Archive | November, 2020

Tips for Turkey Day

25 Nov

Yesterday my husband and I went out to pick up groceries for the weekend. We found ourselves surrounded by tourists. Here we are in the Purple Tier, and people are still coming to Chico to spend the weekend.

Standing at the deli counter, I was privvy to various conversations. One woman says to the other, “It’s only Tuesday and he’s already bored…” I had to wonder if she was talking about her spouse or a child. Nerves are always raw at Thanksgiving, it’s a weirdly depressing holiday. On the news I’ve seen at least a story a day about the pending mental breakdown – I’ve heard Super Bowl Sunday is the worst day for domestic violence, but I’m going to guess Thanksgiving Thursday is a close second.

Throw in the COVID Crazy and wow – batten down the hatches and shelter in place Folks!

I hate to think, a holiday with such good intentions, has become something we just get through. Here’s my suggestions:

  1. Stop watching the news. “The news” isn’t journalism anymore, it’s government propaganda. The main gist these days is “Be Afraid, Obey, Comply.” It’s almost hypnotic, it interferes with your own train of thought, and makes you paranoid about everything. Try tuning it out this weekend, and maybe it will become a non-habit.
  2. Read a book. If you have kids, read it to/with them. Here’s a few recommendations: “A Christmas Carol,” by Charles Dickens, “Cinderella Man,” by Jeremy Schaap, “The Autobiography of Jim Beckwourth (Mountain Man, Indian Scout, etc) by Jim Beckwourth, “Huckleberry Finn,” by Mark Twain, “A Tree Grows In Brooklyn,” by Betty Smith, “The Long Winter,” by Laura Ingalls Wilder, “The Boys of Summer,” by Roger Kahn. That’s just a short list, but it will keep you busy. Yeah, these are all old books – with old values.
  3. Write letters. This is a lost art, and I notice, my letters are always appreciated. Here’s an idea – sit at the family table and tell everybody you are writing to somebody who couldn’t make it, ask them to chime in. One of my favorite things to do in a letter is draw cartoons of family members or friends, tell what’s going on right in that minute – “Uncle drops the turkey, platter and all…” I get letters back, it’s worth the effort.
  4. Get a joke book, try to make it tasteful, the cornier the better. Make your family laugh. One of my favorites is a collection of stories from old comedians – Orson Bean, Lenny Bruce, Burns and Schreiber, to name a few – it’s not all tasteful, but there’s something in it for everybody. The one that makes everybody laugh is the old Burns and Schreiber cab driver routine – you can find that on youtube, along with some of their other greatest bits.
  5. THINK before you speak. Do you think you really need to bring up that old story about your sister’s/daughter’s/wife’s old boyfriend? You really need to tell that story about your brother-in-law/son/cousin at the dinner table? Is it wise to pick on your family members? THINK!

I think the best thing to remember is pay attention, be sensitive to people’s moods. Try to smile and make others feel better, that always works for me. We let ourselves forget sometimes – it’s good to have family and friends who care about you, make it about them.

Happy Thanksgiving Everybody!

Gavin Newsom has a basic disrespect for the law of the people, luckily Cory Honea knows who he works for

20 Nov

NOTE: I just got an email about a curfew party at City Hall tomorrow night at 10:01 PM – maybe we should bring tea bags to throw in the trout fountain!

Recently longtime political reporter Dan Walters wrote an interesting piece about the powers of the governor earlier this month:

https://calmatters.org/commentary/2020/11/california-governor-emergency-powers-covid-19-court-judge/

“California has been a one-party state for the last decade, with Democratic governors and supermajorities in both legislative houses doing pretty much as they pleased without paying any attention to the relative handful of Republican legislators.

However, one-party rule gave way to one-man rule eight months ago when Gov. Gavin Newsom declared an emergency due to the COVID-19 pandemic, thus empowering himself to govern by decree and suspend any laws that stood in his way.”

Yes, having to sit through the hour-long daily “Fireside Chats” Newsom has been running on the Sacramento news is reminiscent of the stuff we heard about the USSR when I was a kid. I think he’s way overstepped the boundaries of his job. According to Walters,

“In effect, some of those orders essentially made new law and while Democratic lawmakers stood by, two Republican legislators, Kevin Kiley and James Gallagher, filed suit, alleging that Newsom had gone too far.

