Wednesday, June 27, 2012

Stockton, California Bankrupt? It's A Lie!

Last night the city council voted to file for Chapter 9 Bankruptcy.  There is just one problem - Stockton is not bankrupt. Looking at the latest audited financial statement (6-30-10) I found the following significant facts:
  • The governmental funds had a net operating loss of$3,503,000 on $283,726,000 in revenue for FYE 6-30-10 - 1.25%. That is pretty benign stuff.
  • The General Fund had a net operating loss of $5,058,000 on $177,784,000 in revenue.  $4,793,000 of the total loss was due to some "bean counter" bookkeeping entries.
  • Since 2001, the governmental funds have grown at an internal rate of 2.37%.  That rate is respectable when compared with a 4% growth rate by the national economy and an inflation rate of 2.5% over the same period.
  • In 2001, total revenue was $229,777,000. For 2010, revenue was $283,726,000.
  • The General Fund had a unrestricted fund balance equal to 4.28% of annual revenue.  That is low, but workable.
Sure revenue for 2010 is down from the peak of $360,201 in 2007.  Compare that with 2001 - a 57% increase in just six years. Does anyone really think that is the normal growth rate.

Forget using the accrual balance sheet to make a case for going into the drink.  It is made with a bunch of large manufactured numbers for infrastructure and associated depreciation.  I have more confidence in Enron's balance sheet.  At least they had real depreciation schedules.

The trail for Stockton's journey to bankruptcy was paved by Vallejo, which was not really bankrupt either.  That's right, Vallejo was not bankrupt in 2008.  They were just pissed off.  Vallejo needed a workout consultant, not bankruptcy lawyers.  The same is true today in Stockton.

Bankruptcy has a lot of appeal.  A newspaper editor once said "Doctors bury their mistakes.  Newspapers print their mistakes."  With bankruptcy, a city gets to have their mistakes reincarnated, which can then be redacted.

The City of Stockton has engaged Marc Levinson, Vallejo's bankruptcy attorney. Marc is a great guy and a good lawyer, with a line of b.s. comparable to Johnny Cochran or David Boies.  I sure hope the employees hire a worthy opponent.

During the Vallejo bankruptcy proceeding, the employees used The Harvey Rose Firm as their financial experts.  Marc really sucker punched Roger Mialocq, the lead expert, who was playing it straight, as an expert should.  I would like to see a rematch between these two.  This time it would be like the Battle of Little Big Horn, with Roger and an army of consultants coming over the ridge, that ends with Goldilocks Levinson laying on the battlefield.

In the end, I do not think the truth really matters.   Everyone is caught up in the depression mentality.  Damn the torpedoes, full speed ahead.  Those preaching conventional wisdom say Stockton and other California cities are bankrupt and they are not going to let the facts get in the way, because in their hearts they know they are right. It is funny that these same prophets do not find it strange that the city has not released its 2011 audit. 

I did a little snooping around to see what I could find.  Holy Cow!  The 1% sales tax distribution from the state was up 3% for FYE 2011 and up 10% for the current year.  That looks like a depression me.  "Hey buddy, can you spare a dime."

Once a family had an adult son who had some real mental problems - he thought he was a chicken.  When asked by a neighbor why they had not gotten help for their son, the father said they needed the eggs.

The Tea Party needs the eggs.

Tuesday, June 19, 2012

I Wish We Had A Thousand Chuck Canterburys

By Ron York

In this crazy political climate we are enduring, two people have had the courage to preach the real gospel to the rank and file - Ron DeLord and Chuck Canterbury.  Ron needs no testimonial from me, but Chuck does.  Even I was once a critic of Chuck - not anymore. I now consider Chuck to be the most pragmatic police association leader in the United States.  This is miraculous considering that his organization, the Fraternal Order of Police, is one-third police union, one-third AARP, and one- third Moose Lodge.  

Chuck, Godspeed to you

Saturday, June 09, 2012

Has Milwaukee Lost Its Mind? No, But Close.

By Ron York

The Grim Reaper, Wisconsin Governor Scott Walker, has survived a recall attempt and is now even more determined to attack public employees.  The only thing that will stop him now is kryptonite.  How did this happen?  Don't blame the Koch brothers.  They acted correctly by supporting the person that most represented their point of view - Scott Walker. The reason Scott Walker succeeded is action of two organizations:

The Milwaukee Police Association
The Milwaukee Professional Firefighters Local 215

These two organizations actually endorsed Governor Walker.  I can tell you, without reservation, this alone made the difference in the recall vote.  To paraphrase Winston Churchill:

"They had a choice of war or dishonor.  They chose dishonor.  They will get war."

Scott Walker played both organizations from day one.  He managed to keep the police and fire unions on the sidelines, while he took out the other government employees, and even got their political endorsement.  Do you really think he will not come for them next?

Another factor in this endorsement was Scott Walker's opponent - Milwaukee Mayor, Tom Barrett.  How much did the "we hate the boss" mentality influenced the decision to endorse the governor?  I don't know.  What I do know is that this mentality is pervasive among police officers all across the nation.

Oh, I have read the remarks of the leaders of the two organizations and their attempt to portray Republicans and Democrats as being virtually the same.  They are not.  Let's just be honest.  Historically, Democrats are lower income people who are soft on crime until their house is burgled, envious of those of wealth, and see Republicans as selfish fat cats.  Republicans are upper income people who say they are tough on crime while appointing liberal judges, who think they obtained their wealth by themselves, and see Democrats as society's deserving losers.

