Category Archives: Economy and Economics

Articles, information, and editorials on the economy and economics. The Austrian school of economics reflects reality whereas Keynesian economics, a somewhat socialist brand of economic theory, does not reflect reality and has been discredited.

Frustration – Letter to the El Segundo Herald by Richard J. Switz

Posted on March 22, 2014 by Mike

Frustration

Make no mistake; my ideology is conservative, and I experience frustration daily about runaway spending at the national level. However, this situation needn’t necessarily apply to residents having a 90245 zip code. Currently there is a lot of community unhappiness about the cost of doing business in El Segundo…else, why is Measure ‘A’ on the ballot? Our elected officials must be held responsible, since only they have authority to tax and spend in our town.

Candidates Fuentes and Dugan are both skilled practitioners of modern management and leadership principles used by local major corporations. Such skills are sorely needed to help right the ship, since we are clearly on an unsustainable fiscal path using current practices. Efficient management and leadership provide the key to improvement, combined with a lot of tough love to effect the changes.

Drastic improvements won’t happen overnight. After all, we have experienced nearly two decades of government wherein our representatives seem more concerned about pleasing outside interests and providing employee perks rather than serving the needs and wishes of our voters. Otherwise, how does one explain granting $150K salaries for mid-level managers and shuttering City Hall every Friday … Continue reading →

Posted in California, Economy and Economics, El Segundo, El Segundo Election Coverage, El Segundo Herald Letters, El Segundo Tax and Fee Increases, Elections, Firefighter and Police Union Compensation and Pensions, Government Employee Compensation and Pensions, Letters to the Editor, Politics, Tax Policy and Issues | Tagged , , , , , , | Comments Off on Frustration – Letter to the El Segundo Herald by Richard J. Switz

City of El Segundo Can Save $3.3 Million Per Year in Employee Pension Costs

Posted on March 15, 2014 by Mike

by Michael D. Robbins
Director, Public Safety Project, PublicSafetyProject.org

March 14, 2014

El Segundo Mayor Bill Fisher, and City Council Members David Atkinson and Marie Felhauer who give Fisher his Council majority, claim the City Council no control over City employee pension costs. They claim that is all determined by California state law. This is not true. They make this claim to deceive El Segundo voters into approving the massive Measure A tax increases on residents and businesses on the April 8, 2014 city election ballot.

This article explains how the City Council has significant control over employee pension costs, how the City Council increased employee pension costs, and how the City Council can save $3.3 million per year in employee pension costs.

The City Council controls employee pension costs in three significant ways:

  1. The amounts of employee salaries, which are increased by pay raises and “special compensation” add-ons;
  2. The percentage of the total CalPERS pension contributions employees are required to pay; and
  3. Which pension formula and other pension options are provided to City employees.

Every pay raise increased the City’s CalPERS pension costs.

City employee annual pension income is a fixed percentage of their single highest year salary, including all those redundant and non-job-related “Special Compensation” union contract add-ons, for every year they worked. Firefighters and police get annual pension income of 3% of their single highest year salary for each year they worked, up to a maximum of 90%, with full retirement after 30 years at age 50 or 55. This corresponds to pension benefit formulas of 3% @ 50 and 3% @ 55, respectively.

Mayor Fisher supported wildly excessive and unsustainable pay raises for the already over-compensated firefighter and police unions that helped launch his political career with lots of campaign support, and for their managers to prevent “salary compaction”. Fisher supported pay raises ranging from 11.25% to 23% for the firefighter and police unions, in three or four installments over three years, and single pay raises ranging from 14.9% to 32.3% for their managers, during the first three years of the Great Recession. All of the raises were approved well after the Great Recession started, and many included retroactive pay raises effective up to 6 and 9 months before the union contracts were approved. The firefighter and police union contracts included additional 5% annual “step raises”, and additional periodic “longevity raises”. … Continue reading →

