What would bankruptcy mean for Oakland?

Bankruptcy appears to be the word of the day here in Oakland. Chip Johnson’s column yesterday about how we might declare bankruptcy sparked a flurry of media coverage on local TV stations, the radio, blogs, and newspapers. It even caught the attention of Rush Limbaugh. The story also made some kind of national news that I haven’t been able to locate online, but know exists because my parents in Houston called last night all concerned about it.

At the moment, the word from City Hall (PDF) is that although the option of bankruptcy has been looked into, it isn’t being seriously considered at the moment because, one, it’s a last resort, and two, it’s not terribly helpful in our situation. This is completely unchanged from the response to the same question provided at a town hall meeting in April.

Anyway, before we all rush into debating whether we will or we won’t, or whether we should or we shouldn’t, I think it would probably be helpful to make sure we actually understand what a bankrupt Oakland would even mean. So here’s a little bit of background.

First, let’s be very clear. Bankruptcy is not some perfect solution that magically makes all your problems go away. In fact, it does not magically make any of your problems go away. It does not eliminate your debt. And it creates new, long term problems that could potentially be even worse than the ones you already have.

Most of you probably have at least some familiarity with bankruptcy in general. You’ve probably read some article or another at some point about Chapter 7 (liquidation) or Chapter 11 (reorganization). Very briefly, if you find yourself in a situation where you have a lot of debt you can’t pay, the government provides a method for you to either liquidate your assets to pay as much as you can, and then dismiss the rest of the debt, or, for businesses that don’t want to shut down, to shield you from collection efforts from creditors while you reorganize and figure out how you’re going to either pay while at the same time giving you an opportunity to modify your obligations to your creditors. Oakland would not be filing for either of these types of bankruptcy.

The United States Bankruptcy Code has a special section reserved for municipal bankruptcies, Chapter 9. Chapter 9 is only for government entities, and it is the only type of bankruptcy available for municipalities.

The reason you’re probably not familiar with Chapter 9 is because it is hardly ever used – there have been fewer than 600 filings ever, and less than 200 in the last twenty years. Even then, it’s almost always some miniscule town where their total debt is like, less than Oakland spends on bottled water in a year. Well, maybe not quite, but generally there are not huge amounts of money at stake. Most of the filings aren’t even a city, they’re like, a hospital or a water board or a housing authority or an amusement park or something.

There are, of course, two big exceptions to that. First, Orange County declared bankruptcy in 1994, due to massive losses in the financial markets after the County treasurer made a series of staggeringly poor (PDF) investment choices. Orange County was faced with over a billion dollars in debt in couldn’t pay, more than quadruple the combined total of all other municipal bankruptcies before it.

Then there’s the more recent one everybody knows about, Vallejo. Vallejo signed some unbelievably stupid collective bargaining agreements, which, among other things, committed them to public safety salary increases of 24% over a three year period (PDF). Unable to pay, they voted to declare bankruptcy last May.

So what happens when a city is bankrupt? Chapter 9 is a reorganizational bankruptcy, intended for the adjustment, not elimination of debt, but it differs from the more familiar Chapter 11 in several key ways (PDF). Here’s how it works.

If a municipality can establish itself as insolvent (meaning that it simply cannot pay its obligations, a different standard than the balance sheet test for Chapter 11), and can satisfy the court that they’ve met all the required conditions, they can file a petition for bankruptcy. They then get something called an automatic stay, which is historically the primary benefit of chapter 9 (although this may change depending on what happens in Vallejo). This means that the city is now protected from any collection actions against it by its creditors, which offers a little breathing room where the city can step back, re-evaluate their financial situation, and figure out a way to pay.

During the bankruptcy, the city does not have to make payments on its general obligation bonds, either principal or interest, but that does not mean the bonds just go away. The city is expected to use the bankruptcy period to either adjust its revenues and spending or restructure the debt or, more likely, do a combination of both, such that when it emerges from bankruptcy, it will be able to resume payment. Not all debt payments are suspended, however. Mortgages, liens, and special revenue bonds (like those paid by, say, leases) must still be paid during bankruptcy, as long as the revenue that’s supposed to be paying those bonds exists.

In chapter 11, the court has a great deal of power over the debtor, and will generally appoint a trustee to liquidate assets, supervise financial decisions, and the like. Municipal bankruptcy does not work that way, thanks to the Tenth Amendment, which prohibits Federal interference into local affairs. As such, chapter 9 does not give the court any authority over the city’s property, revenue, or decision-making. The court does not monitor the city’s day to day financial decisions and cannot dictate or interfere with spending or operations. In municipal bankruptcy, the debtor itself is responsible for figuring out what it’s going to have to do to become solvent again, which may entail selling property, raising taxes, cutting services, or any number of other things.

But the protections of bankruptcy are not limited to suspending and restructuring bond debt. Chapter 9 also lets you reopen burdensome contracts for adjustment, such as (in Vallejo’s case) contracts with employee unions and retiree benefit plans. Again, bankruptcy does not magically void these obligations. It simply opens them up for renegotiation. Whether or not contracts with employee unions can be outright rejected (canceled) under Chapter 9 has been a matter of dispute in the Vallejo case. The judge in that case ruled recently (PDF) that yes, the agreements may be rejected, although that does not necessarily mean that they will be. Despite the city asking repeatedly for the contracts to be voided, the judge has made it clear that he is not eager to do so, has ordered Vallejo and the two remaining unions to mediation (PDF) in the hopes that a settlement can be reached. If no settlement can be reached, and the judge does approve the rejection of the contract, the union will definitely appeal the ruling that allowed it. They will might not win that one, or they might. Nobody knows. But it will drag the case out even longer.

Anyway, the court gives the bankrupt city a timeline for creating a restructuring plan that will restore them to solvency, and can either confirm or refuse to confirm whatever plan the city submits, but neither the court nor the creditors can provide a plan of their own (again, the 10th Amendment). If the city cannot come up with a satisfactory plan within a reasonable time period, the court does have the option of dismissing the petition and revoking the bankruptcy protections. Whatever plan the city ends up submitting is supposed to be agreed to by any creditors (creditors include groups like retirees owed benefits) who would be impaired by the proposal, although if they do not agree, the court can force their agreement and confirm the plan anyway, but only if certain conditions are met.

So is Oakland going to declare bankruptcy? Probably not. Well, not for now, anyway. As I noted above, municipal bankruptcy is very rare, and almost every large city that’s come near the brink of it (Washington, Philadelphia, Cleveland, New York) has figured out a way to avoid it by hook or by crook. Even in those cases, the flirtation with the idea of bankruptcy and financial uncertainty that caused it meant those cities lost completely their ability to borrow money for years. Oakland’s bond rating is in danger of downgrade as is, and if we were to declare bankruptcy, we could basically expect to entirely lose our ability to bond for the foreseeable future. That’s disastrous.

