The press reports here in the San Francisco Bay Area tell us the cost of the Occupy movement to the city governments in Oakland and San Francisco now total about $ 1 million each in additional police, public works and cleanup costs. But that is only a fraction of the true cost of this hard to categorize movement.
I was downtown San Francisco yesterday and the size of the Occupy crowd had dwindled to a handful in front of the Federal Reserve Building. The policy now prohibits tents and camping out but still permit the peaceful protest as long as the crowd does not block ingress and egress from the building.
In Oakland it is a different story, after the siege of downtown Oakland that resulted in violence and force many small businesses to close, the City finally shut down the camp. There are still day protesters but it is a shadow of the former presence. The erratic handling of occupy situation has now resulted in a recall petition against Mayor Jean Quan for bungling the first big problem on her watch.
Occupy the Port of Oakland Escalates the Conflict
But the problem gets both worse and gains clarity in what is happening at the Port of Oakland near Jack London Square where the Occupy Movement has relocated in change of tactics now focused on shutting down the Port of Oakland in order to ‘punish the 1%’.
This shift in tactics seems to suggest both the waning of interest and the digging in by the hard core of the movement. It has been subtle but apparent that the Occupy movements in Oakland and San Francisco were aided and supported by selected labor unions including the Teachers and Service Workers unions and perhaps others either encouraging or choreographing, it is not clear, events to support their own political agendas. That there was embarrassment for the liberal progressive politicians that originally supported them as the demonstrations went on was thought to be regrettable collateral damage. That small business who clearly do not fit the label of the 1% were horribly affected as the movement drove customers away was often only a sidebar story on the evening news outshouted by the protesters.
But the move on the Port of Oakland is different. Either the Occupy Movement has been reduced to its radical core now uping the ante in an effort to keep it going—or—the parts of the labor movement which originally supported occupy are now hearing loudly and clearly the complaints of other voices in the labor movement like the Longshoremen that closing the port entrances with Occupy protests is going to cost workers their paychecks for Christmas. In the first few days of the Port tactics the San Francisco Chronicle reports that the average daily cost for cargo disruption at the Port of Oakland is now about $4 million in lost revenue and pay for 750 workers at the Port sent home. Police reports say there may have been as many as 3,000 protesters at the Port entrance and that the Occupy ports tactic change was spreading to 11 other West coast ports. This is not coincidence.
The Occupy Movement is at a critical point because its original message calling attention to income disparities and the hardships the rotten economy is visiting on the 99% resonated with many. We get it. But the longer it goes the more muddled the message. This is NOT the left wing version of the Tea Party as some on the Democrat side had hoped. The Tea Party had a message and a clear philosophy of lower taxes, less government spending and debt and less intrusion in the lives of ordinary Americans. The Tea Party members also were quickly assimilated in the broader fabric of American politics. The Occupy crowd has overplayed their hand and is increasingly seen as doing more harm than good for their message.
- Oakland port gets back to work after Occupy protest (latimesblogs.latimes.com)
- Arthur Bruzzone: Occupyâs major message misfire (huffingtonpost.com)
- Occupy shutdown costly for Oakland port (mercurynews.com)
- Occupy Oakland takes over Port of Oakland: photos (boingboing.net)
- US ports reopen after protest disruption (news.smh.com.au)
- Occupy shutdown costly for Oakland port (mercurynews.com)
- Blue Collar Furious Over Occupy’s Port Of Oakland Closure? (sfist.com)
- Occupy protesters in U.S. target West Coast port (vancouversun.com)
- Occupy Protesters Clear Port of Oakland This Morning (blogs.sfweekly.com)
There is good news and bad news in California. The good news is state tax revenues grew $6 billion more than expected in the latest report reducing the state budget deficit from $16 billion to $10 billion for the year with less than a month to go before the Constitutional deadline for approving a budget.
The bad news is there is no legislative agreement on the budget and little prospect of getting one by the deadline. The Legislature rarely meets its deadline for budget approval.
Governor Brown proposed to close the deficit with extensions of sales and incomes tax rate increases scheduled to expire to cover half the shortfall and budget cuts to close the rest. Democrats scream soak the rich, Republicans scream stop spending money you no longer have.
So while Sacramento dithers, out here in the real world stuff happens:
A Pox on Both Your Houses. California voters in the last election approved a ballot initiative to reduce the legislative votes needed to approve a budget from 2/3 of each House to a simple majority. But Californians are not stupid so they also approved another measure that requires a 2/3 vote of the people to raise taxes so Governor Brown can propose tax increases and the Legislature can put them on the ballot but the people will decide.
