Sunlight In Palo Alto?

Transparency gets a chance.

In 1968 California Governor Ronald Reagan signed legislation granting collective bargaining rights to local and county public employees and enabling confidentiality of collective bargaining negotiations. A decade later Governor Jerry Brown signed legislation extending those rights to K-12, state and higher education employees.

One result has been the hidden creation of more than $500 billion of unfunded pension and other post-retirement obligations to employees of the state, local and county governments, school and special districts, and public colleges and universities. None of those obligations were disclosed to or approved by citizens and many of the elected officials who agreed to the obligations received campaign contributions from employees benefiting from the obligations. Including interest, paying off those obligations will strip more than $1 trillion from public services. That stripping has already started.

Citizens are granted the right to know about and approve general obligation bond debt such as that issued to build new infrastructure. But the issuance of that debt is tiny compared to the issuance of retirement obligation debt. Also, infrastructure debt creates assets that benefit the future citizens who pay off that debt. In sad contrast, retirement obligation debt relates to services already provided by government employees, which means its service is a dead-weight cost on future taxpayers.

Into the information breach has stepped Palo Alto. The Palo Alto Daily Post reports that four members of the city council have proposed to “lift the cloak of secrecy” on labor negotiations. As described in a memo presented to the council, under current law “virtually no information becomes available to the public until a tentative Memorandum of Agreement (MOA) has been negotiated between the City and the bargaining unit and is presented to the Council for final approval, by which time public review and comment are essentially irrelevant to the outcome of the process.” One result today is that Palo Alto has more than $400 million of unfunded pension and other post-retirement obligations, the consequences of which are “borne by the community.” More such obligations are created every time the city negotiates a contract with public employees. The proponents believe those negotiations “merit meaningful public review.”

The council will debate the proposal on February 26. Citizens should hope for clear skies.

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