Costly Contract/Pensions, Groucho Marx Response


(Sept. 19, 2012) -- In the Marx Brothers classic "A Night at the Opera," Groucho is dining with a ladyfriend at an elegant restaurant (at the height of the Depression). The waiter arrives and hands Groucho the bill.

"This is outrageous," Groucho responds...and hands the bill to his ladyfriend, adding "I wouldn't pay it if I were you."

This isn't too far removed from what Long Beach taxpayers have experienced in the past few years and saw on full display at last night's (Sept. 18) City Council meeting.

After taking office in mid-2006, Mayor Foster supported giving LB's three major public employee unions (police, fire, non-public safety IAM) contractually binding pay/benefit raises without pension reform (that the Mayor now advocates, requiring employees to pay the full share of their pension cost instead of taxpayers). For the record, those reforms had been advocated for years from the Council speakers' podium by taxpayer advocates Kathy Ryan, Tom Stout and Larry Boland and routinely dismissed by City Hall officialdom.

Instead, the Mayor recommended a five year contract with IAM that in our opinion was foolhardy from its inception in May 2008...when the economy was already visibly slowing. (Wall Street's near-collapse took only a few more months to arrive in September).

Councilwoman Rae Gabelich (who unlike Foster hadn't become wealthy running a ratepayer bailed-out utility) asked City Manager West a common sense question at the time. "How are we going to pay for this?" she asked. When City Manager West offered a less than satisfying response, Councilmembers Gabelich and DeLong voted "no" on the IAM contract. Voting "yes" at the time were Councilmembers Bonnie Lowenthal, Suja Lowenthal, Patrick O'Donnell, Gerrie Schipske, Dee Andrews, Tonia Reyes Uranga and Val Lerch.

Four and a half years later on September 18, 2012 (with Councilmembers Robert Garcia (2009), James Johnson (2010), Steven Neal (2010) and Al Austin (2012) now in office), Financial Management Director John Gross [who wasn't with the City of LB in 2008] told the Council and LB taxpayers the cost of the 2008 IAM contract was a whopping 18% increase in pay.

That is the bill for the meal that Mayor Foster and a then-Council majority ordered taxpayers to pay in May 2008.

In our view, the IAM contract was unsustainable at its inception. We regret that Mayor Foster has continued (as recently as last night's Council meeting) to try and blame the "Great Recession" for the costly consequences of his recommended actions. (We believe the Great Recession worsened the impacts of contracts that were already unsustainable.)

Mayor Foster is trying hard to show that during his six years in office, Long Beach City Hall has been so well run that he ought to be elected State Treasurer in 2014 (or to some other state office). We believe that's basically what's driving the proposed ballot measure, advanced by some of the Mayor's Council allies (Johnson, Garcia and DeLong).

That said, Councilman Johnson's proposed measure is elegant in its simplicity. It proposes to roll back wages and benefits (in some combination not specified yet) to FY2010 levels in FYs 2014 and 2015. We like this.

We have repeatedly criticized the 2002 pension spike given to IAM, scheduled for the last day of an outgoing Council and the first day of incoming one under Mayor Beverly O'Neill's administration. That taxpayer-costly action, contemptuously shrugged at the time by O'Neill's enablers, continues to harm Long Beach taxpayers each and every day. We believe that the fiscal consequences of those past actions deserve to be reversed.

At the same time, we have consistently insisted on accountability for what was done. The 2002 pension spike wasn't IAM's fault. It was given to them under the O'Neill administration by its Council and enablers. The 2008 IAM contract isn't IAM's fault. It was given to IAM under the Foster administration by the Council and its enablers. It's not fair -- or intellectually honest -- to demonize IAM for City Hall actions that brought LB taxpayers costly consequences.

Much as Councilwoman Gabelich annoyed Mayor Foster by speaking pesky truths about the IAM contract 2008, Councilwoman Schipske is doing so now. Frequently citing legalistic and wonky facts, Councilwoman Schipske simply isn't bothered if any of this annoys the Mayor. And of course it annoys the Mayor. It challenges the history of what took place that Mayor Foster is trying so hard to revise, along with some other Council incumbents who tied their political futures to him.

Mayor Foster will now likely either have a special election venue where he fulminate against IAM's refusal to accept reasonable pension changes OR [as the Mayor briefly suggested last night] IAM might take another membership vote that could give City Hall what it wants (avoiding a bruising special election).

We have no way of knowing if the Mayor/Council majority will offer IAM anything else in upcoming meet and confer talks. We hope a more businesslike approach will which taxpayers' interests will come first.

Unless that takes place, we expect more Council sessions like the one last night (Sept. 18)...similar to he "stateroom scene" (right) from the same Marx Brothers film in which Groucho handed his dinner date the bill for a meal he couldn't afford when he ordered it.

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