California bad-mouthed as not being business friendly. Newly elected Lt Governor Gavin Newsom, former mayor of San Francisco, lead a delegation to Austin Texas to investigate why so many California businesses were moving out of the Golden State and end up on the Lone Star State. In one meeting covered by the media, executives of companies that quit California complained of burdensome regulation, high costs of mandates, and deteriorating business conditions. One fast food chain executive said it takes more than 2 years to get permits to build one of his restaurants in California compared to 6 weeks on average in Texas—so his company is building 200 more restaurants in Texas and only 4 more in California and those are relocation of existing establishments to better locations.
BayWatch Salaries. Newport Beach’s 13-member full-time lifeguard crew salaries, benefits and overtime pay average over $100,000 each and the top two cost more than $200,000 each(with $400 for sun protection) as the city struggles to rein in pension costs.
Vacation Scams. Despite a policy limiting vacation carryover from year to year to 80 days (640 hours) total accrual, the State of California was forced to pay $2.75 billion for more than 75.5 million hours of excess vacation accrual because its managers failed to enforce its policy. One prison doctor accumulated more than two and one-half years worth of vacation and was paid $594, 976 upon retirement. An audit report says 29% of state employees leaving the system were paid for excess vacation time and 400 received an amount equal to more than one year of salary.
We Pay them HOW MUCH!#@? The San Jose Mercury Newspapers have posted an online database of public official salaries creating a controversy over intrusions into employee privacy not that pales next to the controversy the facts revealed. Public officials are well paid in California—very well paid. Some part-time elected city council members are paying themselves nearly $100,000 per year while others get $100 per meeting for their service. Some cities, counties and special districts pay the health insurance costs and pension contributions for part-time elected officials. In some instances the annual cost of benefits is a multiple of the salaries paid.
Wined, Dined and Termed Out. California has more than 300 state boards and commissions many of which have turned into ‘way-stations’ for termed out legislators and others with political connections. In the most egregious cases, these board appointments are paid $125,000 per year or more to attend a monthly meeting lasting several hours. Governor Brown responded to the last newspaper expose by proposing to eliminate a handful of these boards which met with howls of resistance from legislative leaders and the appointed politicians.
California is careening down the freeway out of financial control with the radio blaring the song “ Do You Know the Way to San Jose” hoping desperately that Silicon Valley will take off again and refill the treasury with gold except Intel decided to build its two new chip making plants in Arizona and all those millionaires California needs changed their legal residence to Texas which has no income tax or capital gains tax.
California is broke and our state government is broken and even the Terminator failed us so we hired back Governor Moonbeam who is busy negotiating new labor agreements which do include some pay and benefit concessions from state employees but do little to change the fundamental flaws in the benefits structure that got us in trouble.
Oh, there is one more thing, The San Francisco Chronicle reported that former Speaker Nancy Pelosi’s office sought and won waivers from who said they could not afford the required coverage mandates under the new law and unless they received waivers they would terminate their health insurance plans. They got them quietly until the press found out. requirements for major San Francisco employers
Have a nice day!
- Lt. Gov. Gavin Newsom: CA still has no clear economic plan to “get back in the jobs game” (sfgate.com)
- Texas, America’s Land of Opportunity – Pursues Calif. Businesses After Jobs Summit (timesoftexas.com)
- California’s Brown sees “good chance” for budget (reuters.com)
- S&P: ‘Important crossroad’ for California credit rating (fresnobeehive.com)
- Deep in the heart of Texas: Lt. Gov Gavin Newsom and Gov. Rick Perry keep it cordial (sfgate.com)
- California bishops decry breakdown on budget deal: ‘Devastating for poor’ – Catholic San Francisco (news.google.com)
- Rich People Underappreciated in Golden State (reason.com)
Zynga is one of those high tech companies attracted to the glamour and glitz of San Francisco as a way of attracting talent for its social game products like CityVille. But it is threatening to move elsewhere in the Bay Area if San Francisco doesn’t friend it with benefits especially any that the City already gives Twitter, one of its rival.
Zynga leaked work that despite signing the largest commercial lease in 2010 for a 10-year deal 270,000-square-foot space for its new headquarters its fast growth means that it could just as easily go to another city that will love it more.