Last week, Sutter County Superior Court Judge Sarah Heckman sided with the Republicans, declaring that Newsom’s order changing procedures for the November election, including a mandate that every voter be sent a mail ballot, crossed the line.”

While I love voting by mail, Newsom’s order was completely asinine. For whatever reason – I think mostly nostalgia – many people want to go to a public polling place. Around the county and state, people still held on to their ballots, lining up in record numbers outside polling stations, mingling freely, masked and unmasked. Just in case nobody noticed, voting day was followed by surges in new cases all over the state. Hmmmm. 

And we’ve all heard about Newsom’s disregarding his own orders. Note the picture, which shows the party was seated INSIDE the restaurant even as Newsom was restricting Butte County to dining outside in November rain storms. 

https://news.yahoo.com/gavin-newsom-executive-powers-under-130000893.html

Sophia Bollag
·5 min read
 
 

“It was a rough Friday for Gov. Gavin Newsom.

In the morning, news broke that he attended a birthday party with several other households as his administration urges Californians to avoid seeing friends and family. The incident has prompted even some of his supporters to question his judgment and privilege.

The same day, a Sutter County judge finalized a ruling saying he overstepped with some of his executive orders.”

News sources report that it was a birthday party for his campaign manager, and guests included lobbyists. Bad, bad Governor!

This story also mentions the suit from Kiley and Gallagher.

“In their legal challenge to the order, Republican Assemblymen Kevin Kiley and James Gallagher argued that the governor violated the California Constitution by creating a new law, which is the Legislature’s job.

Heckman agreed with Kiley and Gallagher, ruling that the order created a new statute and that Newsom’s action exceeded his authority under the Emergency Services Act.”

Furthermore, “But the judge also issued an injunction against Newsom, saying he can’t make further executive orders that create statute. She also wrote that ‘many’ of Newsom’s other orders – he has issued more than 50 – likely violate the state Constitution by changing ‘statutory law.'”

Would that include the curfew order starting tomorrow at 10PM?

“Newsom has issued executive orders requiring people and businesses to comply with directives from the state’s Department of Public Health. That’s how his shutdown orders and mask mandate work.

The Sutter County ruling doesn’t affect those orders. Separate legal challenges have been filed against many of Newsom’s COVID-19 orders, but they are still working their way through the courts.”

While no judge has made this determination, I’ve read county sheriffs are refusing to enforce the curfew order. 

“The Sacramento County Sheriff’s Office will not be determining—including entering any home or business—compliance with, or enforcing compliance of, any health or emergency orders related to curfews, staying at home, Thanksgiving or other social gatherings inside or outside the home, maximum occupancy, or mask mandates,” [Sheriff Scott] Jones said in a statement released on Thursday.”

“Along with the Sacramento County Sheriff’s Office, the Merced County Sheriff’s Office will not be determining compliance or enforcing any health or emergency orders related to curfews, Thanksgiving, or other social gatherings inside or outside the home, maximum occupancy, or mask mandates in Merced County,” the Merced County Sheriff’s Office stated in a social media post on Thursday night.

The social media post also states, “The Merced County Sheriff’s Office will not dispatch deputies for these purposes, and callers will be directed to County Health Officials.”

But nobody made quite as strong a statement as our own Butte County Sheriff Cory Honea. 

https://www.msn.com/en-us/news/us/covid-curfew-northstate-agencies-say-they-wont-enforce-newsoms-order/ar-BB1bdeRa

“Butte County Sheriff Kory Honea says he finds aspects of the Governor’s order ‘very troubling’ in a statement posted to Facebook Friday.

‘As both Sheriff and a citizen of Butte County, the thought of law enforcement officers peeking into the windows of homes, or stopping and questioning residents regarding their destination and family relationships, merely for being outside of their homes, or visiting the home of another during the nighttime hours, all solely due to the suspicion of violating the ‘Limited Stay at Home Order,’ is very troubling.’

