Oakland California Bankrupt - Councilwoman Pat Kernighan Calls Rest of Council "Crazy and Irresponsible"

The party is over for Oakland even whether its city council is willing to admit it or not. As always, union contracts and pension benefits drove the city into the ground. Please consider Oakland faces pension costs, higher taxes.

Oakland voters will likely be asked in November to approve higher taxes to halve a $42 million deficit, but even if they agree, the city will face an even deeper crisis within months.

Ballooning pension costs will push the city's projected deficit to $58.7 million by July 2011.

The biggest portion of that budget shortfall is a debt payment of $43.9 million due July 1, 2011, to the old Police and Fire Retirement System. The payment would be more than 10 percent of the roughly $400 million city budget.

The looming crisis prompted great concern at last week's meeting from two council members, Pat Kernighan and Ignacio De La Fuente. When the council refused to ask staff to prepare a report on the impending budget woes, the typically mild-mannered Kernighan did not restrain herself.

"If that doesn't happen, you guys are crazy and irresponsible!" she exclaimed.

The costs of benefits to retirees appears to be the single biggest issue facing Oakland. Not only are the costs growing, but the city has not been funding them adequately, some council members said.

Last year, Oakland was supposed to pay $85.7 million for retiree medical care, according to a city staff report. But the city only paid $12.5 million, the report said.

City Administrator Is Incompetent

There is much more in the article. Give it a look. The main problem facing the city is their absurdly generous pension system called PFERS. City Administrator Dan Lindheim says "PFERS is locked in stone. It's impossible to change."

That is one hell of an attitude to take when the city you are running is bankrupt.

That Lindheim would not agree to produce a report on the budget woes is proof enough of Pat Kernighan's claim "you guys are crazy and irresponsible!"

Either Lindheim is incompetent or a patsy for the unions at taxpayer expense, most likely both.

Oakland teachers vote to OK a strike

Unfortunately for Oakland, its teachers do not understand simple math. The city is broke, bankrupt, yet Oakland teachers vote to OK a strike, insisting on a wage hike.

Oakland teachers are ready to strike again if necessary if talks sour at the bargaining table, union officials said Tuesday.

On the heels of last week's one-day walkout, the teachers voted 565-184 late Monday to give union leaders the option to "take further actions to secure a fair contract, up to and including a strike," according to Oakland Education Association officials.

The two sides are far apart on several issues including wages, class size, caseloads for school nurses and counselors, and staffing for adult education.

Union leaders have said a raise must be part of any deal.

Administrators have said they can't afford it, given an $85 million budget shortfall for the next school year.

565 Oakland Teachers Do Not Understand Simple Math

The vote authorizing a strike was 565-184. This tells me that a minimum of 565 Oakland teachers are unfit to teach because they do not comprehend simple math. They should be fired.

The only way to resolve these issues is in bankruptcy court. Before Oakland wastes more taxpayer money of a situation that is clearly beyond repair, it needs to pursue bankruptcy options to dissolve those pension contracts.

Regrettably, the "crazy and irresponsible" city administrator and council will not even produce a report that details how big the problem is.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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