One thing the Democrats and Republicans (and all other organizations) have in common is the desire to stack the deck in their favor, by dividing their competition, because they believe that they are morally superior.  This is exactly Scott Walker.  He believes he has the moral high ground and therefore his actions are justified and his conscience is exempted from any remorse.

I do not know what to say to Milwaukee, other than good luck and I hope things work out okay.  The rest of you need to wise up.  Turn off Rush Limbaugh and the other right-winged conservatives on radio and television.  They are polluting your brain.  The current problem is the Republican Party.  It may be the Democrats next year, but today it is the Republicans.  They intend to take your pay and benefits apart, plank-by-plank.

Obviously, I do not see the Democrats or Republicans as a good fit for law enforcement.  Personally, I do not like political endorsements, because I believe the potential risk is much greater than the potential reward, but I know you are not going to heed this advice.

Here is my take on what has happened that brought us to this point.  Thirty years ago, a  typical police officer was a person with a high school education or maybe a GED.  His pay was comparable with a Greyhound Bus driver or an assistant manager of a grocery market, but lower than an assembly line worker in an automobile factory or a postman.  He was usually in no better physical shape than these other workers.

Thirty years ago, crime had been rising since World War II, causing most citizens to just concede to this reality.  Then, along came Ronald Reagan with a "let's take out cities back attitude."  Suddenly, things begin to change.  The pay and requirements for police officers began to increase.  By 2000, we had a highly educated, physically fit, well paid, quasi-military local police operation that was ready to reduce crime.  However, the much improved pay structure was starting to draw attention and some push-back was developing.  Then came September 11, 2001.  Public demand for law enforcement exploded.  This gave police unions considerable power, which was leveraged into even higher pay and benefits.  By 2008, police officers had reached the top of the blue collar pay scale and were threatening to jump into the white collar pay structure.

At that same time, the economy was beginning to slide into recession, just as the goodwill generated by 9-11 was finally exhausted.  Quickly, the once strong public support melted away.  Conservative websites and talk radio locked in on this weakening of the police union bargaining power.  By 2012, this blitz had brought down support for the local police union to nearly zero.

Embolden by the success of the City of Vallejo, California bankruptcy, cities went on the offensive.  They were determined to kick our butts and kick our butts they did.  Just this week, we were severely beaten at the polls in San Diego and San Jose.  In addition, we took a big hit in a Phoenix courtroom.  It is going to get a whole lot worse.

Have you developed a comprehensive plan to deal with this crisis?  It better be real good and in place quickly.  The old demanding and threatening tactics will not work.  There's new sheriff in town.  His job is to take you down.  You are already standing on two banana peels.  Just one little push and you are on the concrete.

At a loss as what to do?  Send me an email           

Friday, June 08, 2012

Looking For A Pension Solution? Got It!

To the Tea Party:

Just follow the simple steps listed below:

1 - Change the income tax laws to give employee paid health insurance and retirements the same tax treatment as employer paid plans.  How could anyone oppose this?

2 - Adjust employee compensation to include the current cost of employer contributions for health insurance and employer pension contributions.  Let's get some transparency.  No more stealthy benefits.

3 - Make employees pay 100% for their health insurance and pension.  Alright, now we are cookin'.  Your're loving this.  It is enough to make you want to kiss Ron Paul.  Well, maybe not that much.

4 - Have the Social Security Administration post all W2s on the internet, including yours - not just government employees.  Include all personal and private information from the W2s that is now being disclosed for government employees.  Welcome to the nudist colony.  Take off your clothes and let us see what you've got.   Ooh, nice package - seven figure income.  Nice!  Nice!

5 - Require that all entities (individuals and corporations) use mark-to-market accounting for income tax purposes and pay ordinary income tax rates on any "gains."  "Let's Get Fiscal, Fiscal, Fiscal!"  (that's not an error)  Hey, this works great for pension plans.  You'll love it.

What's wrong Mr. Tea Party man?  Don't want to drop your pants in public?  Oh, I see - you only want government employees to drop their pants?  You want to hide behind a fig leaf of privacy rights.  Darn, just as I thought we were getting somewhere, you suddenly become modest.

Show me the money Mr. Tea Party!  Show me your money!  You have already seen ours.

Wednesday, June 06, 2012

Scott Walker Survives - San Jose and San Diego Go Down In Flames

Bad day for the good guys.

Wisconsin - Walker 55% - Barrett 45%
San Jose - Tea Party 71% - SJPOA 29%
San Diego - Tea Party 60% - SDPOA 40%

Tuesday, June 05, 2012

LIVE Radio Broadcast of Wisconsin, San Jose and San Diego Votes

Starting at:

11:00 PM EDT
10:00 PM CDT
 9:00 PM MDT
 8:00 PM PDT

A link will appear below ten minuted before the start.

Click the link and you are on.

If you have a comment or question, send an email to

Notice:  There is a leader of 3.5 minutes on the recorded version.  Click the stop button.  Advance the green circle to 3.5 minutes.  Then click play.

Saturday, June 02, 2012

The Real Face and Heart of Law Enforcement

Pat Yoes and His Grandson Bryson