Sheriff Honea says the decision was made to avoid losing the public’s trust, adding that the order has the potential to violate constitutional rights. “

The Shasta County Sheriff, Glenn County Sheriff, and Chico Police Chief Matt Madden have also stated that their departments will not be enforcing the order. 

I think they’re very smart. They know law enforcement needs the support and cooperation of the citizens, and any rational person could see that the citizens are boiling mad and sick of the governors mis-handling of state business. Smart leaders know when they are overstepping the boundaries. 

So, whatever you’re doing on Saturday night at 10:01, you might want to step outside, and let Gavin Newsom know, he’s overstepping his boundaries. 

My dad had a pair of these on his Peterbilt – maybe I’ll get a pair for my truck. 

Plasticolor 000502R01 Yosemite Sam Back Off Easy Fit Mud Guard 11" - Set of 2,Multi-colored

 

 

 

 

Have you seen the new CPOA proposal?

17 Nov

Tonight is the last meeting of the current city council. The next meeting will begin the new “conservative” SUPER MAJORITY. I just like writing that in all caps, because I don’t know if people realize what it means.

Simply put, it means the five “conservatives” can do whatever they agree to among themselves, and the new “infinitesimal minority” of Brown and Huber will have to sit on their thumbs the next couple of years.

Of course I expect Huber to ingratiate himself with the conservatives.

But tonight, the last “elected at large” council will be discussing new contracts for Chico Police Officers Association, the old contract set to expire in December. I’ve been trying to look over the proposals since last week when I got the agenda, but they are onerously huge files that I can’t open with my dinky little internet connection. Why they aren’t displayed at the Human Resources page alongside the expired agreement is beyond me – well, no it’s not, they obviously don’t want us to see it. So, I have not seen the new proposal that will be discussed, in closed session, at tonight’s closed council meeting. 

Have you?  Cause if you go to the city website and direct yourself to the “minutes and agendas” page, look at tonight’s agenda, and then scroll down and open the reports and hit the links, here are some specific items I wish you would look for:

  1. Mandatory overtime
  2. STO
  3. CTO

And then go to this link, below, and re-read this post, because I don’t have time to go over all this again.

https://chicotaxpayers.com/2020/07/10/take-a-cup-of-ot-and-add-a-cup-and-a-half-of-cto-pour-in-some-sto-and-you-get-an-iou/

I tried to have this conversation with my district rep, Kasey Reynolds, but she played dumb. I just wrote the following note to the city clerk and asked her to forward it to the full council:

Dani, I know how hard you work, but I can’t download or even preview these documents. 

This is a problem – the public obviously isn’t let in on this conversation. Most people in town don’t have time to look at this stuff – I got it late Thursday, and staff was out of office by Friday noon.  Most people probably wouldn’t understand it if they did read it – they are purposely written in onerous language. I always wonder how many council members really read or understand these contracts. I’m a landlady, I know people just sign stuff without reading it, I often wonder how many council members do that. 

But council continues to agree to stuff like “CTO”, and “STO”, and all the other perks and benies that make these people outrageously over paid. According to Scott Dowell, public safety, especially CPOA, make up over half our UAL. And only pay 12 – 15% toward pensions of 90% of salaries over $100,000, plus perks like getting paid for not working (CTO, STO).

I’m including Mike Wolcott in this email because I’d like to see more about the contracts in the newspaper. This is why our town is tanking. And Staff’s only solution is to put our town over our heads in debt with a Pension Obligation Bond.

Other towns are talking about switching to 401K’s – Chico has already given Orme a 457 Plan in addition to his pension, an extra $20,000 year, while Orme claims no employees have had raises? Orme also got a raise when he agreed to pay his own “employee share,” previously paid in full by the taxpayers. 

Meanwhile, our park is a wreck, our streets are shredded, and crime is outrageous. This is on the “conversative” majority. You guys can’t blame this wreck on the liberals anymore. If you approve the CPOA contracts without any concessions from the union you are putting another nail in our town coffin. 

Good question Bob: Why do we need to replace Constantin with anyone?

14 Nov

One last word on the departure of Chris Constantin – from a comment Bob left the other day:

Why do we need to replace Constantin with anyone? The truth is the City is over its head in debt and we can’t afford a replacement.