But it isn’t just the bond rating we have to worry about. The stigma attached to being a bankrupt city cannot be underestimated. All those new businesses and private investment we’re so desperate to attract? If we declare bankruptcy, we can just forget about it. Those new office buildings we’re hoping to get built downtown? They will never happen. Bankruptcy (even talk of bankruptcy) leads to huge flight of investment and tax base, something Oakland may be even more ill-positioned to afford than our enormous pension obligations.

It’s also important to remember than bankruptcy is not a way to avoid drastic service cuts. Our problem at the moment is that we don’t bring in enough revenue to pay for the services we provide. Bankruptcy doesn’t change that (and in fact, would likely reduce our revenue base even further). It has the potential to help us avoid future burdensome obligations, but does nothing to ease the day-to-day pains of trying to operate the city. Also, it costs a fortune in legal fees.

What bankruptcy might be able help with is our post-employment benefit obligations, which are not an immediate problem, but will start being a big problem in not so many years. For the reasons outlined above, bankruptcy is definitely not an ideal option for dealing with these, and there is no precedent to indicate that it is necessarily a feasible option for dealing with these. Although if the city can’t get its finances in order and find a way to attract new revenues over the next few years, it may be forced to consider it.

In any case, what Oakland (and every other city in similarly dire financial straits) is most likely to do is wait and see how things play out in Vallejo. If Vallejo is successful in using bankruptcy to void some of their post-employment benefit obligations, we can expect to see many cities follow their path. If bankruptcy becomes a common method of dealing with these types of unfunded liabilities, it is possible that Chapter 9 will lose some of its stigma.

Of course, there’s a bill pending in Sacramento that would make all this irrelevant. But that’s an issue for another day.

63 thoughts on “What would bankruptcy mean for Oakland?

  1. das88

    V. thanks for another excellent post. It definitely helps clear up some of the confusion I’ve had about all of the recent bankruptcy talk.

    Given how ill-advised bankruptcy in the near-future or even talking about it is, I’ve been trying to ponder alternative rationales for why the topic has come up from city officials. We can always go with the theory that city officials are not too bright, but I am hoping there is a better explanation.

    All I’ve been able to come up with is that they want to make the situation look as dire as possible to try to get more negotiating room with the police for givebacks. Measure Y requirements seem to bind the city and give the police all of the negotiating power. So, my best theory is that the bankruptcy talk is designed to make the police pity the city and out of their generosity forgo their 4% raise or make other concessions.

    I’ll admit it is not a very good theory on the recent bankruptcy talk, so I’d be interested in other people’s ideas. If we can’t came up with any better ones, I guess we can always fall back to the our city officials are big dopes explanation.

  2. Navigator

    Someone in Oakland mentions bankruptcy behind closed doors and all of a sudden it’s National news. The damage and stigma has already been attached to Oakland. Thank you very much Chip Johnson and the mindless politicians who confided in him.

    When will Oakland learn to keep its mouth shut to the San Francisco media?

    Oakland is in this mess because of a horrible contract with the Oakland Police Union. The Police Union contract is the only contract which can be addressed by bankruptcy. The other Unions have agreed to a 10% cut along with a certain number of unpaid days off. The Police Union refuses to go along. Oakland wastes 212 million of the general fund on a corrupt and ineffective mercenary Police Department. Cut these salaries in half and invest the remaining 106 million in something which will actually improve Oakland. Having Oakland tax money supporting the malls of Pleasanton, San Ramon, Alameda, and Danville doesn’t do Oakland a bit of good.

    What does Oakland get for their vastly overpaid police force? (New York cops start at 35,000 per year.) Oakland gets a high crime rate, ineffective crowd control, corrupt investigations, refusal to engage the community with neighborhood foot patrols, and, gross abuse of the overtime budget.

    Oaklanders are convinced to throw money at the police department by a fear mongering sensationalist SF media. Oakland’s crime rankings and individual crimes are constantly play up to the hilt, there by, putting pressure on the politicians to “do something.” What the politicians are forced to “do,” thanks to fear mongers like Chip Johnson and others, is throw money at an archaic, ineffective, and corrupt police department.

    Stop the militarization of the Oakland City Budget. The damage and stigma regarding bankruptcy has already been done thanks to the SF eager beaver media. Now, Oakland needs to follow through with this and cut those ridiculous police salaries in half. I’m sure that there are plenty of Oaklanders who will gladly police their city for 50 to 60 grand a year. If that pay is to low for the boys from San Ramon, Danville, Castro Valley and Alameda, then they can quit and get a job in their own cities.

  3. TheBoss

    The key bit here is the third-to-last paragraph in your post. The retirement benefits are the real problem with the city’s finances. Kicking the can down the road until they become an enormous problem is a terrible mistake.

    Put another way, I am virtually certain Oakland will go bankrupt within the next 10-20 years because of these pension obligations. And, I doubt we will be alone, as the 3-and-30 nonsense has infected nearly every city and county in California.

    That’s why it’s better to just take our medicine now and be a leader in getting out of this trap.

    As for the stigma of bankruptcy, I just don’t see it. Business would much rather locate themselves in a municipality that has become serious about its finances, as that provides far more future stability to things like taxes and fees.

    In contrast, a city lingering on the edge of the precipice is not going to attract investment.

  4. oakie

    Unfortunately, bankruptcy is yet another canard to waste our time on. What’s the real issue of why we’re in this mess? We’re paying people too much. 20% more than comparables in the Bay Area, and how much more than that to comparables in California, and then to nationwide comparables.

    The fundamental circumstance of why we’re in this mess is that every single elected politician in this city was supported in their election campaigns by the public employee unions that hold the contracts with this city. Are we objecting to a conflict of interest when they negotiate contracts with these same unions?

    Let’s get real. This is the problem.

    We are now negotiating with every union except the POA. So we don’t need bankruptcy, nor would it even be helpful since we are in a position to decide these contracts right now, anyway without it.

    And if the current available general funds is $440M and we’re short $100M, then why aren’t we INSISTING on a 20% reduction in compensation of every city employee, just to put our compensation in line with the Bay Area averages?

    My solution? Of course I’m just a tad more radical. Take the 1990 employee compensation package. Adjust for inflation. Offer that on every contract and do not budge. If they don’t want to work for the city on that basis, I suspect we will have no problem finding people willing to take their place.