“We are looking at a variety of options to grow the company in the Bay Area, and as part of that, we are in serious discussions with the city,” the Chronicle story quoted a Zynga spokesman saying. “It would be premature to comment on those conversations at this time. We are encouraged that the city is engaging with us on this issue.”
You love Twitter more than Zynga! Zynga is thoroughly ‘tweeted-off’ that San Francisco offering a payroll tax break to Twitter and other tech companies in a push to rev up Mid-Market and Tenderloin districts in the City. Action on the tax breaks for Twitter is scheduled for action by the Board of Supervisors April 5th.
Here’s the problem:
San Francisco and every other city, for that matter, has no money to subsidize venture capital and fast growing firms. Giving Twitter a break just invites Zynga and every other firm to get in line with their hand out. Now that Governor Jerry Brown has proposed to strip cities of the ability to use redevelopment authorities to do these kinds of subsidy deals the onus is falling on the revenue bottom line for every tax break deal.
San Francisco is a magnet for business because the commercial real estate market has been soft and good deals can be found on class “A” office space in great locations. The City hurts its competitiveness by imposing regulations and costs of those doing business there that are not imposed elsewhere, but is unwilling to risk the wrath of its liberal constituencies by reducing its regulatory burdens. These venture capital supported firms are great at leverage and negotiating so they are squeezing San Francisco for every dollar they can extract as they should.
But if San Francisco used the cost of all the tax breaks it has handed out to reduce the cost of doing business in the city for everyone a rising tide would lift all boats—and San Francisco’s fog and magic would still make it a great place to be.
But the best part of the Chronicle story is going online to read the comments from readers which make you wonder, sometimes, why anyone in their right mind would want to do business there.
Here is a sample:
1:57 PM on March 26, 2011
Throw ‘em out. No businesses allowed in SF.
9:56 AM on March 26, 2011
While their tactics reflect poorly on these well-to-do companies, they are beholden to their investors’ money interests and ultimately they’ll do whatever saves/makes them the most money.
Best strategy for SF is to drop the all barriers that make companies look south, keep the businesses here and enjoy extracting money from the business & staff through other means (property taxes, sales taxes, higher business activity in the mid-market, etc). It’s sad to admit but you’ll never be able to compete against an investor’s bottom line, and you shouldn’t give them reasons to show their cheapness – they and/or the stock market doesn’t care whether their workers are enjoying a high standard of living in SF or are in some bleak business park wasteland to the south. Sad, but that’s reality.
9:16 AM on March 26, 2011
The City needs to realize that providing tax breaks to firms that start and provide jobs here in the City will benefit the City in the long run. However, providing tax breaks to firms that operate as part of a chain or import themselves into the City because San Francisco is a ‘destination’ address, don’t need or deserve these tax considerations.
4:16 AM on March 26, 2011
I’m sick of the blackmail. If the internet brats want to move to Hooverville, let them go. They shouldn’t get a tax break when middle class residents and small businesses have to pay their taxes. These are taxes on the stock options of new MILLIONAIRES. I’m sure they didn’t hesitate to take advantage of the city-provided health care safety net and the city-provided clean drinking water, and the city-provided streets, and the city-provided fire protection while they were just a bunch of recent college grads with an idea. Count your blessings, quit complaining, and write your check. It’s not like they’re going to end up in the poor house.
3:15 AM on March 26, 2011
Zynga’s valuation is in the billions. The Company requires a work force that is diversified and able to contribute to the many challenges the Company will face as it continues to grow at its current pace. Zynga’s growing size will eventually utilize a myriad of shared service centers, developer locations, data center operations, and sales offices that are not within an arm’s reach of the Company’s headquarters (even though the newly signed lease is large at 270k sq. ft.). So when Zynga claims they are looking to “future expansion south of the city,” it’s only natural they will look to lessen the cost of living burden faced by their employees (which directly reduces their payroll costs); after all, can an accounts payable clerk or data center operations analyst making less than $70k a year afford to live comfortably in the city? Ultimately, if you want to keep every job a company like Zynga or Twitter can possibly provide you’re going to fail.
(Now for the periphery rants)
Let’s not blow this issue out of proportion and subsidize these fleeting jobs that are perceived as “precious.” After all, wasn’t the building that Zynga agreed to lease and the land Salesforce bought previously destined to cultivate a biotech/medical device industry capable of providing much higher tax revenues to the city; we have apparently forgotten that previously “precious” dream.