Besides, why should we continue to pay hundreds of thousands of dollars every year for a bureaucrat who does nothing but scheme how to raise our taxes and get us deeper in debt with things like POBs while letting our streets and everything else fall apart.

Wow, good question Bob! So I wrote a letter to the ER about it.

When departing Chico administrator Chris Constantin was hired in 2013, he spoke to the Tea Party. He said our previous finance director was “Loosey Goosey”, bragging about his qualifications to “straighten out the mess” she’d left. He told us, once he fixed things, “you can hire someone cheaper, with less initials behind their name.”

Seven years later, I see a bigger mess. Constantin himself has told us, staff deferred maintenance on streets and other infrastructure while they continued to make bigger payments toward their pension liability (UAL) – this year $11,000,000. But the UAL continues to increase –  this year, the city manager created three new management positions with $100,000+ salaries.

When Brian Nakamura was hired, he went on a firing spree, gutting lower level staffers and bringing his own friends in for management positions – Mark Orme and then Constantin. Since then the assistant manager’s salary has gone from $142,652 to over $189,000/year. Orme and Constantin have also garnered themselves 457 Plans worth an additional $20,000/year each.

From a 2018 report to the California League of Cities: “City pension costs will dramatically increase to unsustainable levels.” Their first suggestion – make more aggressive payments to CalPERS. Meanwhile, “Change service delivery methods and levels of certain public services.” Meaning, squeeze the taxpayers for more money.

Top heavy management and perpetual demands for higher salaries and more benefits has our city upside-down. Constantin’s position should be eliminated, along with other unnecessary management positions, so we can hire the lower-paid workers we need to get this town “straightened out.” 

Juanita Sumner, Chico CA

Chico since Nakamura, Orme and Constantin – do you feel “healed”? Or “heeled”?

12 Nov

Chico disaster timeline – rough montage of the last 8 years of city management, or, mismanagement?

Sept 2012 – Nakamura hired from Hemet – Hemet was shocked, said Nakamura had not told them he was looking for another job

Jan 15 2013 – Asst City Manager John Rucker’s “sudden departure” https://www.newsreview.com/chico/content/sudden-departure/8827217/

Mar 7 2013 – Nakamura hires his former asst mgr from Hemet Mark Orme – from the above article – “This week the Chico Enterprise-Record reported the story and also published in its classified section an ad for the position. The ad says the salary offered for assistant manager is $142,652 per year with the potential to reach $172,382 based on performance. The ad refers to the city website for more information.”

[EDITOR’S NOTE: 7 years later, as of his resignation, Constantin was making $189,000+ as Asst City Mgr. Let’s see what council intends to pay his replacement]

Mar-Apr ? 2013 – Jennifer Hennessy resigns as finance director – “As the city’s finances worsened, Hennessy was often the target of sharp criticism from some council members and agenda-driven citizens. ” CN&R article link below

April 16 2013 – Nakamura hires former Hemet employee Chris Constantin from an auditor position in San Diego “

“In an interview prior to the council meeting, the 37-year-old Constantin talked about his decision and the controversies he is escaping in San Diego, where he’s served as assistant auditor since 2010.”

https://www.newsreview.com/chico/content/money-man/9619285/

“I made a three-year commitment in San Diego that was up in February,” he said. “At about that point I wasn’t really happy because I wasn’t feeling appreciated.”

[EDITOR’S NOTE: Read the N&R article – Constantin left San Diego with a shit storm at his heels.]

May 28, 2014 – Nakamura leaves https://www.newsreview.com/chico/content/so-long-nakamura/13622217/

““It caught us a little bit off guard,” said Mayor Scott Gruendl, who received Nakamura’s resignation letter last Wednesday (May 28) during a breakfast meeting.”

“When Nakamura arrived in September 2012, the city was in a bad place financially and it was his job to fix it. About six months into his time in Chico, Nakamura laid out his three-part plan to Gruendl. Part one was to identify the problems. Part two was to put a team in place to remedy those problems. Part three was to step back and allow the town to heal.

“He pulled the covers back on stuff, and also came up with responses on how to deal with it,” Gruendl said. “That meant a lot of layoffs, unfortunately. What was devastating for a lot of people is how many people we had to let go. Each time, it was more seasoned and experienced people, and it got harder. There was no good way to reconcile that.”