  5. V Smoothe Post author

    Boss, you argument is based on a fundamental misunderstanding of Chapter 9. Unfunded future liabilities do not make a municipality eligible for bankruptcy. The “balance sheet” insolvency metric used in Chapter 11 is does not apply in Chapter 9. For a municipality to demonstrate insolvency, it has to demonstrate that it cannot currently meet its obligations. Basically, you have to wait until you have bills you can’t pay before bankruptcy is an option.

  6. Patrick

    With the condition of our roads, parks and city buildings, it’s obvious that we already have “bills (we) can’t pay”. I mean, yes, we can balance the budget by laying off 200 officers, etc., etc. And then 20 years from now, when we’re facing hundreds of millions of dollars of unfunded pension obligations, we can just close city government altogether, save for the check writers.

    What about the obligations of the city to its citizens?

  7. V Smoothe Post author

    das88 -

    Well, it seems like it’s more the media than the city fueling all the bankruptcy talk. As far as I’ve seen, the only Councilmember to seriously suggest bankruptcy as an option right now is Nancy Nadel, who says brain dead things all the time. I don’t see anything wrong with asking, at some point, what bankruptcy would mean and how it would work – it’s always good to know what exactly your options are. In the short term, the answer to the question is that bankruptcy isn’t particularly helpful.

    That does not mean that we won’t be in a situation where it will be helpful at some point in the future – say, maybe two years from now. So I think it’s reasonable to say that we’re not ruling out the possibility of ever doing it, or ever seriously considering it. Whether we eventually reach that point or not will largely depend on how things work out in with Vallejo. Right now, the prudent thing to do is just wait and watch.

    Patrick –

    Unfortunately, citizens are not considered creditors for the purposes of bankruptcy filings.

  8. PRE

    At $212M for police and 750 officers (approximate figure, I don’t know what the exact number is) that works out to be almost $283,000 a year per officer for salaries and overhead. Even figuring 100% overhead, the average salary is almost 3 times the Oakland average.

    Am I the only one who finds that figure ASTOUNDING and near disgusting? Agreements for 10% reductions – try 25% minimum.

    No wonder this city is at the brink of bankruptcy, along with a crumbling infrastructure. There’s no way you can convince me that it should cost that much to run a police department. I’ve always supported unions but this pretty much exceeds my limit.

    As far as I’m concerned the entire city management needs to be replaced – and there’s no way I’d ever vote for Jerry Brown for governor as I’m sure most of the “rolling over” to the unions happened under his watch.

  9. Robert

    The $212M includes almost 400 civilian employees of the PD on top of the 800 officers. There area also various charge backs for other city departments included in the PD budget, such as facilities, etc. So although high, the per officer cost is not as high as you indicate.

  10. Navigator

    There is no way to rationalize the strangling effect this obscene Oakland Police Union contract has on Oakland’s General Fund. Every Oakland citizen should feel riped off by this Police Department.

    It doesn’t matter that 400 civilian employees are included in the 212M. The average salary including benefits for police officers in Oakland is obscene considering the per capita income of residents in this city. This represents 212 million sucked right out of Oakland with no appreciative return. We should have Orinda’s crime rate with the money we pay these mercenary cops.

    Somehow, the cops are NEVER held accountable for their performance. It’s always the fact that we don’t have enough overpaid cops that’s the problem. I wonder why Oakland can’t afford anymore gold plated cops! Why not fire the rest of the gardeners at Lake Merritt or close down library branches? Why not allow our streets, sewers, sidewalks, and infrastructure to crumble? Yes, more ineffective gold plated cops. That’s the answer.

  11. Robert

    Nav, It does matter when you get the facts wrong. It wrecks your credibility when you can’t be bothered to get the actual numbers and just spout nonsense.

    While your apparent point that we should not bother with having police is interesting, having a police department is one thing that is required by the state constitution for a charter city. And it is more important to me that I not get robbed than having a well maicured lawn at Lake Merritt. I think that we could do both if we had had in the past a more agressive stance on labor negotiations.

    Quite frankly, I don’t think it really matters if an OPD officer makes a lot more than the average citizen in Oakland. There job is harder than the average Joe’s job and is much more dangerous. While it may be that they are paid too much compared to other PD’s, comparing them to Oakland residents is pointless.

  12. Ralph

    Comparing OPD salary to average Oakland is pointless. You pay based on the job and many other factors related to the job and market not what the people in non-comparable jobs earn.

  13. Navigator

    Why do cops in New York make so much less? Policing in New York is a blue collar job while in Oakland it approaches white collar and executive status. That’s the difference.

    Also, policing in Oakland is no more dangerous than policing in New York, Pittsburgh, Saint Louis, Atlanta, Baltimore, Chicago, Philadelphia, etc. And, my point regarding per capita income is, that Oaklanders could use those jobs at half the cost thereby improving the city’s economic picture by having a safer city with more cops living in the neighborhoods along with more good paying jobs within city limits.. You may be fine with seeing 212M leaving Oakland for San Ramon, Pleasanton, and Danville, but I’m not. I want that money circulated back into Oakland’s economy.

    Oakland should file for bankruptcy, drastically lower police salaries and fill the ranks with Oaklanders.

  14. dave o

    Navigator,
    Thanks for you post about the police. I work most of the time doing what I can to serve the people of Oakland because I want to see then prosper (or at least not suffer). This big emphasis on huge financial incentives for police work just reminds me of some kind of mafia or mercenary force. Public service is not about getting a nice home in Danville. I’m here because I love Oakland and hate sterile materialistic places like Danville. Where are the Oakland citizen cops who want to see Oakland (not Danville) prosper? How could Danville people even have a clue what Oakland is about? Who is really dangerous? What are the real social norms here? The cop induced budget meltdown is about a police force that belongs somewhere else where there is a lot of money to feed their big lifestyles … like Danville. Let’s get some cops with dreds who love our teens and can set them on the right path, and without needing huge salaries out of step with our economy.

  15. Patrick

    How about raising their salaries in return for union responsibility for pensions and healthcare? At least that way, we’d know what we’re dealing with. And I’ll bet that the real costs of these benefits would drop dramatically when they’re funded by the employee as opposed to a hapless citizenry.

    When the city hashes out contracts with the unions, is there someone neutral present who can specifically state the economic impact of the contractual obligations? It seems that this may not be the case.

    And, is it me or are our City Councilmembers clearly in over their heads? I still can’t get past the video of IDLF puzzled about the difference between facilities and activities. JB’s “I’m not gonna read attachment A” is just bone-chilling.

    Alright, after reviewing the evidence, bankruptcy is not the best option now. But I still believe that it is inevitable, on our current course. A new form of city government seems vital.