Posted in California, Economy and Economics, El Segundo, El Segundo Election Coverage, El Segundo News, El Segundo Tax and Fee Increases, Elections, Firefighter and Police Union Compensation and Pensions, Firefighter Union Corruption, Government Employee Compensation and Pensions, Police Union Corruption, Political Corruption, Politics, Tax Policy and Issues, Union Corruption | Tagged , , , , , , , , , , , , , , , | Comments Off on City of El Segundo Can Save $3.3 Million Per Year in Employee Pension Costs

Ballot Argument and Rebuttal Against El Segundo Measure A Tax Hikes

Posted on March 14, 2014 by Mike

by Michael D. Robbins
Director, Public Safety Project, PublicSafetyProject.org

March 14, 2014

The Measure A tax hikes will appear on the ballot for the April 8, 2014 El Segundo General Municipal Election.

Measure A creates four new taxes on residents, nearly doubles five existing business taxes, and creates a new parking tax. Measure A will cost residents and businesses an estimated $6.6 million each year in the first three years. However, all residents will pay the business tax increases that are passed on to them as customers in addition to the four new taxes imposed on residents.

The Measure Tax hikes are permanent. There is no sunset clause (expiration date). It has become clear that most or all of the Measure A tax hikes will go to pay for excessive and unsustainable past and future City employee pay raises and benefits and pension increases – especially for the firefighter and police unions and their managers. Measure A is not intended to help the City engage in responsible spending during a temporary economic downturn. Recessions are temporary, but apparently, wildly excessive and unsustainable City employee union and manager pay raises are permanent.

Measure A was put on the ballot by a vote of the El Segundo City Council. Council Members Suzanne Fuentes and Carl Jacobson requested a sunset clause so the taxes would expire after a few years and the Council would have to come back to the voters for further tax hikes, but they were denied that request by Mayor Bill Fisher and his Council majority including David Atkinson and Marie Fellhauer.

Here are the official Argument Against Measure A and Rebuttal to Argument in Favor of Measure A that appeared in the Sample Ballot and Voter Information Pamphlet mailed out by the El Segundo City Clerk’s office. … Continue reading →

Posted in California, Economy and Economics, El Segundo, El Segundo Election Coverage, El Segundo News, El Segundo Tax and Fee Increases, Elections, Firefighter and Police Union Compensation and Pensions, Firefighter Union Corruption, Government Employee Compensation and Pensions, Police Union Corruption, Political Corruption, Politics, Tax Policy and Issues, Union Corruption | Tagged , , , , , , , , , | Comments Off on Ballot Argument and Rebuttal Against El Segundo Measure A Tax Hikes

Feels Measure “A” Too Important – Letter to the El Segundo Herald by Scott Houston

Posted on March 13, 2014 by Mike

NOTE:

This letter to the El Segundo Herald newspaper is proof that Scott Houston supported the ELEVEN tax hikes in Measure A on the April 8, 2014 El Segundo General Municipal Electionu ballot.

Feels Measure “A” Too Important – Letter to the El Segundo Herald by Scott Houston

I wanted to stay quiet. But this conversation is too important not to participate in, speak up and urge every El Segundo voter to support Measure A. We’ve been down this road before and, once again, our City finds itself in a precarious financial situation. Even with the additional revenues gained from the Chevron tax settlement agreement, our City will be running significant deficits of nearly $6 million for the foreseeable future if we do not address our structural deficit. That is why I am supporting Measure A.

Our City Council has worked diligently to maintain our services with less. And our City employees have borne the brunt of cuts due to our financial state – in fact, there are now about 20% fewer employees at City Hall struggling to provide the same levels of service we are accustomed to. Something has to give. We cannot continue cutting our way out and decimating the community we love.

While not a panacea, I believe Measure A is a major step forward in the right direction to finally address our city’s ongoing budget crisis. Let’s work together as a community to give our next Council the resources needed to balance our city budget. Please vote Yes on Measure A on April 8.