“He’s the lightning rod for the hard decisions that were made—the significant number of layoffs that we did, the collapse of 11 departments into five, the actual moving out of key management people who, for no better explanation, blatantly fucked up,” Gruendl said. “We had people who had good intentions but really didn’t know what they were doing. Brian dealt with it.”

“But the drastic reorganization of city departments has certainly left some with a bad taste in their mouths. Layoffs included many employees who had dedicated years—decades, even—to the organization, and key positions were eliminated, leaving things like the city’s trees untended.”

June 3 2014 – Orme appointed interim city manager

Same article – “Looking forward, Mark Orme—who was promoted from assistant to interim city manager at the City Council meeting Tuesday (June 3)—said he’s excited to work with Chico to begin the healing process.

“There’s been a lot of pain and heartache. That takes time to heal,” Orme said. “There are also external challenges. There’s been a lot of impact on the community financially as it relates to community organizations and a lot of the norms Chico was used to.”

[EDITORS NOTE: “the norms Chico was used to…” What the hell did he mean by that? If you lived here before 2013, let me ask – do you feel “healed”, or “heeled”?

Don’t be a mushroom – tell your elected officials you know what they’re doing, and you don’t like it

11 Nov

This morning’s Chico ER reports that Chico Ass City Mangler has been hired out from under us by the tiny SoCal town of San Dimas. Sorry San Dimeans, that train was not going to be stopped. When he was brought in by his crony Brian Nakamura, Chico citizens, including city employees, screamed NO!, but a “conservative” council hired him regardless.

It comes down to this – you voters have to ELECT BETTER PEOPLE.

Constantin, along with City Mangler Mark Orme, has worked hard the last couple of years to try to get us to pass various tax measures on ourselves. The Pension Obligation Bond Constantin has brought to council will most certainly be carried along by Finance Director (and future Ass City Mangler?) Scott Dowell.

Here’s another good analogy for a POB – the last nail in our collective coffin. Our biggest debt at present is the Unfunded Actuarial Liability, also known as “The Pension Deficit Bag”. If they implement this POB, we will be on the hook for millions more, all guaranteed and payable out of our General Fund. It was Chris Constantin who made it clear that if we can’t meet the payments on the POB, the bond holders can take our entire General Fund. And with the Developer Fund, the Sewer Fund, the Park Fund, and other funds in deficit, the GF is about all we got.

and here’s another thing people need to understand – any money they get out of this scheme goes exclusively to pay down the UAL, period. Furthermore, the UAL and the bond payments come before ALL SERVICES, including the cops. Which is ironic – it’s the cops who have run up the biggest UAL. So, they get paid, but they don’t do their jobs? What the hell is that? Constantly crying that they don’t have enough officers, wah, wah, wah, meeeee-owww!

When will the newly elected “conservative” majority clean the bums out of the fucking park? (excuse me, between the COVID and the recent election, I’ve come down with a bad case of toilet mouth, I’ll try to clean that up by Christmas…)

We pulled in to a local home improvement store last week and the parking lot was full of smoke. Like we haven’t had enough of that shit lately? So my husband asks one of the employees where the smoke was coming from – a fire along Hwy 99. Right near an entrenched bum camp. Great. I’m standing in a lumber yard, looking at smoke billowing out of a nearby field, and I suddenly understand – this is what it’s like to own a business in Chico.

So here’s my wish for Christmas – remember that old movie, Miracle on 34th Street? I happen to prefer the version with little Natalie Wood and Maureen O’Hara. Remember what the public did to the judge that had the nerve to put Santa on trial? Remember the reception the judge got when he went home to the wife and kids?

Well, watch it again, and then start writing those letters. Write to the paper and write to Chico City Council. And write to your county supervisor while you’re at it, because they are also considering a Pension Obligation Bond. Not to mention, the county Behavioral Health Department is bringing the transients in for the money they get from other cities and agencies around the state. So write your emails, and write some snail mails too! Let’s recreate this scene from that famous movie:

Listen folks, you have to BELIEVE you can make a difference. You have to BELIEVE that the government CAN WORK. But it is just a human machine, and any human machine can malfunction without oversight. We need to let these people know we know what they’re doing, and we don’t like it. We need to let them know we want better.