  16. livegreen

    I think the issue of Bankruptcy was raised as a trial balloon for negotiation purposes. I also think that’s a valid reason to float it. Oakland’s stuck in a really big hole, and the OPOA playing brinksmanship, essentially betting that the Public will support it vs. cuts, is irresponsible.

    I agree with Oakie that pay will still be an issue, even with the parts of the overall City workforce that kicks in 10% salary reductions (the previous duplicate automatic raises that V has pointed out, both in the Salary Schedule and the COLA’s -which are already way above the CPI- comes to mind). That said at least they’re kicking in, while the OPOA is not.

    Historically OPD salaries are high because demand swelled when many municipalities were hiring officers all at the same time. Cities had to fight each other to attract recruits & retain officers. That competition is now gone, demand has settled, and so should salaries. (In fact, if we had the money, it would be a good time to recruit at lower prices).

    That said I agree that OPD & OFD jobs are more dangerous and they should be compensated more than other positions. They still will be after the cuts.

    If the OPOA continues to play hardball it will only do damage to the large amount of support OPD has overall (and disregarding the brainless generalizations to the contrary of both the news media and cop haters like Navigator).

  17. Ralph

    A vet police officer in NY has a base of $77K. In SF it tops out at $101K. These numbers do not include any other compensation. The problem I have with the NY comparison or any other city not located in the Bay Area is just that – it is not located in the Bay Area. OPD is not competing with NYPD for labor.

    Nav, I am not sure what your idea of police work is or what police should do. But from the officers that I have known, police work is not about rounding up the bad guys. They went into the profession because they wanted to make a difference in the community – to help young men make right choices, to be a pillar. PD aren’t looking for just law and order people; they want people with psychology backgrounds – people who can talk to the people on the street. In some respect, being a police officer is like being a guidance counselor on the street. When Johnny ne’er-do-well has stopped going to school and ignored his guidance counselor for the upteenth time that police officer may be his last best hope. Being a police officer is far from just a blue-collar show-up and punch the clock job.

    We don’t have to the highest paid and we don’t have to be the lowest paying PD in the bay area, but we should pay the officer in accordance with what we think the job is worth, in consideration of the market in which they compete, and other intangibles. $5800/month for a Police Officer just doesn’t seem that unreasonable.

    PS: The one item which does irk me is the COLA and back when the cost-of-living was off the hook annually, I could some what get this. But over the past 10 years when the cost-of-living has been flat, this has really become free money for unions and govt employees.

  18. dave o

    livegreen said, “If the OPOA continues to play hardball it will only do damage to the large amount of support OPD has overall (and disregarding the brainless generalizations to the contrary of both the news media and cop haters like Navigator).”

    Using terms like “brainless” to dismiss the opinions and life experience of people like myself and Navigator doesn’t inform the debate. You are just demonstrating that you are not open to the ideas and the experiences of others, kind of the point of the blog, no? What should the rest of us do, oh great one? Tell us what to think? We are as mere dust at your feet. I would love to understand the great value that the OPD gives to the community. Yet dozens of experiences show me that they are probably more destructive of public safety than constructive. And there is no question that they sink the budget.

  19. len

    not the best time to play hardball with compensation for existing opd employees until we fix the low morale, scandal ridden structure of the dept, and come up with a work schedule that disrupt every cops home life. if you just force compensation reductions risk losing better experienced cops to other cities and attracting less qualified replacements who can’t handle the stress of our peaceful town.

    -len raphael
    temescal

  20. dave o

    len,
    The cop’s life would be a lot less stressful if they hadn’t spent the last 10 years completely alienating large parts of Oakland. For example, giving a large public memorial in a sports stadium without inviting any black politicians to speak … not a good PR move. Covering-up the execution of an accomplished black reporter … not a good PR move. Shutting down Cinco de Mayo festivities … not a good PR move.

  21. dave o

    len,

    I also want to question this idea that I see here that you will have to pay a lot of money for the “best” cops. I think that you are confusing policing with the movie business. We are talking public service here. The best public servants are the ones that love doing it. It comes from the heart. I would wonder if the cops that are the most money-oriented aren’t really the worst ones. The ones that are easily corrupted by developers and drug dealers.

  22. Navigator

    In my opinion a guy living in Danville or San Ramon is going to have a tough time identifying with the single mother in East Oakland trying to raise a family. Also, I don’t hate cops. I think Oakland cops should live in Oakland and be paid half of what they’re bankrupting our city with right now. This way, the money stays in Oakland, and we could even hire more local cops if that was our inclination.

    San Francisco despite having a hire cost of living, has more cops living in their city than Oakland does living within its city limits. San Francisco also does a much better job of hiring cops which represent the various communities. For example, San Francisco has many Asian and Gay officers on the force. Oakland by contrast is dominated by white males living in middle class and affluent suburbs.

    Oakland needs more African American, Latino, Asian, and Gay officers who want to live in Oakland and make a difference in their community. And please, don’t give me that tired “they don’t want to see someone they arrested at the supermarket” for not wanting to live in Oakland. They’re more likely to see that person shopping in Alameda or San Leandro where the stores exist anyway. That’s a weak excuse for shunning Oakland for the homogeneous Tri-Valley or Danville.

  23. Ralph

    dave o, can you help me understand why a black politician should have been invited to speak at a large public memorial in a sports arena and why this alienates large parts of Oakland? Further, what Cinco de mayo activities did OPD shut down?

  24. Jennifer

    Didn’t the Acting Police Chief, African American, speak at the memorial? I give Dellums credit for respecting the wishes not to have him speak — basically acknowledging that he had repeatedly bungled the name of an officer at a previous memorial and may do it again. It’s one of the only things he’s done that I respected. Then his staff tried to take retribution, but they didn’t get traction, thank goodness.

  25. livegreen

    Dave o, First, stop with the condescending tone, and stop taking words out of your head and trying to put them in my mouth (I never said “we are mere dust at your feet”. You did).

    And how do you know I’m not open to the ideas and experiences of others? You don’t know me one bit, and I never said anything of the sort about anybody’s life experiences. Once again, you did (you seem to have a projection problem).

    I’m totally open to the experiences of others, and have discussed them repeatedly with both those who agree with me, disagree, and in between. Navigator’s original post was a blanket generalization about all OPD, as are yours. OPD is not a monolith but instead are composed of many officers of different opinions and experiences.

    As such any generalizations about anything, painted in broad strokes, is brainless. On the other hand I much appreciate Navigator’s more detailed comments in his more recent post, as well as your earlier post, about having some police living in Oakland. I agree with that. More on that point later…

  26. livegreen

    BTW, Dave O and Navigator, in your comments I didn’t catch any “life experiences” that Dave O seems to believe are implied. I’m totally open to hearing about your experiences. My point is that generalizations should not be made, as OPD is made up of individuals and like anywhere, there are good individuals (and cops) and bad individuals (and cops). That does not make OPD all good or all bad.

