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Harris Sherline: We Have Met the Enemy, and It Is Us

At some point, local government will be forced to default on benefits the unions negotiated for their members

One of the most valuable lessons about negotiating that I learned in more than 50 years as an accounting professional and businessman was to always leave something for the other side. Successful negotiating is not about winning everything and leaving nothing for the other party. That’s one of the biggest mistaken assumptions made by many people and can sometimes lead to undesirable and unintended consequences.

Harris Sherline
Harris Sherline

Negotiating is not dictating. It’s a give-and-take process that, hopefully, can be a win-win for both parties. Otherwise, it becomes an exercise in power, where one side simply dictates to the other.

That said, the example of the day is the unions that represent government employees vs. the government entities that employ them and indirectly the taxpayers who ultimately pay the bill. Think about it: What is the long-term outcome likely to be when unions obtain wages and benefits from the government that can’t be sustained over time?

Pogo’s well-known quote comes to mind: “We have met the enemy and he is us.” That seems to be the case with government employee unions, which have negotiated wage and benefit packages that are generally better than those of most taxpayers forced to pay the bill.

The argument is sometimes made that government employees are also taxpayers. True enough. However, that would be appropriate only if they were paying the major share of the bill for their own compensation.

The problem has been a combination of government revenue streams that grew steadily for many years, coupled with compliant politicians who responded to the political muscle of the unions that have actively supported their campaigns for election. A particularly egregious example of this was the Santa Barbara City Council election a few years ago, in which the employees union asked council candidates a series of questions but would not release their responses to the public.

Not only do the government employee unions have the power to strike, they also vote and, given the percentage of the work force that now works for government, they represent a major portion of the voting population.

We — that is, our political leaders — can resist, but they don’t. President Ronald Reagan demonstrated the value of pushing back against the excessive demands of government employees by firing more than 11,000 air traffic controllers in 1981, when they attempted what was then an illegal strike.

The result has been the steady growth of government employee costs, to the point that they can no longer be sustained. This is clearly demonstrated by the current plight of Santa Barbara County, which is grappling with a projected budget deficit of about $39 million

The percentage of government budgets that is allocated to employee retirement has been steadily increasing. At some point, the government entities that fail to stop approving expenditures they don’t have the money to pay will eventually go broke. When that happens, whatever retirement benefits they may be contractually bound to pay to their employees will be drastically reduced, of necessity, possibly by a bankruptcy court, if no other way.

But, both the unions and the various government entities seem to keep trying to “soldier on” as if there’s no tomorrow. One gets the impression that if no one looks, the problem will just go away. It won’t. There will be a day of reckoning, and appears to be approaching fast.

Writing in the Santa Maria Times, Julian Ramos noted on March 3: “Faced with the unenviable task of closing an overall $40 million budget gap, the Santa Barbara County Board of Supervisors agreed Tuesday to hold off giving direction to county staff on how to narrow that deficit. ... Most of the budget gap is linked to skyrocketing county employee retirement costs and shrinking property tax revenues, which makes up the majority of the board’s discretionary funding and supports most public-safety programs.”

Fifth District Supervisor Joe Centeno of Santa Maria said he would rather see cuts to nonessential services than see reductions in services to children and adults who need mental-health care. “We have to find a way to accommodate their needs,” he said.

It all sounds good, but no one has the slightest idea how to stretch the available funds to accomplish that without going broke in the process. Ultimately, Santa Barbara County won’t be able to meet its commitments to pay the retirement benefits the unions have negotiated for their members. The county will be forced to default, and the unions will have turned out to be their own worst enemy.

It’s time people in government — at every level — get real.

— Harris R. Sherline is a retired CPA and former chairman and CEO of Santa Ynez Valley Hospital who has lived in Santa Barbara County for more than 30 years. He stays active writing opinion columns and his blog, Opinionfest.com.

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