vallejo is the same one that helped drive the city to file for Chapter 9 bankruptcy in May: a costly campaign to improve security in a post-9/11 world that backfired. Since the filing, nearly 40% of its police force has either quit or notified the city of plans to quit.

"Everyone is watching to see how this shakes out," said Marc Levinson, Vallejo's bankruptcy attorney and a partner at the Sacramento office of Orrick, Herrington & Sutcliffe law firm.

After Sept. 11, California municipalities moved to increase wages and benefits to attract police officers and firefighters. Vallejo joined a consortium of cities in the region, including Oakland and San Francisco, that used each city's salary and benefit increases as a guide for labor contracts.

Before that, in 1999, state lawmakers had adopted a measure called "3% at 50" that allowed local and state police officers and firefighters to retire at 50 years of age with 3% of their highest annual salary -- multiplied by the number of years served. The legislation granted thousands of public-safety workers a retirement payout of 90% of their former salaries for life. The benefit, bolstered by post-9/11 recruiting, swiftly became a major staple for most California cities.

Those full-natured benefits created a bidding war among Northern California cities, and Vallejo negotiated lucrative wage increases with police and firefighter unions to stay competitive. Three years ago, the city agreed to a 20% pay increase between 2007 and 2009; an average police officer now makes $121,000. When benefits are included, the number rises to more than $190,000. By 2007, 80% of Vallejo's budget was dedicated to police and firefighters.

As tax revenue plummeted, Vallejo's finances buckled under the pressure of the labor contracts. Retired Vallejo employees are owed almost $220 million in unfunded pension and retirement-health benefits.

"We did a bad job of long-term forecasting," said Craig Whittom, Vallejo's assistant city manager. "We made agreements that were beyond our means."

Recently, Vallejo's city council preliminarily approved a package of cuts to close its budget shortfall, including a 10% salary cut for the city manager, and city employees will take two unpaid days off before June 30.

With budget cutbacks and salary concessions staring at them, many of Vallejo's officers have turned to retirement or are seeking employment with surrounding municipalities.

Jason Wentz is typical. A Vallejo native and a 12-year veteran of the city's force, Mr. Wentz, plans to join another police force in Northern California.

"People on the street know we are scaling down," said Mr. Wentz. "The high-crime neighborhoods are used to seeing more patrol cars, and they notice the ramp-down."

Vallejo's Police Department is down to about 120 from 150 police officers in January, and it expects an additional 30 or more to exit by year end. The city has cut law-enforcement community services and youth-service programs.

According to the FBI, the national average for sworn law-enforcement officers is 2.4 officers per 1,000 residents. In Vallejo's case, there is one officer for every 1,000 residents. Vallejo reported nearly 500 assaults in 2008 through April, according to the latest numbers available, already approaching last year's total of 687 assaults.

The ranks of the city's firefighters have also taken a hit. Jon Riley, vice president of International Association of Fire Fighters union local 1186, said that after the city filed for bankruptcy the department lost 15 firefighters in one day. "I don't think morale can go any further south," said Mr. Riley.

Stockton, Calif., rocked by housing foreclosures, also is scrutinizing budgets for police and fire. Mark Moses, the city's chief financial officer, said "we will not be able to manage with just cuts to libraries and parks." In Santa Rosa, assistant city manager Michael Frank said the city is cutting about 20 police officers and will also cut some firefighting services.

In Sacramento, Police Chief Rick Braziel is grappling with how to cut 8% from the city's $130 million police budget.

"Vallejo is not unique," said Mr. Levinson.

Vallejo also finds itself in competition with Bay Area cities that can still afford to attract officers. Joe McCarthy, a Vallejo detective, says 10 surrounding cities have contacted him with job offers. He plans to leave soon.

Comments

[Michael Nevins]

Average salary of $121,000 for a police officer?!? Including benefits the figure rises to $190,000!?!

They can retire after 30 years and collect a pension of 90% of their final years' salary? This would obviously be greater than the average of $121,000 - is it closer to $150,000 and thus provide a pension of $135,000?!?

I think that the greater "problem" is the runaway personnel costs for school districts and municipalities. This isn't just a California problem, but a national one.

PRIOR to this economic "slowdown" states and municipalities were being extremely challenged to meet the pension and health care promises made during the boom years.

Guess what, market declines and tax shortfalls are leading to "Pension Armageddon!"

Sadly, add this worry to everything else.

