Weekly News – March 15, 2014

Chicago credit rating downgraded, pensions blamed
There’s some bad news out of Chicago: a major credit ratings agency downgraded the city due to the “massive” pension deficit. The city’s four pension funds are currently in the hole for nearly $20 billion, and next year’s required contribution is set to double, meaning the problem will get worse instead of better without major changes in tax revenue or spending.

Houston firefighters give up holiday deal
The Houston Professional Fire Fighters Association has reached an agreement with the city that counters an earlier proposal to pull fire trucks out of service in order to help reduce budget deficits. The new deal will give firefighters a 2% raise and a one-time uniform allowance, but they are giving up the ability to use guaranteed holidays temporarily, which will help with staffing shortages. The staffing shortages were causing the HFD to schedule more overtime to fill in the gaps, driving up the city’s spending on salaries.

Police association fears “retaliation”
This one is a little complicated, but the short version is this: a task force faction that included a firefighter and a consultant hired by the police union declined to present their findings to the San Antonio city council, in spite of having previously requested an opportunity to do so. The reason given was that some members of the group had “significant fears” of retaliation by the city manager, Sheryl Sculley. Mike Helle, president of the police union, says that he doesn’t blame them for not wanting to present their findings, but is ready and willing to “stand up to bullies” as necessary.

Cease-fire on opposing ballot measures
In Oregon, pro- and anti-union groups have all agreed to withdraw ballot measures that were the cause of great acrimony in the state. One side was pushing to raise taxes on corporations and the wealthy, and the other side was pushing to restrict what unions could do with their dues. A pro-union group called “Our Oregon” issued a statement saying, “The best news out of this deal is that Oregon workers will not have to face a major, multi-million-dollar attack from out-of-state corporate interests.”

City council and union come up with different numbers
The Memphis city council and the firefighters’ union are (somehow) getting different numbers for the city’s pension shortfall, to the tune of $200 million. It’s hard for most of us to understand how that much money could be neither here nor there, but the accountants are undoubtedly hard at work trying to figure it out. State Treasurer David Lillard is urging Memphis to act now and not “kick the can down the road.” Putting off the inevitable will just make it worse, but if the $200 million turns out to have been sitting in the pension fund all along, the situation will be much less dire.

Costly pension ruling in Arizona – good news for cops, teachers
The Arizona Supreme Court ruled unanimously that the state legislature was acting illegally when it adopted rules that would cut the inflation benefits for public employee pensions to the tune of $375 million. While that would undoubtedly have saved a lot of taxpayer dollars, the fact remains that the money would be coming directly out of the pockets of retirees who had been planning on a certain level of income. Arizona’s state constitution has an amendment that says “public retirement benefits shall not be diminished or impaired,” so it’s hard to understand how legislators thought this would be legal.