And we need to remember what my old buddy (ex city council member, ex county supervisor) Larry Wahl told me again and again – BE CAREFUL WHAT YOU ASK FOR. That means, study the issues, read agendas and reports, and if you don’t understand something, google it. Don’t just take your elected representative’s or staff’s “word for it” – DON’T BE A MUSHROOM, sitting in a dark room, eating their bullshit.

And don’t forget to teach your children well. We are raising a generation of possible mushrooms – have you noticed how accepting young people are of the mask mandate? Global warming? (Yeah Matt, Agenda 21/30!) We need to teach them to seek the sunshine. Like little Susan, we need them to believe the system can work, but only if the people will work harder.

The best way to teach, is by example.

Snail mail can be directed to the full council at 411 Main Street, Chico, CA 95928

Email – for starters,

sean.morgan@chicoca.gov

kasey.reynolds@chicoca.gov

Dear San Dimas – here’s a few things Chris Constantin probably doesn’t want to talk about

10 Nov

This is an old website, now defunct. But, the woman who put it up did a lot of research about Chris Constantin’s history before he was hired by the City of Chico in 2013. She quotes news sources from San Diego, so you might be interested in seeing what he was up to – including harassment of employees who complained about him.

http://savechiconow.weebly.com/constantin.html

Thanks Jessica, I’m glad your research will go to some good end.

SURPRISE! Assistant City Manager Chris Constantin seeking a manager position in San Dimas CA – $220,000/year!

8 Nov

Dear Chris Constantin,

So you are off to San Dimas? I heard it through the Grapevine. (ha ha, get it? Through the Grapevine? Old trucker joke)

It seems like just yesterday you bragged to a Tea Party gathering about all he “initials” after your name. You bragged about the consulting positions you held with agencies all over the state. You told the assemblage that our town was in a terrible financial shape, because our former Finance Director was “Loosey Goosey”. But you bragged about your credentials and promised that you would fix everything, adding, “then you’ll be able to hire somebody cheaper, with fewer initials behind their name…”

Wow, looking around myself, I don’t see that. I see our town is a bigger mess than it was when you got here, while you’ve done very nicely for yourself. You’ve garnered almost $200,000/year in salary and about a $50,000 package. You paid little to nothing for not only a 70% pension but a $20,000/year 457 Plan (special 401K for public workers). Now you’ve used Chico to step along to an “Annual salary of $220,000” as city manager in a rich Southern California town.

I realize you’ve paid the price. I remember when you bragged and bragged about your gorgeous young wife, showing her off around town like a trick pony. Then you left her at home to pop out kids like a popcorn machine.   When you told me about your first child, I told you, “Quit your job, or you’ll miss the best years of your life.”  You should have listened to me Bud. Instead you made an ass of yourself at the podium, whining like a bitch about our town causing your divorce?

That’s on you! Jesus Christ Chris, look what YOU’VE done to our town! 

Good Bye, and Good Riddance Chris Constantin, and please, don’t let the screen door hit you on your ass on your way to San Dimas. It’s already had enough abuse.  

To the people of San Dimas – GOOD FUCKING LUCK with this guy. Here’s what you can depend on – your town is about to get more expensive!

Juanita Sumner

FROM THE SAN DIMAS CITY COUNCIL AGENDA FOR THIS TUESDAY

CITY COUNCIL MEETING AGENDA
TUESDAY NOVEMBER 10th, 2020 7:00 P. M.
SAN DIMAS COUNCIL CHAMBER
245 EAST BONITA AVENUE

a. Consideration of Appointment of Chris Constantin as City Manager, with a start date of January 4, 2021, and approval of City Manager Employment Agreement

RESOLUTION 2020-61, A RESOLUTION OF THE CITY COUNCIL OF THE
CITY OF SAN DIMAS, COUNTY OF LOS ANGELES, APPOINTING CHRIS
CONSTANTIN AS CITY MANAGER AND APPROVING A CITY MANAGER
EMPLOYMENT AGREEMENT
RECOMMENDATION: Adopt Resolution 2020-62, Appointing Chris Constantin as
City Manager and Approving the City Manager Employment Agreement.

