The Pension Issue – Everywhere

Two stories yesterday thrust pension reform in the front of the political news. In Michigan, a judge declared that Detroit could consider bankruptcy to deal with its debt crisis and that public pension obligations can be treated like any other contract under bankruptcy law. In Illinois, the state legislature passed a public pension reform that supporters say will save $160 billion and fund the retirement system over 30 years by reducing benefits for workers and retirees.

Both actions await the inevitable lawsuits promised by the public employee unions that don’t want to see members’ benefits reduced. Both stories have meaning to California cities that are struggling with fiscal problems that are wrapped around pension and health care liabilities.

Let’s state here that no one wants to see pensioners lose income they expected. That goes for public workers as well as citizens on Social Security who could see benefits cut in the not-too-distant future if the current gap between available revenue and payments due is not altered.

Saying that, something has to be done to avert the city bankruptcies and everything is on the table.

The judge making the Detroit bankruptcy decision clearly stated that, “it has long been understood that bankruptcy law entails the impairment of contracts.” That argument is at issue in the San Bernardino bankruptcy debate and could arise again in Stockton. Other California cities facing difficult fiscal conditions due to heavy pension burdens will take note.

The pension decision in Detroit will now become front and center as city officials sit down with union leaders to discuss resolutions to budget problems. The decision also gives a boost to San Jose Mayor Chuck Reed’s effort to find resolution on the pension issues that are threatening the budget in his city and cities across the state.

Reed’s proposed ballot initiative would give local governments more power to negotiate reductions in pension benefits. He has reached out to unions in an effort to find a solution to the pension crisis and avoid a war over the initiative. The unions responded by rebuffing Reed’s overture unless he drops his initiative plan.

In light of the decision coming out of Detroit on bankruptcy and public pensions, perhaps public employee unions should reconsider and accept Reed’s invitation to at least attempt to find common ground.

Via: California Political Review

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'God Bless America' gets veteran in hot water with employer

STOCKTON, Calif. (KCRA) —A Dameron Hospital employee who is also a veteran said he was asked last week to remove his email signature that read, in part, "God Bless America."

Boots Hawks served the United States for 20 years in the Army, he said Thursday, adding that he has been a good employee at Dameron Hospital for 10 years.

But when Hawks wanted to seek legal counsel about a request to remove the words "God Bless America" from his professional email signature, he was met with resistance, he said.

Still, Hawks said he complied.

"I removed the signature before I sent another email," Hawks told KCRA 3.

But on the Friday before Veterans Day, he said he was placed on administrative leave for insubordination -- all because of the signature, which had contained the "God Bless America" phrase for more than a year before the hospital brought up the issue.

"I was shocked," Hawks said. “I think Dameron Hospital provides fantastic care to people. And I hate to see bad publicity, and I don’t mean for this to be bad publicity. I just see that we need to have justice done.”

KCRA 3 has reached out to Dameron Hospital for an explanation, and to see if company policy forbids such email signatures.

The hospital has not returned calls.

Via: KCRA

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MOODY'S: MORE CALIF. CITIES AT RISK OF BANKRUPTCY

SACRAMENTO, Calif. (AP) -- One of the nation's top credit rating agencies said Friday that it expects more municipal bankruptcies and defaults in California, the nation's largest issuer of municipal bonds.

Moody's Investors Service said in a report that the growing fiscal distress in many California cities was putting bondholders at risk.

The service announced that it will undertake a wide-ranging review of municipal finances in the nation's most populous state because of what it sees as a growing threat of insolvency.

The report has both investors and government leaders worried.

Three California cities - Stockton, San Bernardino and Mammoth Lakes - have filed for bankruptcy so far this year. They are not likely to be the last, Moody's said.

Moody's reports that some cities are turning bankruptcy as a new strategy to take on budget deficits and avoid obligations to bondholders, an emerging dynamic that could have ripple effects throughout the investment community.

The municipal bond market has long been characterized by low default rates and relatively stable finances, Moody's said, but that outlook is beginning to change as bankruptcy becomes a tool for cash-strapped cities.

As a result, the agency will reassess the financial position of all cities in California, which issues about 20 percent of the municipal bond volume nationwide, "to reflect the new fiscal realities and the governmental practices."

Via: Associated Press

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