As a friend of mine, Los Angeles radio show host John Phillips, put it, local elected officials in California are robbing their constituents so they can live like multi-millionaire gangster rappers. What’s sad is that he’s not far off. His colorful analysis has proven true, as recent reports reveal that city managers in Southern California are paying themselves hundreds of thousands of dollars, living in lavish mansions and cruising to work in limousines — all on the taxpayers’ dime. Couple this unchecked corruption with California’s historically incompetent leadership, and you have the makings of a fiscal calamity.
The story breaking out of Bell, California, is a scene right out of an R. Kelly music video — the mayor runs a drug house, while city officials take kickbacks from thug tow companies and hold parties with underage female escorts. In late July, residents erupted in outrage after discovering that Robert Rizzo, the city’s chief administrative officer, was paid a salary of nearly $800,000. Upon retirement, Rizzo’s pension benefit would amount to $600,000 annually — its estimated total value a whopping $30 million. Predicting the exorbitant retirement checks that its city employees would later collect, Bell voted to take in $3 million in illegal property taxes from its residents, whose average annual income is under $25,000.
Vernon is the latest city contributing to the heap of government waste in California, with a massive $325 million budget for a city of less than 100 residents. The Los Angeles Times recently reported that in 2005, former city administrator Bruce Malkenhorst paid himself a salary of $911,563, retiring on a taxpayer-funded annual pension of $500,000. Malkenhorst is currently awaiting trial on charges that he spent city money on himself.
The result? California-based companies are flocking in record numbers to less-restrictive, less-taxed states like Arizona and Texas, as they discover that in California, corrupt politicians and labor unions have taken control. The growth of government, wasteful spending, and burdensome regulations that create a hostile business environment are redefining the term “Golden Parachute” for private sector employers. The spotlight has quickly shifted from traditionally-ridiculed corporate executives to union-protected government workers, whose audacity to rake in outrageous salaries and benefits in an underperforming economy raises eyebrows.
Unfortunately, these scandals are microcosms of the statewide financial problems plaguing the Golden Parachute State. California’s behemoth budget deficit is approaching $20 billion. Its unemployment rate exceeds the national average — an alarming 12 percent — in a state whose pension fund is on the brink of bankruptcy.
The California Public Employees’ Retirement System (CalPERS), the largest public retirement fund in the nation, needs $3.9 billion this year from the state in order to finance retiree costs, according to Pensions and Investments. CalPERS is currently in $500 billion of debt.
As it stands now, a typical state worker in California making $36,000 per year can retire at age 55, with a guaranteed, inflation-protected, one-million-dollar retirement fund. One million dollars. Guaranteed. There are nearly half a million retired public employees enrolled in CalPERS.
The people of California — and Americans nationwide for that matter — are looking for answers. How can this possibly be sustainable? Where is the accountability?
When former Bell mayor Robert Rizzo requested a massive 47% pay increase in 2006, CalPERS approved the salary spike without batting an eye. After the story broke in July, Attorney General Jerry Brown came under pressure to investigate the matter.
“CalPERS should have told someone,” Brown said, “and the attorney general’s office would have been a good place to start.”
Brown, who is also California’s Democratic gubernatorial nominee, has served as the state’s top prosecutor since January 2007. Brown has promised voters frugality if elected this November. To “begin with,” Brown said in an interview with Univision, “I would cut back the governor’s expenses, like the private jet, mansion and things considered luxuries.” That’s great, except the governor’s office no longer owns a private jet or official residence. Hmm.
Perhaps the state’s CFO can offer guidance.
In a July interview with Fox Business Network, State Controller John Chiang divulged that California “has not been operating in the black since July 12, 2007. I am the person trying to keep California afloat. I am the one trying to keep the taxpayers out of trouble.” Chiang’s comments are intriguing, considering he assumed the office of Controller in January of 2007.
Chiang, who also sits on the CalPERS Board of Administration, failed to act for more than three years in his capacity as state controller, after officials learned of the city of Bell’s ridiculous salary increases. He is running for re-election in November.
California now spends more money on retirement benefits than it does on higher education. Its budget is nearly two months overdue, and the state will soon begin issuing IOUs to its taxpayers. Think about that. A state with the world’s 8th largest economy is issuing IOUs to people — people who now will be both uneducated and broke.
Sounds like a gangster rap video to me.
Chris Garcia is a conservative political activist and strategist in Southern California, and a contributor to The Daily Caller and Human Events. Chris most recently appeared as a guest commentator on Fox News’s morning show Fox and Friends, and has been a frequent guest on several talk radio shows, including The John Phillips Show on AM 790 KABC in Los Angeles, The Dr. Gina Loudon Show on AM 630 KJSL in St. Louis, and The Tony Katz Radio Spectacular on All Patriots Media. He is a Bill Gates Scholar studying economics at Pepperdine University in Malibu, CA.