But if you’re stubborn and continue to claim these jobs are worth a San Franciscan’s arm and leg (or two) to save, then admit this: Caltrains needs a direct funding source because an increasing number of employees take the train to their SOMA workplaces because their home address is south of the San Francisco border.
11:59 PM on March 25, 2011
Let’s see… the city imposes taxes on businesses that can easily move outside of the city and still attract the same talent; now instead of collecting sales tax on the coffee, lunches, and other items those workers will buy in the city they can collect nothing!
All the Board of Stupidvisors does is dig the city into a deeper financial hole. They only want to tax the “rich” to pay for all the services forthe “poor” and pay a “living wage” to all the “poor” city employees. What they seem to forget is that the rich can leave and pay nothing; and you’re still stuck with the poor.
The fact that San Jose has surpassed San Francisco in size should be a huge wake up call; San Francisco will become to San Jose what Oakland is to San Francisco… second rate.
8:24 PM on March 25, 2011
The tax benefit is supposed to mean companies who put workers in blighted areas don’t pay city employment taxes for wages earned during the time the employees are working in the blighted areas. But the benefit to twitter goes backwards and also forgives taxes due on stock options paid while the workers were NOT in the blighted areas.
All of the other businesses have to pay taxes on such wages, but Twitter and Zynga want to sidestep them. They want to avoid the taxes due on the portion of compensation paid via stock options to workers before the move that don’t come due until after the move.
It’s bad policy to allow some companies to sidestep taxes that other companies have to pay. Either the taxes are bad or they aren’t. Telling some companies that they don’t have to pay taxes on wages accrued before the move and other companies who pay 100% in cash that they don;t get that same benefit is unfair.
San Francisco Superior Court judge Ernest Goldsmith smacked down plans by the California Air Resources Board to implement its AB32, Global warming Solutions Act, “scoping plan” because he said CARB failed to follow the provisions of the California Environmental Quality Act (CEQA) because its environmental review failed to adequately consider alternatives to its proposed cap and trade approach.
In essence, the judge said CARB had already made up its mind and its actions to implement the scoping plan “seeks to create a fait accompli by premature establishment of a cap-and-trade program before alternatives can be exposed to public comment and properly evaluated by the ARB itself.” Judge Goldsmith found that CARB’s “analysis provides no evidence to support its chosen approach,” and its action “undermines CEQA’s goal of informed decision-making.”
Adding insult to injury for CARB the lawsuit pending before Judge Goldsmith was filed by the Center on Race, Poverty and the Environment, a San Francisco environmental justice group that seeks more specific remedies from the court such as ordering reductions in specific harmful emissions in specific neighborhoods.
CARB has until Tuesday to respond to the preliminary ruling, but if it is ordered by the Court the effect could be considerable delay in implementing AB32.
The delay could be just a temporary hiccup in the implementation of AB32, according to environmental blog Legal Planet since the since CARB won on the merits on all the plaintiffs specific claims challenging the scoping plan. The Judge’s decision is narrowly cast to apply to the CEQA environmental review process. CARB would certainly appeal any injunction issued but it probably will have to fix the procedural problems before it moves forward with implementation.
California license plate numbers follow a pattern of number-letter-letter-letter-number-number-number, but the state is running out of possible combinations.
The Contra Costa Times asked readers for suggestions. A few wise-guys responded:
“The obvious, quintessentially California answer is this: Once we get to9ZZZ999, the state will simply declare that there can be no more cars registered in the state. A cap, if you will. This will be explained as a necessary measure to preserve air quality and reduce our energy usage. The only way you’ll be able to buy and register a new car is to take an old one off the road.”
“I agree that this will probably happen, replied another, with one small variation. When the state institutes the cap, the only way to register a different car will be to find someone to swap cars with you: cap and trade.
Still a third said: “Rebellious citizens will quickly set up a black market where you can buy new cars, incandescent light bulbs and (for San Franciscans) Happy Meals, which will soon replace crack and other controlled substances.”
I think a reverse auction might work where new car owners bid on the license plate numbers of older cars. Think of it like buying a renewable energy credit. When the price is higher than the residual value of the old clunker someone will raise their hand and take the deal. The state will keep half for the politicians to spend flagrantly on essential purchases. You know, like the $258,000 the state motor pool just spent to buy the newly elected state legislators new cars—more than half of which were gas guzzling SUVs.