    I’ve had a lot of interaction with Officers involved in Community Policing (PSO’s, etc). Some live in Oakland, some live outside Oakland. All that I’ve met care about the community and are trying to make a difference.

    On the other hand some Officers obviously don’t have the time of day for it. The former chief of Internal Affairs was obviously a problem considering he killed a low level drug dealer and is now on suspension.

    And ex-Chief Tucker, who’s very old school, was against Community Policing. Now why would anybody be against getting to know the residents of the city you’re in charge of? A trusted crime & safety activist told me that he heard ex-Chief Tucker say that community policing was “going native”.

    Good-bye, god speed, and good-riddance Chief.

  27. livegreen

    I totally agree with Ralph: why would not inviting a black politician to speak alienate large parts of Oakland.

    First, that presumes large parts of Oakland are hanging on to their opinions based on what a politician says just because of the color of their skin. (I’ve heard a lot of people who voted for our Mayor who say they made a mistake. He seems to be doing a good enough job alienating his own constituents.)

    Second, the OPOA publicly thanked Larry Reid for his help setting up the ceremonies. So, even though he didn’t speak, he got more appreciation than any Oakland politico did.

    If you’re intending to imply that OPD as a group is racist, you’re either just flat out wrong, or you’ve chosen the wrong examples. (That’s not to say that there aren’t individual officers who might be…).

  28. dave o

    Ralph,
    There was a lot of racial tension around the shooting of the 4 white cops, all of them from the suburbs, policing a poor black neighborhood and bearing down on a young black man. For most of us, the storming of Lovelle’s sister’s apartment was another cop execution of a black man, though badly botched. Many in town celebrated it and saw it as an act of heroism on the part of Lovelle. I would expect that the thousands who have considered themselves abused by cops because of their social class or race, may have felt a little twinge of gratification that they got some payback. No necessarily my view, but widely expressed. Now it is true that the acting chief is black, but no black politicians were invited to speak, including
    the mayor. It is true that Dellums botched a name at an earlier memorial, but it is far more important for the OPD to try to diffuse the raging racial tension around this killing and try to bring the city together.

    The OPD made it impossible for the big Cinco de Mayo festival to occur because of huge “security fees”. Smaller parties were also blocked through the requirement of ridiculously large “security fees”. This seems like obvious disrespect towards Mexicans. It is not the OPD’s job to run Oakland in this heavy handed way. They are supposed to enforce the law, not shutdown culture. This has been an ongoing problem that has alienated community after community towards the police.

  29. dave o

    livegreen,

    My apologies for the condescending tone. I felt that you were trying to marginalize me when you called Navegator “brainless” because of his cynicism towards cops.

    Generalizations are not necessarily “brainless”. My opinion of cops being clueless and out of touch with Oakland was based on dozens of experiences with them. I’m sure that there are exceptions. I met one myself, Patrick Egan. The man was a social genius and quickly understood the real dynamics of the situation and who the manipulators were. And he quickly took most of the tension out of the situation. Unfortunately, most of the other cops did the opposite. They disrespected everybody and left deep social scars. Scars that will lead to antisocial acts. I have many of those scars myself so this is not idle cop bashing but a very serious alarm and call for understanding.

  30. Deckin

    OK, Dave O, now you’ve lost whatever shred of credibility you might have had. For most of us, the storming of Lovelle’s sister’s apartment was another cop execution of a black man, though badly botched. So going after a man who has raped countless women and who has murdered two officers in cold blood is an execution ‘though badly botched’? Perhaps if you stopped minimizing and exculpating the actions of rapists and murderers you’d get more positive feedback on your views on the budget.

  31. Jennifer

    Dave 0 – wow. Because of your comments I am taking a break from this blog for a while — at least the comments section. Unbelievable.

  32. dave o

    livegreen,
    The cops are totally racist. A case in point is the heavy enforcement of cheap crack cocaine popular with blacks in comparison to the light enforcement of powdered cocaine popular with white people in the hills. And there is the old “driving-while-black” joke that blacks tend to be pulled over without cause. Blacks are way over-represented in the jails and in the way laws are enforced. These are generalizations but clear trends none-the-less and a serious problem with dire social consequences.

  33. Ralph

    dave o, I don’t want to go down this path and I am going to regret going here, but by your logic had these white cops lived in East Oakland there would be no racial tension.

    I don’t get how having Dellums, or any black politician, speak would have diffused any racial tension. Quite honestly, after Dellums botched the first the officer’s name at the first funeral, I was disgusted. Forget that the man was an officer of the law, but to botch a man’s name at a memorial service is something I find deeply troubling. Then add to that he served our city and you are the mayor. I would feel the same way about any of the 44 if they made a similar mistake about any of our servicemen. A man only has his name and his word, you owe it to the family to get it right.

    I don’t know if the security fees were ridiculously large as you describe them but you need to pay the freight. If you can’t pay the freight, you can’t have the party. A similar thing happened when I lived in DC and smaller road races were cancelled because all events which required security had to start paying the freight. They couldn’t pay the freight. Was this some type of disrespect to smaller road races? Given that the group which sponsors the Cinco de Mayo celebration is still planning for an Independence Day celebration, I am having a hard time buying your argument.

    PS: I now see I am not alone.

    PPS: dave o, crack and coke bad example – the cops did not write the law. they are arresting drug dealers. the enforcement and disparity comes in the courts as a res when punishment is meted out.

  34. livegreen

    Dave O, FIrst thanks for your apology and trying to calm down any disagreements we might have. We can learn more by sharing each others experiences, both when we agree and when we disagree.

    To be clear I called the generalizations brainless, never did I call Navigator that. Apparently you and I still disagree about generalizations, which is fine. My problem with generalizations is they are seldom entirely correct, and therefor should not be made, and esp. without qualifications. And when you take a general tone about all OPD, it sounds like you’re own version of “you’re either for us, or you’re against us”, or they’re bad because they’re OPD. Well what about all the good cops out there? Isn’t that blanket hatred, transferring a race with a color of a uniform?

    Once again my experience is that Police come in all walks of life, just like everybody else. Another factor is ignorance, lack of training, not knowing an area, stress, and experience or lack thereof. The more experienced police tend to know how to defuse a position calmly, vs. reactively.

    On the other side of the coin I’ve seen PSO’s and other Officers genuinely interested in Community Policing and communities of all backgrounds automat-ically be dismissed because they’re OPD. Even when they’re trying their best to show they care.