Who will pay the unfunded liability? Taxpayers living on a median income of $43,000/year, or well-paid, well-heeled, entitled public employees making over $100,000/year?

5 Nov

It’s been said, the campaign begins the day after an election.  I like to hit the ground running. Here’s a letter I just sent to the ER. 

Butte County, like the city of Chico, is considering a Pension Obligation Bond.

POBs are a financing scheme that allows state and local governments to get the taxpayers to pay unfunded pension liabilities by issuing a bond guaranteed by tax revenues. Like CalPERS, POB proponents claim investments will pay for both the bond and the retirement fund. According to Oregon PERS manager Mike Cleary, “Some people call this arbitrage, but it’s not, it’s really an investment gamble.”

In fact, in 2013, Stockton and San Bernardino went bankrupt. According to the court, “Generous pensions awkwardly propped up with ill-timed POBs contributed to both debacles.”

In recent years, returns on POBs have often fallen below the interest rate paid by agencies to borrow the money, digging the liability hole even deeper. Nonetheless, they remain popular because they are instant money without voter approval.

Chico’s Unfunded Pension Liability has grown enormously over the past year – from $123,000,000 to $140,000,000, with another $146,000,000 interest – because of unrealistic employee contributions. Chico employees pay, at most, 15% for pensions that run from 70 – 90% percent of hundred-thousand-plus salaries. Meanwhile, taxpayers not only contribute a payroll share, but the annual “catch-up” payments come at the expense of city services – this year $11,000,000.

Who will pay the unfunded liability? Taxpayers living on a median income of $43,000/year, or well-paid, well-heeled, entitled public employees making over $100,000/year?

Let your elected representative know what you think of this scheme to leave the taxpayers holding the Pension Deficit Bag.

Juanita Sumner, Chico

Pension Obligation Bonds: Some people call this “arbitrage”, but it’s really an investment gamble

4 Nov

Wow, what an election. I got most of what I wanted out of it – Prop 15 is dead, Prop 22 won. Doug won. It still looks good for Don. Locally, I have mixed feelings. It’s good to get rid of the liberal majority on council, but no, I’m not glad about a conservative Super-Majority, cause that means we are going to get that Pension Obligation Bond. Hmmm. Pretty sure we were going to get it anyway – the only vocal opposition was Stone, and he has been retired.

So, despite conservative promises that we will get less crime, a cleaner park, and better streets, here’s the thing – if they float that POB, the General Fund belongs to CalPERS and the POB holders. Our streets will continue to degrade, crime will go up, and we’ll never get the park back.

This article, from “Governing,” gives us some historical perspective on POB’s in California. It says what the consultants made very clear to the city Finance Committee – these bonds are risky, even in a good market.

https://www.governing.com/topics/finance/gov-pension-obligation-bonds-risky-or-smart.html

POBs are a financing maneuver that allows state and local governments to “wipe out” unfunded pension liabilities by borrowing against future tax revenue, then investing the proceeds in equities or other high-yield investments. The idea is that the investments will produce a higher return than the interest rate on the bond, earning money for the pension fund. It’s a gamble, but one that a lot of governments are willing to take when pension portfolio returns plummet, causing unfunded liabilities to run dark and deep.

Yes, Chico’s Unfunded Pension Liability runs very dark and deep. Just recently, the head of our finance department revealed that we not only have a $140 million UAL, but we owe another $140 million in interest. All this because of unrealistically low contributions by employees, compounded by poor investment returns from CalPERS. Chico employees pay, at most, 15% of pensions that run from 70 – 90% percent of highest year’s salary. Management, the highest salaried individuals in Chico, pay less than 10%, even while boasting that they pay 3% of the city’s share.

Here’s a good credit card analogy – this is like always paying the minimum payment on your credit card, never making extra payments, and then going over your credit limit regularly. In the case of the City of Chico and CalPERS, the city has gone over limit with crazy-generous salaries and benefits, and then ladled on some more trouble by creating three new management positions with $100,000+ salaries in the last year.

