City of Maywood Lays Off All Government Workers

Maywood, California, a small bedroom community just outside of Los Angeles, may soon be viewed as the poster child for how to deal with the budget deficits faced by states and municipalities across the country.

"Tiny Maywood, Calif., laid off every single one of its city employees on Wednesday.

But that doesn't mean the city is closing up shop. City Hall will still be open, as will Maywood's park and recreation center. Police will continue to patrol the streets.

They just won't be staffed by Maywood employees. The city can't have any staff because it can't get liability or worker's compensation insurance for them. Maywood's carrier, the California Joint Powers Insurance Authority, dropped it earlier this month in part because of several police-related claims.

Instead of declaring bankruptcy, Maywood officials decided to outsource all city functions. The Los Angeles County Sheriff's Department will patrol the streets, while the neighboring city of Bell will cover other city functions, such as staffing City Hall.

Maywood already relies on contract workers and outsources many city services. The director of parks and recreation, for instance, is a contractor, and the city's lights, landscaping and street sweeping are handled by private companies. Los Angeles County maintains the library and fire department."

It is notable that Maywood is making this change not necessarily to slash costs but rather due to its inability to obtain insurance coverage at an agreeable price. Seems that the local police force has been a little, ahem, overzealous in enforcing the law.

The massive budget deficits that have occurred at the state level are largely due to excessive pay and benefits that have been lavished on state workers. And it's no surprise why this has been the case. Public employee unions tend to vote as a block, so any state lawmaker who wants to be reelected knows he or she has to make nice with the union.

The big upside for state governments across the nation is that fixing the pay scale and the cost of service they provide goes a long way towards fixing the budget deficits.

From my perspective, there does not seem to be a reasonable objection to Maywood's move.

Public employees across the country have so completely overreached in recent years in demanding significant pay increases and outsized pensions, that any cries about the dislocation this wholesale change will cause should fall on deaf ears.

To the extent that society has an interest in ensuring a particular service is provided, it does not follow then that the government itself has to perform that service. Contracted labor is just another means of providing the service, and because the labor can be purchased in a competitive process from potentially multiple providers, as opposed to a single entrenched bureaucracy, it should reduce the overall costs and in effect give a tax cut to the citizens that ultimately have to fund these costs.

New Jersey Nixes Tax on Millionaires

In a sign that the popularity of Governor Christie with New Jersey voters may be forcing legislators in New Jersey to pay attention and act more fiscally responsible, lawmakers in the Garden State have conceded they don't have votes to override his veto of a substantial tax increase from earlier this year.

"New Jersey Democratic legislators on Monday failed to gather enough votes to extend a tax on millionaires that would have been used to provide property tax relief for senior citizens and the disabled.

Democrats wanted to override Republican Governor Chris Christie's veto of the plan but were unable to get any Republicans to join them to muster the two-thirds majority needed in the state Assembly.

The Democrats had wanted to reimpose a one-year, 10.75 percent tax on income above $1 million that would have hit 16,000 people, some of them likely to work as financial professionals just across the Hudson River in New York."

It's a shame that it takes a veto by the governor to stop lawmakers from imposing a draconian tax on the most productive members of society.

What lawmakers should actually be doing is cutting personal and corporate tax rates to encourage more people and businesses from neighboring states to move to New Jersey.

Yes, providing help to senior citizens and the disabled is certainly a noble cause. But if finding money for this cause was important enough, lawmakers could easily come up with the funds for those initiatives if they were willing to cut spending on their sacred cows - the public unions that have extorted money from the public for year and given lavishly to their campaigns in exchange.

CA Lawmakers Move to Shut Down Municipal Bankruptcies

California lawmakers are moving to deny the ability of cities and municipalities to file for bankruptcy, which would otherwise cleanse them of the bloated union contracts that have moved them deep into the red over the past decade.

"A bill that clamps down on municipal bankruptcy filings is headed for Gov. Schwarzenegger's desk, which is bad news for Los Angeles and other cash-strapped California cities.

It the governor signs Assembly Bill 155, it would place a hurdle in the path of filing for Chapter 9 municipal bankruptcy. The bill stipulates that a city may only file for bankruptcy with the approval of the California Debt Investment Advisory Commission, which provides information on debt to public agencies."

Of course, lawmakers are attempting to mischaracterize their efforts as simply an attempt to protect the public!

"California's taxpayers who rely on public safety, senior, park and library services, as well as those who own and operate businesses in our communities, deserve every effort that state and local government can make to avoid the long-term devastation of bankruptcy," the bill says.

Bankruptcy is simply a means to reorganize and eliminate burdensome liabilities. As a result, any city that files for bankruptcy could and would be able to continue fulfilling the same day-to-day activities that they were doing prior to the filing.

This latest action by legislators is simply an undisguised effort by California public unions to prevent their bloated, overly-generous retirement benefits from being scaled back in bankruptcy. Considering they were never fairly approved by the California public anyway, the effort to scale them back is reasonable on many fronts.

Let The Public Employee Furloughs Begin

In a move that will be increasingly common across the country in the coming years, New York state legislators approved a furlough affecting 100,000 New York public employees.

"Legislators on Monday night reluctantly approved furloughing 100,000 state workers for the first time in New York history.

The unprecedented move forcing employees to take one unpaid day off per week came after Governor Patterson threatened to shut down state government."

The measure being taken by New York State was largely avoidable. If public sector employee had been willing to reduce their already incredibly lavish pay and benefits across the board by as a little as 10%, furloughs would have been unnecessary.

Of course, agreeing to such concessions would go against the bull-headed nature of public sector unions.

In time however, for states like New York, California and New Jersey that have nightmare fiscal deficits , furloughs will ultimately prove to be insufficient and mass layoffs of public employees and slashing of promised pension benefits will be required in order to get state budgets in line with tax receipts.

For taxpayers that are sick and tired of funding lavish retirements of public employees (good luck to anyone who think they can get these types of retirement benefits in the private sector), this type of fiscal reckoning can't come soon enough.