But there is hope for California.
Governor Jerry Brown told 48,000 state employees to cancel their cell phones saying that when he was last governor we didn’t even have cell phones and things worked better. Besides, he said, he did not understand why 40% of the state employees or 96,000 of them needed state paid cell phones.
The California High Speed Rail system is not only the largest single recipient of stimulus spending with $3.5 billion to date not counting state bond money for total spending of $4.3 billion. But this is the theatre of the absurd at work as the prospect of real construction ahead now is causing communities along the Peninsula south of San Francisco to complain that the train will come too near them for comfort—NIMBY at pure gold prices.
The problem for the High Speed Rail Authority is that the clock is ticking to get this money spent before the deadline runs out in 2017 or give it back. So there is a triage effort at work to identify the segments of the high speed rail that are ready to move forward and leave others behind.
Now don’t laugh!
The problem now is the sections of the high speed rail line designed to link the major metro areas of San Francisco in the North and Los Angeles in the south are out of the running because of these NIMBY problems with the routes. So two sections—San Francisco to San Jose, and Los Angeles to Anaheim—are now stalled. The section of the route to be built first is the one needed least either Merced to Fresno (60 miles in length), or Fresno to Bakersfield (113 miles in length). You can check out the route online on an interactive route map here.
So what happens if the other sections cannot be built by 2017? California will have spent $4.3 billion on a railroad to nowhere
Mayor Gavin Newsom of San Francisco announced that he is sending lay-off notices this week to 15,000 of the 24,000 employees of the City and County of San Francisco.  San Francisco like the rest of California’s cities and counties is in the midst of a financial emergency and faces a $522 million budget deficit that must be closed. This is on top of the $438 million hole in the budget for the current fiscal year that the City filled by using virtually every reserve, piggy bank and accounting gimmick known to man.
This time there is no other way out.
Newsom’s solution is a clever evasion of both the Board of Supervisors and San Francisco’s labor unions. Instead of arguing about concessions from the unions for a second year in a row and then getting thumped by the Sups, Newsom has taken the offense. By issuing 60-day lay-off notices to 15,000 employees, Newsom said many could re-apply for their jobs and, if selected, might be offered part-time employment with no one working more than 37.5 hours per week. After all the paperwork is settled, this action is expected to save the City about $100 million per year and result in the equivalent of a 7% pay cut for employees retained. Not enough to close the budget gap but it can be done administratively. Only public safety and muni transit workers were exempt from the layoffs.
The alternative to this approach is to cut about 4000 city positions with all the corresponding impacts on city services and a bloodbath of conflicts before the Board of Supervisors. The Mayor is betting that the public would rather see fewer cuts in services and let him be the bad guy for cleaning house at City Hall to squeeze out some fat since he is ‘termed out’ and will not be running again for Mayor.
Separately, the San Francisco School Board issued 900 layoff notices including more than 500 teachers, counselors and nurses to balance its own $113 million budget deficit. Under California law, school districts must issue layoff notices by March15th for the following school year. The Board is negotiating with the affected unions there for wage concessions and furlough days in an effort to reduce the number of layoffs but this is déjà vu all over again—as the saying goes so the outcome is uncertain. Statewide more than 10,000 California teachers are expected to get layoff notices by March 15th.
Unions for the city hall bargaining units affected were, as you can imagine, not happy. They accused the Mayor of “French kissing” them after they agreed to concessions to balance this year’s budget. The reference is to a similar strategy used by the French Government a few years ago to get around its own unions. In France, the tactic failed since the unions merely made life miserable by work slowdowns and other tactics of their own until the Government relented.
Newsom recently gave up his run for Governor saying he didn’t have the time and could not raise the money for the race. Of course, his likely opponent in the Democrat primary would have been Attorney General Jerry Brown. He is now flirting with running for Lt Governor but no one in their right mind can imagine who would want that useless job unless you are worried about Jerry Brown’s health—he is 72 and would have the distinction of being both the youngest person and oldest person elected Governor if he wins in November. You can bet the labor unions are not going to be writing the Mayor’s campaign any big checks.
The budget balancing games being played in California are part of the fiscal tragedy of the meltdown of the Golden State. While every gimmick known to man—like these above in San Francisco may buy a little more time in the hope that the economy will turn around. But they will not solve the structural problems facing our public finance. Fixing that requires hard work which, so far, our politicians seem unwilling or unable to do.