Local Measures – Nov 2010

Santa Clara County & San Jose

Measure A – $29 Per Parcel Tax To Continue Insurance For Underprivileged Children.

Recommendation: Yes

Santa Clara County’s Measure A is a straightforward dedicated property tax increase.  The measure would impose a $29 tax on each parcel in the county. The monies would then be used to fund existing children’s healthcare programs for the poor and working poor (families earning no more than 300% of the federal poverty level [currently about $10K for a single person $22K for a family of four].

This comes down to whether you buy into the “an ounce of prevention is worth a pound of cure” concept.  Covering kids for primary care prevents a domino effect of problems including emergency room visits, school absences, and parents taking time off work to care for sick kids or take them to the ER.  Previous funding (from tobacco taxes, city of San Jose, and private foundations) have all dried up in these tough economic times.

Originally  created in 2001 when about 12% of the counties children were uninsured, whereas today that number is around 3%.  Similarly, the number of individuals served by the program has dropped by about 1/3, but there is a waiting list.  The Federal Health Care initiative will impact this segment, however that program is focused on adults and their families and the coverage for kids not covered by Medicaid won’t hit until October 2013.   Even once fully effective, some argue that despite the federal program’s intention to achieve full coverage, some children of unemployed parents and/or children who do not live with their parents may fall through the cracks.  Additonally, the federal program expressly excludes coverage for undocumented immigrants (young and old).

Generally speaking, we at PolitoMuse think universal healthcare is both the ethical thing to do and the long-term financially wise move.  We are not keen on a “patchwork” of coverage through federal, state, and county programs, but we believe the problem of uncovered children is serious.  Children – both citizens and undocumented immigrants – who do not receive regular health care are not only likely to suffer unnecessarily, but they put a larger strain on our social safety-net by receiving their medical care in the Emergency Room, which is the most expensive way to deliver medicinal care.  Here are some facts to back-up the claim:

The average cost (in 1998 dollars) for an ER outpatient visit was more than three times as much as the cost of a normal outpatient visit. Source: “Marginal Costs of Emergency Department Outpatient Visits: An update using California data,” USC Center for Health Financing, Policy, and Management, November 2005.
 “About 20 percent of the uninsured . . . say their usual source of care is the emergency room.” Source: “The Uninsured: A Primer, Key Facts about Americans without Health Insurance,” The Henry J. Kaiser Family Foundation, October 2006.
Nationally, the uninsured are 30 to 50 percent more likely to be hospitalized for an avoidable condition, with the average cost of an avoidable hospital stayed estimated to be about $3,300.” Source: “Hidden Costs, Values Lost: Uninsurance in America,” Institute of Medicine, June 2003.

While we’re not thrilled with another flat tax, we do believe this tax provides a return on investment that is better than most.  We believe that supporting this imperfect measure is preferable to suffering the consequences of a lapse in coverage for this County’s children.

Measure B – $10 Annual Vehicle Tax Increase To Fund Transportation Costs.

Recommendation:  Weak Yes.

Measure B is another flat use-tax increase.  It proposes to raise by $10 your license fee for registering your car in Santa Clara County.  The money is to be used for various road works.

Opponents regurgitate the same blind anti-tax slogans that they use for every revenue proposal, which frankly makes those arguments hard not to dismiss. It’s as though someone is after their lucky charms…  In election literature and videos,  opponents also incorrectly claim that the monies could be used for non-road related expenditures.  A review of the text of the measure shows this claim to be false.  The one reasoned point opponents present is that like all flat “use” taxes, this tax will hit (nearly) all parts of our economic demographic equally – a valid point that is worthy of attention.

We would prefer that the money be raised using a graduated income tax scheme (since that is the only way of raising revenue in a manner that eases the burden on those of us with less disposable income).  However, the very low level of this particular fee ($10) coupled with the fact that it is only paid by those who have sufficient means to own a car (thus excluding the lowest economic demographic) makes this “use tax” more tolerable than most.

Proponents claim the fee is needed to close a 144 million dollar shortfall being faced by various cities within this county.  Secondary sources suggest the need is even greater.  The S.J. Mercury News contends there is a $250 million backlog on street maintenance in San Jose alone and that San Jose’s streets are rated among the worst in the country in terms of maintenance.  The same piece quotes the somewhat implausible sounding statistic that our poor roads create between $400-$700 of increased costs to drivers annually.  While this statistic seems overblown, the need for better road infrastructure seems reasonably well documented.

Because there can be little question that our cash-strapped cities can use the extra cash generated by this modest tax we urge a “yes” vote on this use-tax.  While we would have preferred to see some things done differently in this tax scheme, because of the relatively minor impact on taxpayers, we decline to allow perfection to be the enemy of progress in this case.

Measure C – 12-Year Term Limits For Water Board Members.

Recommendation:  Strong No.