– Scott Houston

NOTE BY MICHAEL D. ROBBINS:

The City of El Segundo’s taxpayers are probably paying about $8 million per year in excess compensation to the city’s firefighter and police “association” (union) members and their managers. That is a great sum of money for small-town El Segundo. The firefighter and police unions ratcheted up their total compensation (salaries, benefits, and employer-paid pension contributions) to wildly excessive and unsustainable levels by endorsing, contributing money to, and campaigning for the City Council candidates who would give them the largest pay, benefits, and pension increases, and raise taxes to pay for it all.

That is why El Segundo firefighters (and those of many other California cities) are paid about $150,000 to more than $330,000 in total compensation each per year. When the firefighter and police union members get large unjustifiable compensation increases, their managers get even larger increases to avoid “salary compaction”.

Scott Houston is a firefighter and police union puppet. He supports them and they support him. Houston supports Measure A on the April 8, 2014 El Segundo city election ballot to pay for past and future excessive and unsustainable firefighter and police union pay raises and the resulting pension increases. The current firefighter and police union contracts expire on September 30, 2014, and the City Council will negotiate new labor contracts with the unions later this year.

If the voters reject Measure A, the firefighter and police unions will have to give back some of the excessive increases they received as rewards supporting the campaigns of City Council candidates. There is a conflict of interest when government employee unions campaign to elect their own bosses who will negotiate with them and decide their pay raises and pension increases in secret meetings.

Scott Houston ran for El Segundo City Council twice – in April 2010 and April 2012. Each time the El Segundo Police Officers Association (union) gave him their endorsement, a huge cash campaign contribution, independent campaign expenditures, and additional campaign support. Houston lost both elections due to strong grassroots campaigns against him.

Scott Houston supported Measure P, the firefighter union’s initiative (4/10/12 election), which was defeated by 90.1 percent of El Segundo voters. It would have disbanded our local fire department and transferred our fire and paramedic services, and firefighters, to the Los Angeles County Fire Department for inferior services. It would have eliminated 31 percent of our on-duty firefighters, two paramedic squads and all three paramedic transport ambulances, doubling hospital transport times. But it would have protected the firefighters from much-needed pay cuts. … Continue reading →

Posted in California, Economy and Economics, El Segundo, El Segundo Election Coverage, El Segundo Herald Letters, El Segundo News, El Segundo Tax and Fee Increases, Elections, Firefighter and Police Union Compensation and Pensions, Firefighter Union Corruption, Government Employee Compensation and Pensions, Letters to the Editor, Measure A - 5 New Taxes and 6 Tax Inceases, Measure P - Firefighters Union Initiative, Police Union Corruption, Political Corruption, Politics, Tax Policy and Issues, Union Corruption, Videos | Tagged , , , , , , , , , , , , , | Comments Off on Feels Measure “A” Too Important – Letter to the El Segundo Herald by Scott Houston

El Segundo Measure A Co-Chair Joe Harding was Against the Tax Hikes Before He was For Them

Posted on March 6, 2014 by Mike

by Michael D. Robbins
Director, Public Safety Project, PublicSafetyProject.org

March 6, 2014

Joe Harding is one of two co-chairs identified on the “Yes on A for El Segundo’s Future” campaign committee website. Harding is also treasurer of the campaign committee as indicated on the first FPPC 460 campaign finance disclosure filed by the committee with the El Segundo City Clerk.

Harding was against the tax hikes before he was for them. He spoke out strongly against the tax hikes at the August 3, 2010 El Segundo City Council meeting when he was the General Manager of the Hacienda Hotel in El Segundo (HaciendaHotel.com). Now he is campaigning on the opposite side, for the tax hikes which hit hotels especially hard, as an ex-employee of the Hacienda. Here is an excerpt of what Harding said as a Hacienda Hotel employee:

“You must say ‘No’ to the hotel killer tax. … A TOT, and a UUT would hit us twice. That’d be like kicking us when we’re down, and then running us over for good measure. … The City must make unpopular and difficult adjustments to their payroll and expenses. Asking businesses to pick up the bill for the City and its residents in this economy is simply not a fair approach. The Hacienda has been and will remain a stellar business in this community. Help make sure this continues. Leave the TOT where it is. It’s working for us. It’s working for the City. … Thank you.” – Joe Harding, General Manager of the Hacienda Hotel in El Segundo, speaking at the August 3, 2010 El Segundo City Council meeting, before he became an ex-employee of the Hacienda, flip-flopped, and became a co-chair of the Yes on Measure A committee to raise both the TOT and UUT taxes on the Hacienda and all other hotels and businesses in El Segundo, and to impose them on residents.