    This kind of rebuff (to either side, or from either side) is detrimental for everyone.

  35. dave o

    Deckin,
    No doubt about it, Mixon was a bad guy. He raped two women at once that same morning, maybe while drinking his coffee. He also raped a child and did take- over robberies. He was also probably working on a dirty bomb and organizing an international terror network. He might even have been a driver for Bin Laden. Do you believe the cops? Ha, ha, ha, ha, ha, ha, … !

  36. livegreen

    Dave O, Re. Crack vs. Coke, I agree the difference in the laws and sentencing is unfair, and even racist. But that’s not the Cops. That’s the laws that are on the books.

    The cops make the arrest. They don’t make the sentence. The sentence is the D.A. enforcing what the law says. Who passes the laws? Our politicians. You can’t blame the cops for something they aren’t responsible for creating.

    Re. prisons, I disagree that there’s selective enforcement. I believe it’s economic. There are more poor minorities due to historical reasons, historical racism. In most urban areas in CA direct racism has dissipated today, but a benign racism remains that accepts the poverty of minorities while forgetting the root causes. This is because of the lethargy of the general populous. Once again, not the cops.

  37. Ralph

    because right about now, i can use some levity,

    this sentiment looks familiar, “To be clear I called the generalizations brainless,…”

    Where have I seen that before?

  38. Naomi Schiff

    Just to get back to that bankruptcy talk, and skipping over some of the heated posts above, remember that Chip Johnson is a columnist and not a reporter. While he occasionally has something mildly interesting or provocative to say, most of his pieces are not heavily researched. They are opinion, rumor, and more opinion. But it is not reporting. And therefore, it ought not to be a trigger for mass hysteria, bond downrating, or anything but perhaps an attempt to get further information.

    Is the SF Chronicle responsible and fair in its coverage of Oakland and the East Bay? Definitely inadequate, condescending, and sensationalizing, with a tendency to make Oakland look bad so SF will seem more fetching in its cuteness.
    Wouldn’t it be refreshing if Chip did feel like taking a seriously investigative approach? Well, perhaps that is not how he sees his job.

    I think V’s attempt to explain muni bankruptcy is useful. The kind of poking and prying that we citizens are doing to understand how to deal with a bloated public safety budget is what the council has to do too. They aren’t necessarily geniuses but it is not such a simple situation, either. And many cities are facing the same quandaries, to which at present there are not a lot of good solutions.

  39. len raphael

    NS, Johnson is what he is: the Herb Caen of Oakland politics. I wish he were more, wish he had realized what a cipher Dellums instead of giving him the benefit of the doubt for the first year or so.

    What does annoy me is that KQED radio consistently presents Oakland talking heads who talk off the top of their heads without detailed knowledge of stuff here. Be they academics from SF State or journalists from the Trib or the Chron. I could get as worked up over KQED as Nav would over the Chron.

    The comments above do make me curious if there have been any decent opinion polls/market research of opinions toward oakland cops by area, by race, age, by income, education etc. even before the 4 cops were murdered i had the impression that young people of color generally distrusted/disliked opd and older people across the board thought they were doing a good job under the circumstances. Then there are older people of color who are pissed that their kids get profiled by all cops.

    -len raphael
    temescal

  40. Naomi Schiff

    Len: I don’t think Chip had much of a clue either during the mayoral campaign or thereafter. To me he seems usually to adhere to whichever group he thinks is in
    power, and doesn’t try to step out of the box much. I agree about KQED. They hardly ever talk to community people about Oakland, even though we have a number of articulate constituencies.

    I am an older person of pale hue, but I am well aware that police do not consistently treat everyone fairly. Some of the officers are really excellent. But too, there is a long history of police maltreatment of Oaklanders, not all of them young, not all of them miscreants, and not all of them male. And some have not survived the encounter. There are many reasons why some officers overreact and of course some people who should not have taken up the profession. I don’t think there is a clear age or race boundary among citizen opinions; it may depend what one’s own encounters have been, and that is probably true among the police officers too. We tend to generalize but we should try to avoid it.

    I think we should do as much outreach, connecting, interacting with people different from ourselves as we can possibly manage, to knit our community more tightly.

  41. V Smoothe Post author

    I don’t know about this distinction between columnist and reporter you’re trying to draw, Naomi. Sure, Chip’s columns are generally poorly researched, and often inaccurate, but no more or less so than any other coverage of Oakland in the press.

  42. Izzy Ort

    “Is the SF Chronicle responsible and fair in its coverage of Oakland and the East Bay? Definitely inadequate, condescending, and sensationalizing, with a tendency to make Oakland look bad so SF will seem more fetching in its cuteness.”

    The Chronicle, separate and apart from any question of how it depicts Oakland, is a joke. It was bad in 1990, when I moved to the Bay Area (the first time) and it is now floundering into oblivion. The redesign to print the business section backwards at the back of the sports section crossed the line from real newspaper to “tabloid”, even if it’s still in broadsheet format, but since then it’s even gotten worse.

    As an apparent low-cost “news-substitute”, lately the Chron has devoted large chunks of its front page to fluff articles about semi-obscure events from decades ago. These are mostly reruns of old articles dredged up from the morgue for free, with a few added paragraphs absurdly proclaiming how important it was, and how we should care today. A case in point, about two weeks ago, half the front page of the PAPER, not the sports section, recounted Randy Johnson’s high school baseball career in Livermore, or maybe Pleasanton.

    IMO, the Chronicle makes San Francisco look bad by existing. I only read it at all because they sell it at BART at a discount.

  43. Naomi Schiff

    V, I guess I am being charitable and explaining Chip’s apparent lack of interest in getting the full story. As a columnist he may be excused from doing any legwork (not that it would hurt). If he wrote as a reporter I would give him a lot less slack.

    In general, public discourse seems awfully shrill (newspapers imitating talk radio and tv pontificating and gesticulation and shouting), and of course website and blog comments aren’t immune. Whatever the medium, including live in-person speech, we would all benefit from ratcheting down accusations, hysteria, assertions, and personal attack. Our society is too high-strung! We can have energy and out-of-the-box thinking without such high blood pressure.

    I appreciate your efforts to deliver factual material. I know it takes actual work to find the info.

    Izzy, yeah, the Chronicle is shrinking its news hole drastically by putting in listy items, ancient material, and large photos. I love photos, but. And, what was all that about 144 years? Makes you think they won’t make it to 145.

  44. LoveOakland

    RE: employee pensions

    TheBoss and others keep pinning Oakland’s fiscal problems on pensions for city employees. If that were the case, it would be true in cities all over the state who offer similar benefits.

