Commentary: Union wants city to break the bank

I was interested to read the latest fictional spin piece by Orange County Employees Assn. mouthpiece Jennifer Muir on Costa Mesa’s financial situation (“Community Commentary: Don’t believe City Hall’s spin on finances,” Oct. 22).

Ms. Muir contends that a union-retained accountant has found $26 million in hidden money that the city could use to pay employee salaries. Here is the truth about the union’s so-called “cost savings.”

Draining our reserves: Yes, the union wants us to further reduce our reserve account down to 10%, in order to pay employee salaries and benefits. This is not only financially risky, it’s just plain stupid. The best practices for local governments dictate a 17% reserve, not 10%. We need to be putting money back in our reserves, not depleting them to pay salaries.

If you’ve been watching what’s happening in the city of Santa Ana, you know that using your reserves to pay your monthly bills has pushed that city to the literal brink of bankruptcy.

Eliminating our self-insurance fund: Yes, the union wants us to take money out of our self-insurance fund — a fund in place to protect the city and residents from claims and lawsuits — in order to pay employee salaries and benefits. The problem is that this fund is for claims that have already been made. How do we pay those claims?

Pension obligation bonds.

Yes, you read that correct. The union actually suggests that the city incur additional debt through pension obligation bonds. It’s like paying your Visa card off with your MasterCard — debt on top of debt. This way they can free up city funds now to pay salaries and benefits.

Our children get stuck with the additional debt down the road, more of the kick-the-can approach to solving our budget problem.

If you Google pension obligation bonds, you will see the financial mess that happened in the state of New Jersey, when they bought into the pension obligation bond scam. It’s troubling that the union accountants would ever recommend such a risky proposition for our city.

Notably, none of the union representatives, or their accountants, actually live in Costa Mesa. Maybe that explains it.

The union’s proposed recommendations have been panned by the city’s financial staff, and even criticized by the union’s own accountants, who claim that if these proposals were adopted, they could lead to a serious cash crisis for the city. Even the union’s own accountants can’t recommend the city adopt these risky proposals.

Ms. Muir and the union can continue to fight the city in its efforts for financial reform, but she should at least accurately represent the facts. There is no $26-million hidden pot of gold, or some secret account filled with available cash. Costa Mesa, like all other cities in California, is facing difficult financial decisions and must cut costs.

The unions and their public attacks, costly lawsuits and refusal to offer any real solutions only exacerbate our problem — a problem that we, as the residents, have to collectively solve. Perhaps if the union stopped suing the city we would have additional revenue to save jobs and plan for the future.

It’s like the city is fighting two battles: one against a bruising economy and the other against a union that is bent on fighting any form of financial reform. Ms. Muir doesn’t speak for the employees I know who want a sustainable solution.

Lastly, what “damage” has the current City Council caused? It’s the first balanced budget in years that doesn’t rely on reserves, and it has significant street and park improvements and a police helicopter available three times more often at one-third the previous cost.

The reality is that the times are changing. Cities must learn to live within their means just as families do. Fortunately, the residents of Costa Mesa get the facts and understand that change must be made in order to keep our great city financially healthy during these difficult times.

COLIN MCCARTHY is the president of the Costa Mesa Taxpayers Assn.