Here is a video I made for the April 10, 2012 El Segundo City Council Election that includes Joe Harding’s full speech, starting at about time 3:28 to 5:46, followed by a transcript of his full speech. … Continue reading →

Posted in Economy and Economics, El Segundo, El Segundo Election Coverage, El Segundo News, El Segundo Tax and Fee Increases, Elections, Firefighter and Police Union Compensation and Pensions, Government Employee Compensation and Pensions, Politics, Tax Policy and Issues, Videos | Tagged , , , , , | Comments Off on El Segundo Measure A Co-Chair Joe Harding was Against the Tax Hikes Before He was For Them

El Segundo Firefighters’ Union is Bankrolling the Measure A Campaign to Hike Taxes

Posted on March 6, 2014 by Mike

by Michael D. Robbins
Director, Public Safety Project, PublicSafetyProject.org

March 6, 2014

The El Segundo Firefighters’ Association (the official name of the firefighters labor union) is bankrolling the “Yes on Measure A” campaign to create four new permanent Utility Users Taxes (UUTs) on residents, nearly double the four existing business UUTs, increase the hotel Transient Occupancy Tax (TOT, or “bed tax”) by 25%, and create a new 10% parking tax.

The “Yes on A for El Segundo’s Future” campaign committee filed its first campaign finance disclosure form, FPPC Form 460 (“Recipient Committee Campaign Statement”), with the El Segundo City Clerk on March 3, 2014. It reports $12,500.00 in total contributions received, including $5,500 monetary contributions and $7,000 in nonmonetary contributions. The committee reported spending $10,266.64. Those are large amounts of campaign money for small-town El Segundo with a population of only about 16,720 residents and about 10,784 registered voters. And that is just the beginning of their campaign!

The two monetary campaign contributions were a $5,000.00 contribution from the El Segundo firefighters Political Action Committee (PAC) and a $500.00 contribution from Sandra Jacobs, the current chairman of the El Segundo Chamber of Commerce, and a former El Segundo Councilmember and Mayor who ran as one of three firefighter and police union sponsored City Council candidates.

Here are the data entries from the Schedule A of the Form 460:

DATE RECEIVED CONTRIBUTOR AMOUNT RECEIVED THIS PERIOD CUMULATIVE TO DATE CALENDAR YEAR
02/11/2014 El Segundo Firefighters PAC (#1231824)
P.O. BOX 55
El Segundo, CA 90245		 $5,000.00 $5,000.00
02/12/2014 Sandra Jocobs
402 Hillcrest St.
El Segundo, CA 90245		 $500.00 $500.00

Click HERE to view or download the “Yes on A” tax hikes FPPC Form 460 (536 KB PDF file).

Measure A will be decided by voters in the City of El Segundo, California on Tuesday, April 8, 2014. The El Segundo firefighter and police unions have much to gain in pay raises and increased pensions if Measure A passes. The two unions have a long history of endorsing, contributing money to, and campaigning for the City Council candidates and ballot measures that will put the most money in their paychecks and pensions, and then raise taxes and fees on residents and businesses to pay for it all.

The El Segundo firefighter and police unions have used this racket to ratchet up their total compensation to about $150,000 to more than $330,000 per individual per year.

The average 2009 firefighter annual individual total compensation was $211,000 and the maximum was $342,000 – before multiple large pay raises after 2009. The average 2009 police officer annual individual total compensation was $178,000 and the maximum was $304,000 – before multiple large pay raises after 2009. The firefighter and police managers get big pay raises when their subordinates get pay raises, to avoid “salary compaction”.

