The outrageous story of the hapless city of Bell, California is now widely known across the nation. A group of city politicians led by City Manager Rizzo allegedly colluded to pay themselves obscene salaries in a poor city of under 40,000 residents.
The disgraced city manager has resigned, losing his $790,000 salary. But not to worry — he’ll get by okay.
It turns out that his pension likely will as much as $710,000. When you factor in the employee deductions from a $790,000 salary, odds are that the pension roughly equates to the take home pay the city manager was previously receiving.
Assuming this new retiree now leaves the state (I can all but guarantee his stealthy departure), he’ll head to a lower state income tax state — maybe totally income tax free — such as Nevada, Florida, Washington, or Texas. Hence this reprobate will net significantly more in retirement than he made doing next to nothing for his previous paycheck.
The economy of Rizzo’s new adopted state will be stimulated at California’s expense. And, BTW, since Bell’s pension is with CalPERS, the cost of his grossly underfunded pension will be shared by essentially ALL the cities in California.
If formal quid pro quo collusion can be proved, he might end up in the hoosegow, along with the other alleged city co-conspirators. But that’s very hard to prove, so I’d say the odds are that all the Bell officials avoid being convicted of a crime.
One puzzling aspect was how could such a poor city afford to come up with the cash for the officials’ bloated salaries and pensions. Seems the answer is now at hand.
It wasn’t just the usual slashing of city services — it also included amazingly high (and completely unnoticed) property taxes. Here’s the salient excerpt from a blog item on the PublicCEO website.
The citizens of Bell were first upset because their city’s administrators were making some of the largest salaries in the nation. Now, it’s being shown exactly what the price of those salaries was.
On Thursday, the Los Angeles Times reported that the working-class town is paying the highest property taxes of all but one of Los Angeles County’s 88 cities (the other being the city of Industry with just 21 residential parcels affected).
From the Times:
All county property owners pay 1% general property tax, along with special or direct assessments levied by their municipalities. The countywide average of all tax rates is 1.16, or $11.60 for every $1,000 of assessed value.
Bell’s rate is 1.55% — nearly half again as much as those in such affluent enclaves as Beverly Hills and Palos Verdes Estates and Manhattan Beach, and significantly higher than just about everywhere else in Los Angeles County, according to records provided by the county Auditor-Controller’s Office at The Times request.
That means that the owner of a home in Bell with an assessed value of $400,000 would pay about $6,200 in annual property taxes.The owner of the same home in Malibu, whose rate is 1.10%, would pay just $4,400.
So now taxpayers are finding out that they are being – for lack of a better term – screwed.
It’s amazing how, as a society, we just assume taxes are correct and rarely question the percentages. . . . Now, taxpayers are awake. It’s another reminder of how local government officials need to act with the greatest of transparency.
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We, the people, allowed this to happen. When San Diego City Council increased their benefit package, did the people take a stand and vote them out? No. Why do we allow it? Only a few will be vocal about it. I always like the comeback that the only way to get good people into elected office is to offer them a nice pay and benefit package. So how many years have we been hearing that and why are we in this constant mess? Do you think we’re finally coming to the point that after all of the promises made to special interest to get elected; we’re finding we can’t pay for those promises? Raising taxes during a recession/depression really isn’t a wise thing to do.
So question authority. Write to your local paper, go to your city council meeting and question their benefit package. Ask them why must we pay for your retirement and medical. Make those politicians sweat a little.
Here’s another thing. I always like the rational for a good pay and benefit package for administrators/bureaucrats-Only way to keep them. So we pay them a lot now, because we don’t have to worry about dealing with their retirement later because it will be CalPers problem.
Maybe if government would just look at the long term ramifications, they might think otherwise.
Here’s a thought-Make the agency that the employee came from, fund any deficits in their retirement package. Maybe this would force government to really monitor themselves more (right) if they might be forced to make up any shortages. Actuaries can provide those estimates and those should be factored into budgets.
Responsibility should rely on the agency that created the mess. Passing the problem up the ladder (In this case, CalPers) isn’t right.
What we need is real leadership-Being able to look at the long term problem and solution. As of now, all we hear is tough talk but little to no action.
Steve Greenhut on Bell and the spirit of the Tea Party…
http://ping.fm/0sMCT
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Poway Roger, little know is a pension scandal pulled off by a lame duck San Diego city council in the fall of 2000. They boosted their pay, their pension and their early retirement options with almost no opposition.
Three of us (two Libertarians and Bruce Henderson) went down to city hall to protest the scam. No one else showed — perhaps because the somnolent press failed to report on this astonishing theft of public assets. We three were ignored by the press and, of course, by a very arrogant and “insulted” city council (the old city video of the event was likely a gem to behold).
The most interesting part of this reprehensible rip-off was that city elected officials could start drawing their retirement the day they left office REGARDLESS OF AGE!!! Hence Christine Kehoe, Juan Vargas and other young reprobates doubtless started drawing their pensions in their 30’s or 40’s.
Yes, there was a penalty for drawing early — 2% a year. Hence, Kehoe who retired from the city at age 49 surely started her pension “six years early” (from the official age 55 start point) at “only” 88% of the full salary.
But here’s the con job: While the initial pension is lower, remember that city pensions grow by the COL up to 2% a year. Assuming we hit at least 2% a year, by age 55 her pension was very close to what she would have received anyway! 99.1022292% to be more exact.
The good news is that such a rip-off were tried today, it would be highly scrutinized by SDCTA, SD TF, the GOP, the press and everyone else. All Hell wold break lose. But the horse is already out of the barn — too late for our runaway pensions.
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CORRECTION: Above I said that Kehoe retired early at only 88% of full SALARY. That SHOULD have read 88% of full PENSION.
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BTW, as a result of what might be the most generous pension plan in the land, for a $75,000 city council critter’s salary, the city must contribute to their pension about $38,000 a year. And that amount does NOT adequately deal with the unfunded pension deficit and adverse earning rates. The proper figure to fully fund the pension is somewhere around 78% of salary.
One SD elected official has refused to participate in this pension honey pot. I don’t think I have to tell you which one.
The rest are mindlessly engorging themselves without a care in the world. Now including Mayor Sanders — the new quintessential RINO.
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Turns out that Rizzo surely will be giving up his current posh digs in Huntington Beach (he chose not to live in the city he was stealing from) to leave the state. He planned ahead. He owns a horse ranch in income-tax-free Washington state.
We should start a pool on when he will leave CA. Except it’s likely he ALREADY left — obscene pension and all.