[IF]

I agree with Michael. The policemen et al leeched off the public capital flows. They behaved like the "locusts" (i-banks/hedge funds). Shed no tear for them. Still, the communities are going to suffer.

[it's worse than you think]

Michael, the pension situation is worse than you think. The pension benefits are typically based on the last 2-3 years of paychecks. It is accepted practice among cops to 'juice' their pensions by putting in massive overtime during those last two years. That overtime could earned on anything from patrolling the local donut shops to manning barricades on I95. Yeah, that's totally worth $200K+ a year for the rest of your life starting in your 40's.

Anyway, it doesn't matter, the pigs in the public sector gorged themselves too much and the states/local governments will default on all this debt. The only way out is massive asset inflation. Prepare accordingly.

[Andy]

How much police work is just a backhanded way of maintaining the high profits of the unregulated recreational drug industry? Or providing human fodder for the prison/corrections industry?
End the War on Drug Users, things would cost a lot less. And the streets would be safer.

[RK]

How many police officers per capita did the Native American tribes have at the time of contact with Europeans? What was their crime rate? Jus wunderin'.

[mark Rowell]

Shows why people complain about taxes that keep going up and we don't get anything for it.

I think the private sector has handled the problem of rising wages differently. THey have reduced hours, benefits, pensions, made contract workers of more people, and outsourced. So pulic trys to be fair by keeping it all going and the prviate lives within it's means, except fo executive compensation.

[farang]

A few comments:
How many of these police and fire personnel voted Republican? Yep. That's right.

How many of these police recruits that signed on for an HUGELY overpaid position in Vallejo, were trained as cops in the military? The military dropping entry standards? Into a job, that has been shown to not take the HIGHEST scoring applicants in the written tests? (That's right, you can score "too high" to qualify for police work, fact). But let's be sure to pay the ones that do "qualify" 4 or 5 times what they are worth. And give them a gun.

How many cities 9and their easily frightened citizens) bought into the false flag attacks by domestic terrorists on 9/11/01? I suppose they think WTC 7 fell out of sympathy with the Towers? Let the fools suffer for their naive stupidity. They deserve it for being so gullible.

Ever have a home broke into? Car stolen? Get any satisfaction from your police force? Bwahahahaha, sure.

$190,000/year....to chase kids and lower-income Americans selling substances the public is willing to pay for and risk arrest? That would describe Vallejo, for those not familiar with that city.

Who is the largest jailer in the world? Why, it is the good ol' US of A? WHY? Because we imprison people for using, or selling substances REGARDLESS of whether there was EVEN A VICTIM. Substances our grandmothers and grandfathers (us baby boomers, that is) could pick up legally without prescription. Talk about "traditional values", bah.

Which led to PRISON GUARDS being the most POWERFUL LOBBY in California. That's right, not teachers, not doctors or lawyers, PRISON GUARDS. Says it all. Screw'em, they voted for what they are reaping. I say cut police forces by 50% across the US, and legalize. Then lay off another 10%. All the while, cutting the DOD budget by 75%.

I cry no tears for these cops: "Privatize" that. You see them out knocking heads of those pointing out the folly of off-shoring our manufacturing base through SHIT like NAFTA, now we are supposed to give a rat's ass about them?? PLEASE. SCREW THEM.

I say they should make no more than a waitress, or school bus driver, and they should DAMN sure not collect "pensions" until they reach age 62.

Legalize, decriminalize, whatever you wish to label it, but THAT ALONE will bring the budget into the black in most cases.

Then cut the police forces accordingly, starting with the ones that like dressing up in their old military outfits, and kick doors in for smoking a joint, then go get drunk at some bar.

[gandy]

This is great news. Financial recoil is the only natural corrective to the Bush-era trend toward a militarized police state in which every cop imagines himself a homeland security hero.

[farang]

For example: http://opednews.com/maxwrite/linkframe.php?linkid=74091

Prop.5 in California

[Phil]

"We did a bad job of long-term forecasting," said Craig Whittom, Vallejo's assistant city manager. "We made agreements that were beyond our means."

This is true for most of the country's cities and states. To this point in my 62 years, I have never heard of a city or state standing up to police, fire, teacher, state worker unions etc. I have constanly thought " How long can this goes on?" To which, I have no response.
I agree with RK --- private sector has handled this better (maybe because they're not trying to get elected)
I also agree "Pension Armageddon!" is coming. What form it takes, remains to be seen.