This measure seeks to impose a 12 year term limit on all elected members of the water board.  So, if you have always felt a burning desire to serve on the local Water Board but feel that you have been held back by the unseen hand that is The Water Board Elite this is your chance!  However, if you are amazed that people are actually willing to serve on this board and prefer that those willing to serve actually know what they are doing you should vote “no” and avoid passing a measure providing a solution in search of a (non-existent) problem.

How wacky is this measure?  The district could find nobody to write a “pro” position and the “anti” position is a rambling rant by a single individual named “H.S. Cohen” Secondary commentary on this measure is exceedingly scarce.  The one piece we found makes some reasonable points criticizing the board.  The problem is that a measure that creates a 12-year “churn” of candidates doesn’t seem to address any of the problems identified in the article.

We see no good reason for this “half-baked” and half-heartedly backed measure, so we recommend you vote “no.”

Measure L – (Second) $96 Tax Benefiting Cambrian Schools.

Recommendation:  Strong No.

This is a proposed flat $96 property tax increase for all Cambrian residents for the next six years, except for residents over age 65 who, inexplicably, can opt not to pay.

There are a number of reasons this measure should be defeated but the exception for older residents is perhaps the greatest.  While it is true that many seniors are on small fixed incomes, it is also true that many are not.  To inject an element of equity into a tax we should employ a graduated income tax – a way of truly ensuring that those with less means are given a “break”.  Reducing the tax burden on a group of people simply because they are older makes no sense.  Indeed given that the over 65 group are most likely to vote in an election this likely has less to do with equity and more to do with getting people who don’t pay this tax to vote for it.

Separately from the inequitable scheme used in this measure, the funds themselves do not seem carefully targeted toward a need.  Unquestionably, all schools (including Cambrian) are suffering budget cuts thanks to the governor’s $20 million reduction in spending on schools.  However, a piecemeal approach to replace that funding at the local level seems unwise.  At bottom, this is a general call for funds rather than a targeted local need.  In addition to failing to plan for the use of the funds there is also no plan or explanation for how these funds will be replaced after the six year term for the tax expires.  Finally, the Cambrian schools already have a separate assessment on your tax bill (one of 18 different taxes including 9 separate assessments).  While undoubtedly these schools could use more money, this measure does not make a compelling case for implementing yet another new local dedicated tax levied only upon younger property owners.

Because this tax plan is flawed and unfair, because there seems little planning has been done as to how funds will be allocated and even less of a plan as to what will be done when the stream of funds dries up, we urge a “no” vote.

Measure U – Tax On All Forms Of Marijuana Sales.

Recommendation:  Strong Yes.

This measure would impose a 10% tax on marijuana businesses within the city of San Jose.  There is some valid concern about the possibility that taxing a business that remains illegal under Federal law will cause legal entanglements.  However, similar issues are already a reality since marijuana has only been legalized (for medicinal use) at the state level and those involved in the business routinely need to conduct business in spheres regulated by the federal government (for example federal regulations on medicine).

Despite the potential difficulties with the dueling systems of regulation (state and federal), this seems like a perfectly reasonable tax on purveyors of a drug that has both positive and negative attributes.  No “opposition” position was submitted for this measure and we find no reasoned explanation for such opposition.

Because this seems like a reasonable “sin” tax on marijuana, we recommend a yes vote.

Measures V and W

A bit of a preamble before our analysis of Measures V&W. If you’ve had the occasion to need the help of first responders, you appreciate the amazing work our police and firefighters do.  Not only do they put their lives in harms way to protect the public, but also pay a tremendous toll personally – health, marriages, family. We do not take their dedication and sacrifice lightly.  However a public retirement system that is not sustainable is, in the long-run, of no use to those first responders who rely upon it for their future.  Additionally, when the high costs of retirement dramatically reduce the City’s ability to provide basic services to its citizenry, shared sacrifice is required by all.

One important cautionary note should be made: We cannot solve California’s (or San Jose’s) budget woes solely by asking the police and firefighter unions to accept cutbacks. We’re troubled by campaign propaganda that scapegoats all our fiscal problems on those pesky public employee unions – this simply is not the case.

Measure V – Amend City Charter to Change Arbitration Process to Increase Transparency and Increase Arbitrator’s Consideration of City’s Ability to Pay.

Recommendation:  Strong Yes.

This is a difficult measure to analyze in part because of a large amount of misinformation and in part because it is a very esoteric issue.  The same is true of Measure W – a companion measure.  Both measures have been heavily pushed by a majority of the current city administration as necessary for creating a more fiscally responsible future for San Jose.  Both measures are heavily opposed by police and firefighter unions.

Measure V deals with a 30 year old procedure that sets up an arbitration panel to resolve labor disputes between the city and its police and firefighter unions.  The procedure means that any labor dispute will necessarily be resolved.  The problem, according to the City, is that past arbitration decisions have favored labor and have resulted in large unfunded liabilities for the City.  It is difficult to analyze that claim directly.  However, with over 115 San Jose city employees (many of them Police and Fire employees) making over $200,000 (with the highest paid being the Deputy Police Chief who earned over $470,000) it is not difficult to understand why the City feels there is a problem with the way labor disputes have been resolved.  Checkout complete Bay Area salary information for public employees.