Over the last few years, the city finance team has arranged to make extra “catch up” payments, creating a “Pension Stabilization Fund”. The PST takes a percentage of every department payroll, and uses it to make that extra payment to CalPERS – this year growing to $11 million. And you probably wondered why the street in front of your house looks like a section of Downtown Tijuana. Silly you! You need to pay more attention.

This is maddening – our “extra” payments have gone up, up, up – meaning, the taxpayers are paying more, while getting less service. All the while, employee contributions are not going up, just employee expenses. And the UAL recently reported by the city finance man is about $17 million more than what he reported last year – $123 million. In one year, the UAL went up that much. Not including interest. Ever think to yourself, “how the hell did that happen?”

A popular analogy for POB’s is that the city would be paying their Master Card by taking out a new VISA. That is exactly right. Worse – they are investing the money they take from their Visa, hoping to be able to get enough returns to pay off both cards. Like BC said – that’s like taking your credit card to the casino.

This scheme became popular as far back as 1985. At first it seemed to be a good idea, but times changed. “When Oakland, Calif., launched the first pension obligation bond in 1985, it appeared to be a reasonable strategy. It qualified as a tax-free bond that could be issued at the lower municipal bond rates. A state or city could then pivot and invest the funds in safe securities — a corporate bond, for instance — at a slightly higher rate. ‘That was classic arbitrage,’ Cleary (Oregon Pension System Chief) says. ‘You were locking down the difference between nontaxable bonds and taxable bonds.’”

What is “arbitrage”? “Arbitrage occurs when prices for the same product differ between two markets, allowing a nimble player to exploit the difference. ‘Real arbitrage is free money,’ says Andrew Biggs, a scholar at the American Enterprise Institute. ‘But it doesn’t hang around very long.’”

In fact, it ended quite abruptly with The Tax Reform Act of 1986, which prohibited state and local governments from reinvesting for profit the money from tax-free bonds. But the scheme didn’t go away. “When the concept resurfaced, the strategy called for states or localities to issue a taxable bond and leverage the higher interest rate of that bond against higher return but riskier equity market plays. So long as markets boomed, the new tactic seemed savvy. ‘Some people call this arbitrage, but it’s not,’ Cleary says of post-1986 POBs. ‘It’s really an investment gamble.’

Nonetheless, in the early 2000’s, POB’s became the strategy du jour for cities struggling with pension debt – rather than reform their pensions, they just dug themselves in deeper. Fast forward to 2013 when two California cities, Stockton and San Bernardino, went bankrupt. “Generous pensions awkwardly propped up with ill-timed POBs contributed to both debacles.

“Over the years, returns on POBs have often fallen below the interest rate the state or locality paid to borrow the money, digging the liability hole even deeper. Nonetheless, they remain popular with politicians in a revenue pinch. Politically, it is easier to borrow money to pay for pension costs than it is to squeeze an already-stressed budget. While many economists and policy analysts view them as risky gimmicks and question the high market growth assumptions that make them seem viable, POBs have defenders who believe that with careful timing they can pay off.

I don’t think that the proponents of this scam believe it will pay off. Chico City Manager Mark Orme and his Hemet side-kick Chris Constantin know exactly how risky this is. Constantin, in presentations to various city commissions, repeatedly predicts a downturn in the stock market. The consultants who gave the presentation remarked several times that CalTRANS isn’t expected to hit their investment target, not by a long shot – why should POB investments fare any better? I don’t think either Orme or Constantin really care – both of them are nearing retirement, I believe they just want to prop up the pensions for another 5 or 10 years.

For another thing, now that council has a conservative Super Majority, they can put Orme’s sales tax measure on the ballot, thus insuring a taxpayer supported revenue stream to help pay off the POB.

So, now is the time to contact your new council majority and start telling them what you think of this insane scheme to get YOU to pay STAFF’S pension deficit. Do you really think that’s YOUR responsibility? Did you negotiate these contracts? No, you weren’t even allowed in the building when they negotiated contracts this past six months.

Start with Sean Morgan, who voted as a Finance Committee member to forward this crap to the full council. That’s sean.morgan@chicoca.gov

Here’s the real bad news – the county is also looking at a POB!

That’s next time, on “How to Take on a Shit Storm with a Tennis Racket”.