    City employees earn their pension through CalPERS, the largest and one of the best managed pension funds in the country. CalPERS took a big hit in the recession like everyone else, so it is expected that rates will increase a little for several years. However, in ‘up’ economic cycles, CalPERS lowers their rates and cities and other government entities pay little or nothing into the pension fund. Oakland paid nothing for at least five years when times were good. At least one union urged the Council to sock an equivilant amount away for bad times. Too bad they didn’t.

    This year Oakland’s pension costs are actually down more than $1 million.

    I can’t understand this harping on pensions. What next, replace social security with savings accounts a la Bush? A much more expensive option would be to cut back pensions leaving many retirees in the lurch should they lose their homes due to rising costs on a fixed income or end up in nursing homes on the public dime.

  45. len raphael

    if the oakland families and institutions were capable of producing enough qualified candidates to staff opd, we wouldn’t need so many cops in the first place.

    cops these days are combo of paralegal, emt, social worker, and soldier. not your typical oakland school attendee skill set.

    -len

  46. das88

    len they don’t need to be born and raised in Oakland, we still have open municipal borders.

  47. Robert

    Why would any new cop move to Oakland? Oh that’s right, they can live safely up in the hills. They certainly wouldn’t want to live in the flats if they didn’t gow up there, regardless of color. Of course if they live in the hills they really wouldn’t get to know the people they are policing any better than they do living outside the borders of the city.

  48. oakie

    LoveOakland: “I can’t understand this harping on pensions. ”
    It is my understanding that the city has not been putting sufficient funds into the pension system, year after year to be adequate for the pensions promised for current workers. This is fiduciary irresponsibility of the highest order. It is my understanding that the accumulated underpayments has reached $60M. Maybe it’s more now, that’s the last I heard. Our marvelous leaders (who the majority in this city have elected) figured out how to avoid making these required payments up through about 2011. Their intention was to wait until then for the shit to hit the fan. Meanwhile, over the 90′s and 2000′s (“oughts”?) which now look like boom times with boom revenues- and employee compensation ballooned–and still not paying up the required money to the pension that are being promised now. So we have the double wammy of the accumulated underpayments now need to be paid, IN ADDITION TO the $100M deficit.
    Utterly irresponsible and nobody seems to mind. Certainly not the city’s unions.

    Furhtermore, no one—no one in private industry gets these kind of pensions anymore. Actually, GM and Chrysler did until last week.

  49. Ken

    Naomi: I read somewhere that the bond rating agencies (the people who told us that AIG, Lehman Bros, Enron, etc were financially sound senior AAA+ securities, ultra safe) will be downgrading ALL US municipalities/jurisdictions.

    It’s just how things will be. Relax with a tequila, we’re not that special :)

  50. Ken

    “Loveoakland: TheBoss and others keep pinning Oakland’s fiscal problems on pensions for city employees. If that were the case, it would be true in cities all over the state who offer similar benefits.”

    That is EXACTLY the case. That and genneral over-extension of debt overhangs by cities, business, residents. In CA, FL, NY, Vegas. Almost everywhere in the US. That is the problem.

    Too much debt. Too many home ATM withdrawls. And at least 50% of everyone was doing it. That we’re facing such sharp corrections to historical norms over the last two years is painful. It’s healthy, though.

    As far’s I know, we’ve only had “pensions” since the 1950s in America and a few other post-industrial countries.

    Actually, wwikipedia says different, but i don’t think old pensions were the same as our post 50s pensions.
    http://en.wikipedia.org/wiki/Retirement_plan#History

    And in any case the US was on a ‘brand new’ and untouched continent, filled with abundant natural resources to pay for all these wondrous new pensions.

  51. Ken

    loveO: just a followup, i talk to city staff around the country, and practically everyone is cutting staff and programs, cutting budgets by at least 4% these next two fiscal years. they’ll have to do even more i think. maybe get to 5% cuts annually.

  52. Navigator

    Robert,

    There are many neighborhoods in Oakland where a cop could live that aren’t in the “hills.” Also, I was under the impression that people in the hills were Oakland residents, and the “hills” were part of Oakland.

    Cops could live in lower Rockridge, Temescal, Downtown, Lake Merritt, Jack London Square, Laurel, Dimond, Piedmont Ave, Maxwell Park, Idora Park, Haddon Hill, Ivy Hill, Fruitvale etc.

    Even if Oakland cops lived in the hills they would still have a vested interest in this city. It’s outrageous that only 6% of Oakland cops live in the city. Oakland is good enough for its residents but not good enough for the cops who are suppose to keep them safe and improve the city? If Oakland isn’t safe enough for a cop and his family, then they’re telling us that they’ve failed miserably at their jobs and are not earning their inflated salaries . What about the rest of us poor schmucks who love Oakland and wouldn’t want to live in Danville or San Ramon? What happens to us? That line of thinking is arrogant and self-serving.

    Oakland should file for bankruptcy and make those salaries blue collar salaries. Oakland cops shouldn’t be able to afford to live in Danville and San Ramon.

  53. Naomi Schiff

    I’m amused by Danville’s iconic appearance in this debate. As though Danville were the Great Satan.

  54. len

    city employees live in the burbs for the same reasons many other people with young kids and some without do. it’s not hatred of oakland, but wanting more house for less money, schools with fewer problems etc.

    many a time the put down of the burbs comes up in the same discussion about some bad oakland problem, as if that’s the price oakland residents have to pay for the pure pleasure of living here compared to these leave it to beaver stereotypical burbs: eg. Jean K’s (roughly paraphrased): if you don’t live with oakland’s crime, move to orinda. the flip side, is the conversation with residents of the burbs who are convinced they’ll get jacked if they get off the freeway and stop at a traffic light at 51st and Shattuck.

    -len

  55. Ralph

    Okay, in the world of this gets us no where – why are people so fascinated with Oakland employees living in Oakland. Do you think living within the city makes you anymore knowledgeable about the city, its people, and its positives and areas for improvement. It may help a little but actually talking and listening to people helps a little more. if any part of your job description entails helping and empowering individuals to do better and you ain’t feelin’ it, then it is time to get to steppin’. It just seems to me people are forgetting the bigger picture.

    On the other hand this brings up an interesting observation. People came out of the woodwork to vote for Barack, someone who now sits some 3000 miles away in a big white house far removed from our day to day concerns. Yet, when it comes to voting for council members, the people, who, except for Ed Jew, actually live in their district and can have a direct impact, the woodwork people stay in the woodwork. Hmmmm.

  56. Ken

    Ralph- could be the woodwork people actually “believe” in the “american dream” or whatever… they may still be involved civically but in different ways.