Secondary sources single out the firefighter’s union in particular as refusing to bargain “in good faith” and instead relying on decisions by the arbitrators – in particular pointing to a decision that resulted in an award of retroactive benefits that resulted in a $30 million unfunded liability for the city.   Others, cite the mayor’s claim that the city’s current pension responsibilities are $2 billion in the red and those liabilities have tripled over the last 10 years.

The major proposed changes in the charter would still allow for an arbitration system, but would change that system dramatically.  Key changes are as follow:

  • Any disputes over the arbitrators’ powers and any dispute over selection of an arbitrator will be resolved by a Superior Court judge;
  • All proceedings will be open to the public;
  • Arbitrators shall decide cases based on the best interests and welfare of the public;

The primary factors in decisions regarding compensation shall be the City’s financial condition and, in addition, its ability to pay for employee compensation from on-going revenues without reducing City services. No arbitration award may be issued unless a majority of the Arbitration Board determines, based upon a fair and thorough review of the City’s financial condition and a cost analysis of the parties’ last offers, that the City can meet the cost of the award from on-going revenues without reducing City services. The arbitrators shall also consider and give substantial weight to the rate of increase or decrease of compensation approved by the City Council for other bargaining units.”

Additionally,the Board of Arbitrators shall not render a decision, or issue an award, that:

1. increases the projected cost of compensation for the bargaining units at a rate that exceeds the rate of increase in revenues from the sales tax, property tax, utility tax and telephone tax averaged over the prior five fiscal years; or
2. retroactively increases or decreases compensation, including, but not limited to, enhancements to pension and retiree health benefit for service already rendered, but excluding base wages; or
3. creates a new or additional unfunded liability for which the City would be obligated to pay; or
4. deprives or interferes with the discretion of the Police Chief or Fire Chief to make managerial, operational or staffing decisions, rules, orders and policies in the interest of the effective and efficient provision of police and fire services to the public.”

Secondary sources have labeled opposition campaigns by police and fire unions against both Measure V and W “unfair” and based on “half-truths.”  From our review, that analysis is correct.  One of the fair arguments presented by opponents is that the city has hidden the text of the actual measure.  It is odd that the City decided not to publish it in the voter guide.  However it is readily available on the web.  Find it here .  We’ve quoted the key provisions above.

There is no question that this measure limits the type of case the police and fire unions can present to the arbitrators and thereby limits the powers of those unions to extract benefits for their members.  Still, when you look at the limitations, candidly, they seem to be the type of appropriate measures that we would want arbitrators to consider.  After all, while it is true that police and fire personnel are prohibited from striking (thereby limiting their power) it is equally true that they are in demand and can always leave if the City’s compensation offers are truly unjust.  The city, on the other hand cannot walk away from an arbitrator’s binding decision setting compensation.

At the end of the day, the ability of the City to pay for its labor deals would seem to be paramount.  Continually increasing retirement benefits are, in the long run, good for no constituent since they are likely to result in a bankrupt city.  To avoid this serious problem we recommend you vote in favor of this change.

Measure W – Amend City Charter to Exclude Newly Hired Personnel From the Charter’s Guaranteed Retirement Benefits.

Recommendation:  Strong Yes.

The companion measure to Measure V, Measure W removes the City Charter’s requirement that new employees receive exceedingly generous retirement benefits.  It does not change the benefits of existing employees, but allows the San Jose City Council to exclude new employees from those protections and forces the City to make sure that any new retirement plans are “actuarially sound”  (meaning based on actuarial predictions we can pay for those benefits in the future).

The current “guaranteed” retirement plan requires a 250% match for employee contributions, and a guaranteed retirement age of 55.  Police and fire department benefits are even more generous, with a guaranteed retirement age of 50 and pension benefits that can exceed the employees’ salary thanks to an annual guaranteed 3% acceleration of payments.  For detailed description of benefits and tables showing the breakdown for each click here

According to proponents the city spent $138 million for pensions last year – more than the amount it spent on libraries, gang prevention, senior programs and community centers combined.  This year the number jumped to $180 million and by 2015 it is projected to reach $350 million – more than the total amount of property taxes and sales taxes collected by San Jose.  That is a clearly unsustainable plan.  See these articles here and here.  In fact, it is difficult to see how the City will avoid bankruptcy in the not-too-distant future if some changes are not implemented now.

We believe our boys and girls in blue and uhhh yellow (?) deserve a fair wage and a generous retirement plan.  They perform an important, and dangerous, public service.  But we also think that making promises that the City can’t possibly keep doesn’t make any sense.  Although we supported Mayor Reed’s opponent in the last election we are impressed that the mayor is addressing these long-term systemic problems.  We don’t think that measures V and W will fix all of the problems identified here, but we do think they are a step in the right direction.  We recommend a “yes” vote on Measure W to put the retirement plans offered to new employees back under the control of our elected council members.

  1. New Analysis & Recs for Select SJ & SCC Measures « PolitoMuse

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

%d bloggers like this: