The lack of effective political leadership has reached an all time low in California with nearly all establishment politicians denying there are any problems in the state related to the cost of government, particularly pension and public employee benefit costs.
The state’s unfunded pension liability now stands at an estimated $1.5 trillion, but nobody in the California Legislature will even admit there is a problem. Closer to home in the Bay Area, the BART board has come down hard on State Sen. Steve Glazer for opposing the $3.5 billion BART bond on the November 2016 ballot. Glazer cites poor leadership, fiscal irresponsibility and mismanagement by the BART board and management.
The main problem in California politics is that few politicians will confront the big elephant in the room of every state and local government chamber in the state---the unsustainable rise in public employee compensation costs, particularly pension benefits and health care.
State Senator Steve Glazer is different. More than two years ago Sen. Glazer campaigned on fixing BART fiscal mismanagement and cleaning up unsustainable labor practices. Glazer was also one of the only members of the California Legislature to campaign in 2014 on fixing pension abuse, which is the biggest public policy problem in the state.
Glazer is 100% correct, yet he acknowledges a major problem that continues to be ignored by the Bay Area political establishment including most of the California Legislature, the Bay Area business community, the San Francisco Chronicle, and nearly all Bay Area politicians. The East Bay Times is the only other major stakeholder in the region that has correctly analyzed and opined on the severity of the issues at hand.
Longtime BART board president Tom Radulovich calls Glazer’s opposition “petty” and will only serve to undermine a system that the senator professes to support. None of the other BART board members so much as even acknowledge a problem with their stewardship of the system, something that is so readily apparent to all studious observers.
Radulovich and everyone else says go ahead and let the BART board and management continue to screw up and we’ll look the other way, because the Bay Area needs BART.
The sad reality is that unless the deep seated fiscal mismanagement at BART, particularly as it relates to public employee compensation issues, the system will both never have the money to pay for needed improvements and be able to garner the public support necessary to fund those improvements.
State Sen. Glazer is apparently the only elected leader in the region who is aware of this, and is criticized for it despite doing the right thing.
“At some point you can’t reward bad behavior, and you gotta do as a parent does with an unruly child—you gotta just sometimes say no, and you gotta go back and do it right and rebuild the trust that has so deteriorated,” Glazer stated, at a forum held and reported on by KQED.
Glazer says that BART has suffered from “a lack of planning for the deterioration of the system that’s now reached a crisis point,” citing the examples of excessive labor contracts, and the controversy of dummy security cameras that the district can’t even get replaced.
BART has much bigger problems than are publicly acknowledged. First off, none of the BART bond funds will pay for new cars one of the most expensive and needed items on the wish list. Second, the BART system is at capacity and has deteriorated to the point that the entire system needs to be essentially rebuilt—something that will cost a lot more than $3.5 billion.
In short, the $3.5 billion BART bond is a band aide, intended to cure decades of neglect and misplaced priorities that have consistently put worker salaries and benefits (including management) above the cost of needed infrastructure improvements and the long-term sustainability of the system. BART management does not even have the faintest clue about how much money needs to be invested in the system which will soon be incapable of meeting the huge increased demand through the tunnel due to the region’s surging economy. The system is maxed out in terms of trans bay traffic, but there is no help on the way, despite having years to plan for this bottleneck.
According to inside sources, the chickens may finally come home to roost this November because polling shows that the BART bond is passing in San Francisco and Alameda Counties, but failing to achieve the needed 2/3 vote in Contra Costa County.
The key proponents of the BART bond, measure RR, are the beneficiaries of the bond and the Bay Area business community are scrambling to shore up flagging support in Contra Costa, but it’s likely already too late. The Bay Area business establishment says we need to pass the bond because it is essential to the state’s economy.
This may be true, but that does not mean we should force escalating rate increases on riders and tax increases on homeowners. If the Bay Area business community wants the BART bond so badly they should pay for the exorbitant costs of both the bond and recent labor agreements, because these costs are currently falling almost 100% on riders and Bay Area homeowners.
Moreover, Bay Area business leaders say just give them what they need, while they skate free from the never-ending cycle of big labor contracts, fare increases, and tax hikes that will continue as far as the eye can see unless something changes at BART. All the while the system crumbles from a lack of funding and leadership that will put the public interest over the interest of union interests who control the BART board.
According to Stanford University, BART has unfunded pension liabilities of $3.1 billion (market rate) which is nearly three times it current bonded debt of $1.1 billion and nearly twice the $3.5 billion it is asking to borrow from taxpayers this November. This $3.1 billion pension liability continues to grow unchecked at 7.5% per year at minimum, but most likely at 10-20% per year or more.
Don’t you think it makes sense to get that pension liability under control before you ask voters for more money? But not one BART board member nor public manager will say a word about this debt, other than we can’t do anything about it. The truth is that they won’t even try. Offsetting cuts could be made to force pension changes and increased cost sharing by employees similar to the 4% of payroll contribution required by Governor Brown for state employees.
BART’s public employee pension debt alone has the capacity to totally crowd out its ability to fund capital improvements.
BART employees have been given a 30% raise over the last two contracts in 2013 and 2016 despite being already the highest paid transit workers in the country. BART management has refused to even conduct a salary survey in the last two contract cycles because everyone knows what it will show—that there is absolutely no justification for the level of raises, a complete lack of benefit costs sharing, and a refusal to curb unsustainable benefits, which includes 6 weeks of paid vacation and 13 paid holidays.
BART workers get paid more than anyone else and most get two months off per year, pretty nice gig at taxpayer and rider expense.
The only question is when will this whole taxpayer-funded gravy train end? Measure RR promises to extend existing practices for at least another decade because up to $1.2 billion of the bond funding can be used to pay for exorbitant labor cost overruns, instead of capital improvements.
Radulovich even has the gall to say that Glazer and East Bay Times columnist Daniel Borenstein are flat out wrong that the bond will make it possible for BART to shift other funds in its budget from long-term projects to worker salaries and benefits.
There is literally nothing in the BART bond language that would prevent this transfer, along with the diversion of significant funding that is currently transferred to capital projects on a voluntary basis to fund future labor costs and attempt to temporarily plug the growing pension and benefit funding gap.
Glazer is right, and just about everyone else in a position of power in the Bay Area is wrong when it comes enabling poor fiscal management and weak leadership at BART.
The best thing Bay Area voters can do this November is reject Measure RR unless a series of commitments are made to alleviate concerns raised by Glazer, Borenstein and other observers about the underlying structural and chronic issues with the management of BART’s finances, particularly with regard to its labor practices and long-term planning.
David Kersten is the president of the Kersten Institute for Governance and Public Policy. He is an expert in public budgeting and public sector labor issues.
State Senator Glazer Deserves Praise for Opposing $3.5 Billion BART Bond, Unchecked Labor Costs "On Track" to Require Massive Public Subsidies in Future Years
Insolvent Film Report (4-12-16): BART “Tentative Deal” Solidifies “Unsustainable” Public Employee Compensation Practices at Bay Area Rail System