    Or maybe you are right and they just vote every four years and think its enough.

    If things are going well, people don’t vote as much or care about politics. That’s sort of good, in a way. If people are voting in droves, that is a sign that things are not going well. I know, seems odd.

    People mostly only care about themselves and what they’re gonna eat tonight (check out yelp.com if you don’t believe), and we’re always only going to have 10-20% of people thinking more long-term and community-wide.

    Otherwise, most people wouldn’t be able to get on with life and actually do sh.t because they’d be reading blogs all the time and worrying about too many big depressing issues at once like v Smoothe…;)

    I wouldn’t worry too much. We’ll adapt or die. A billion years from now do you seriously think humans will even exist? Facetious, you say? :p

  57. Ralph

    Ken, you sound so optimistic and positively hopeful about mankind. I, on the other hand, am fairly convinced that the since a fair number of these people who voted for B.O. were eligible to vote in the last election and didn’t vote. They certainly didn’t show up in the last statewide election and you can bet our bottom dollar they won’t vote in July.

    Heck, I care about me and for the most part just me, but I vote. and if those people who don’t vote get screwed over so be it. They had their chance. :)

  58. Ken

    hey Ralph, i forgot to mentino we also vote with our dollars each day. dollars are counted; votes may not always be. since we all vote 1/4 to 1/2 of our votes to landlords we thus seem to approve of private property ownership and real estate riches (must feed one’s landlord!), but with the other 50%+… i “vote” for these things-

    bikes, bike parts
    composted soil (foxfarm rocks!)
    nonprofits (donations- these never exceed the standard deduction somehow)
    books (political/social/env authors)
    organic food 60% of the time (whole foods corporation, CA farmers, CSA)
    ikea, target corporations/chinese factories (random house stuff)
    local mom’n'pops – restaurants, alameda antique fair (random house stuff)
    chevron corporation and all their/our pollution (partner’s car: yay climate change)
    credit union – eat local bank local. i email my cu ceo every so often and usually get a response (try that with kenneth lewis, b of a!:)
    public mass transit – bart
    magazine/newsletter – two of those…
    clothes – try to get organic shirts/underwear at am-apparel whenever possible
    carbon offsets (carbonfund) and ‘climatesmart’ (pg&e corporation, still mostly non-renewable energy)
    verizon & at&t corporations – communication, and philippines tech support
    asus/taiwan- because apple doesn’t make a small netbook and ii dont want iphone
    biggest chunk? a privately held largecap RE company with decent values
    city of oakland-biz fees
    big commercial banks/ibanks like gould-man sacks, house of jpmorgan-chase-manhattan… (you know, federal income taxes –> bailouts, tarp, ppip, talf, alpphabet soup of larding toxic ‘assets’ onto us taxpayers, now at 155k extra debt per american)

    about people not voting… well our education system is designed to NOT educate people. it fails at that too, in that some people actually learn about the real world anyway. i think a subset of ppl who don’t vote are some of these ppl since they know the whole system is rigged n ponzi anyway.

    our political system and just about any i wager, is set up to have a politician please his financial and plebian constituents. when there is an intractable problem, the system can’t cope. it seems to happen with regularity and maybe it’s plain amusing (sad?) to watch.

    we could all watch KTOP in a seedy saloon on old school teevee, and hang out at the wet bar. sometimes it feels like the end result would be the same as if we actually were vocal to ‘TPTB.’

  59. Ken

    the MSM didn’t cover the oakland elections as much. the 08prez election was covered for over a year in all MSM… that made for essentially a year-long tv commercial telling people to vote.

    look at how many people do things they’re told n reminded to do (mostly, purchase stuff) on tv or in newspapers. well, seems reasonable that more ppl went to vote for a president than Oak politicians. =)

    “Okay, in the world of this gets us no where – why are people so fascinated with Oakland employees living in Oakland. Do you think living within the city makes you anymore knowledgeable about the city, its people, and its positives and areas for improvement. It may help a little but actually talking and listening to people helps a little more”

    in best of all possible worlds id say require city staff to live IN the city, and listen to people.

    locals… are invested in the community. woould put in longer hours.
    if they live here, they wont leave in a disaster situation to make sure house in our mythical Danville is ok (and say hi to e-40 next door)
    locals mesh better with locals (er, residents)
    less co2 emissions from commuting
    will see problems from OUR (ken and ralph’s) perspective more often as peers instead of as viceroys

    there is pro/con to everything but i think the future is local, and so local control ought be in the hands of locals too.

    main drawbacks wb cronyism (hiring family members) and corruption which is related. but i guess we already have some of that…

    on other hand, outsiders can be less corrupt due to having less contact (cue mexico’s drug war and fed troops… of course the whole thing’s overblown by LATimes… their real probs are oil-revenue related)

  60. len raphael

    NYT article on a small Alabama town that couldn’t pay it’s promised retirement obligations despite state law and despite failure to get those obligations reduced in bankruptcy.

    http://www.nytimes.com/2010/12/23/business/23prichard.html?src=me&ref=business

    “So the declining, little-known city of Prichard is now attracting the attention of bankruptcy lawyers, labor leaders, municipal credit analysts and local officials from across the country. They want to see if the situation in Prichard, like the continuing bankruptcy of Vallejo, Calif., ultimately creates a legal precedent on whether distressed cities can legally cut or reduce their pensions, and if so, how.”

    “Prichard is the future,” said Michael Aguirre, the former San Diego city attorney, who has called for San Diego to declare bankruptcy and restructure its own outsize pension obligations. “We’re all on the same conveyor belt. Prichard is just a little further down the road.”

    Aguirre is a very bright, civic minded attorney. Grad of Boalt Hall plus a degree from Harvard School of Government, he’s succeeded in a range of litigation from defending the UFW’s to very complex security litigation.

    All of which is to say that when he says that the fight by cities to reduce pension obligations by using bankruptcy and other legal proceedings is only the beginning, he is not whistling in the dark.

    At some point before Oakland faces bankruptcy, our unions will have to decide whether to put their trust in the state and contract law to make Oakland elminate basic services to pay for their full pensions and retiree health benefits as promised, or voluntarily renegotiate down.

    -len raphael, temescal

  61. Livegreen

    Maryland is considering having State workers work longer to both collect state pensions and retirement healthcare benefits.

    http://www.baltimoresun.com/news/maryland/bs-md-pension-recommendations-20101220,0,4746364.story

    Interestingly they’re also proposing “cost-of-living adjustments for future retirees should be contingent upon investment returns for the pension trust fund meeting or exceeding the actuarial target.”

    Even if it’s not defined contribution, it would at least b more accurate and resemble marketplace reality…