Police Chief David Cummings was given a 23% raise for his last year before retirement. As a result, he was paid a total of about $597,000 in 2009, the year he retired, in total Annual Compensation plus his CalPERS pension income while working half-time for 11 weeks as Police Chief after his retirement. His annual CalPERS pension income is now listed as $198,272.04 on the FixPensionsFirst.com web site.

The firefighter and police unions in El Segundo and other California cities have been pushing their city employers down the road towards bankruptcy. The City of Vallejo, California, is just one California city that filed for bankruptcy due to their firefighter and police unions. … Continue reading →

Posted in California, Economy and Economics, El Segundo, El Segundo Election Coverage, El Segundo News, El Segundo Tax and Fee Increases, Elections, Firefighter and Police Union Compensation and Pensions, Firefighter Union Corruption, Government Employee Compensation and Pensions, Police Union Corruption, Political Corruption, Politics, Tax Policy and Issues, Union Corruption | Tagged , , , , , , , , , | Comments Off on El Segundo Firefighters’ Union is Bankrolling the Measure A Campaign to Hike Taxes

Wrong Time to Raise Taxes and Fees in El Segundo

Posted on March 4, 2014 by Mike

by Michael D. Robbins
Director, Public Safety Project, PublicSafetyProject.org

March 3, 2014
Updated and expanded March 6, 2014.

This is the wrong time to raise taxes and fees on residents and businesses in El Segundo, for multiple reasons.

First, the existing three-year City employee union contracts are expiring later this year, and the City Council will negotiate new union contracts later this year after the April 8, 2014 City election. Raising taxes and fees before then will greatly weaken the City Council’s bargaining position with the unions, especially the politically active and extremely aggressive firefighter and police unions, which are the primary cause of the City’s financial problems.

Second, Mayor Bill Fisher and Councilmembers David Atkinson and Marie Fellhauer have claimed that the City’s financial problems are largely due to El Segundo receiving a lower percentage of the property taxes generated from property in the City than other cities in California receive.

That claim is false for multiple reasons.

The percentage of total property tax revenue generated in El Segundo that the City receives has not changed in many years, and the last time it changed, it went up due to the extraordinary efforts of Mayor Carl Jacobson. In fact, although El Segundo gets about 6.2% of the property tax revenues generated by property in the city, compared to the average of 11% for all 88 cities in Los Angeles County, El Segundo property values are much higher than the values in many other cities. The higher property values in El Segundo help compensate for the lower than average percent of property tax revenue allocated to the City of El Segundo.

But most striking is the fact that the City is receiving the highest amount of property tax revenues it has received in any year since fiscal year 2000/2001, and probably in the City’s entire history, as shown by the bar chart below. The FY 2012/2013 property tax revenue is at a record high of $6,332,163 – up by 46% and $1,994,509 above FY 2000/2001 property tax revenue. Property tax revenue has increased in 9 of the last 13 fiscal years, with an average yearly increase of 3.6% and $166,209.


Bar chart of the City of El Segundo, California property tax revenues for fiscal years 2000/2001 through 2012/2013, using data from official City of El Segundo records.

Mayor Fisher and Councilmembers Atkinson and Fellhauer have repeatedly berated El Segundo residents for not paying enough property taxes. City residents paid about $20,770,813 in property taxes in FY 2012/2013, which is about 20.9% of the total, of which $1,287,790 came back to the City (about 6.2%). The 20.9% figure is not surprising given that only about 25% of the city’s land area is residential property and about 75% is industrial and commercial … Continue reading →

Posted in Economy and Economics, El Segundo, El Segundo News, El Segundo Tax and Fee Increases, Elections, Firefighter and Police Union Compensation and Pensions, Firefighter Union Corruption, Fraud Waste and Abuse, Government Employee Compensation and Pensions, Police Union Corruption, Political Corruption, Politics, Tax Policy and Issues, Union Corruption | Tagged , , , , , , , | Comments Off on Wrong Time to Raise Taxes and Fees in El Segundo