Last year Forbes magazine declared Stockton, California America’s most miserable city. Since then Stockton has defaulted on some bonds and last Friday the New York Times reported that they would be a test case for defaulting on public pensions. How did they get into this mess and who is most to blame? A look at their July 1, 2011 – June 30, 2012 budget (all 412 pages) answers that question for me.
Sheet A-4 of that budget tome (page 14 of 412) notes that a “new senior management team” looked at the books and found:
“an unfortunate practice of inter-fund borrowings, deficit spending, over leveraging and drawing down cash from internal service funds, all of which have quietly put the City’s General Fund at greater risk. From our examination, much of this has not been highlighted for City Council’s attention as a clear policy choice, but instead resulted from an accumulation of staff decisions at various levels of the City, and was buried in the myriad of financial details forwarded to the Council.”
Boiling it down, it appears that trust fund money was stolen to patch budget holes that would allow extremely generous employee benefits to continue but the Council is not to blame because they’re idiots who can’t be expected to pay attention to anything that’s not underscored, highlighted, and under 200 words. Now that they can’t steal any more they’re about to declare bankruptcy and stiff bondholders and employees.
(a) Politicians who get their positions by whoring out their services to anyone with $300 to get lawn signs.
(b) Bondholders and public employees who have promises of future payments in writing.
(c) People in government and consulting to government who should know better but keep quiet for some perceived personal, generally monetary, benefit.
I vote (c). Being vain, dumb, or trusting is not yet a crime to me. Treason is.