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Watch Your Locals.

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  • Watch Your Locals.

    We all get caught up in the National scene. Might be better to put the local & state under extreme scrutiny and the National level will be more likely to fall in line.

    Salary of $800,000 Sparks California Taxpayer Mutiny: Joe Mysak
    By Joe Mysak - Jul 27, 2010 9:00 PM ET
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    Bloomberg Opinion
    The search is on for the next $800,000-a-year city manager.

    The taxpayers of Bell, California, a 2.5-square-mile city just outside Los Angeles forced the resignations last week of three public officials who made too much money.

    The taxpayers were responding to a Los Angeles Times article of July 15 that asked the question, “Is a City Manager Worth $800,000?” I think we all know the answer.

    The story reported that the city’s chief administrative officer was on a salary of $787,637, his assistant $376,288, the police chief $457,000. These paydays struck the Bell citizenry, and many other Californians, as a bit bloated.

    Ideas in public finance blow in from the West, an old municipal market saying goes. If the watchdogs where you live aren’t on the hunt for public officials making king-size compensation, they soon will be.

    People were already angry about the guaranteed pensions that so many state and local employees get. It’s a surprise that some civil servants also collect supersize salaries, which will only spur even more populist backlash. Unlike the rage expressed over banker bonuses, you can expect taxpayers to demand action. This time, they can do something about it.

    Salary, Security

    The fury over banker bonuses was a short-lived phenomenon, fueled by the taxpayer bailout of the nation’s financial system. Americans respect high salaries in business rather than resent them. After all, (in most cases) if business turns sour, or goes bust, so do those salaries.

    The dynamic is different when it comes to government. Americans think that civil service makes up in security what it lacks in pay, and for the most part they are fine with that. Now they find out that only half of what they know is accurate. Yes, governments don’t go out of business, and they fire workers only as a last resort.

    Americans are slowly being disabused of the idea that civil servants make peanuts. This quaint notion dates from the 1960s.

    The Bureau of Labor Statistics reports on its website that total employer-compensation costs are $27.73 per hour in business, $39.81 in state and local government.

    Californians are on the cutting edge. For years now, they have been treated to stories about how public pensions are going to be the ruin of the state’s economy. Now they find out that current government employees aren’t doing so badly in terms of salary, either.

    Choke On It

    How much is too much? If Bell’s city manager made $250,000 a year, would it have made headlines? How about $300,000? I’m not sure. I’m quite certain $400,000 would have raised eyebrows.

    In his only statement to the press to date, the $787,637 man, Robert Rizzo, told the Los Angeles Times, “If that’s a number people choke on, maybe I’m in the wrong business. I could go into private business and make that money. This council has compensated me for the job I’ve done.”

    Well, that may not be so.

    “There are darned few $787,000 salaried positions anywhere in the private sector for managers who run an organization of similar size,” said Girard Miller, a public-pension and finance consultant at PFM Group in Los Angeles. Bell has 80 full-time employees, according to its latest financial report.

    “What would make for an interesting law would be a statute prohibiting excessive compensation in the public sector, with a clawback provision,” Miller said in an e-mail. “That could apply to excessive-pay union contracts as well.”

    Public Trust

    This is what happens when nobody is watching. Rizzo joined Bell in 1993, on a salary of $72,000, the Times reported. The city council, most of whose members make $100,000 for their part-time labors, decided in their wisdom to keep giving their city manager raises, and nobody called them on it.

    I guess nobody knew. That’s not unusual; a lot of public finance, as we have seen, is conducted in private. What’s worse is that nobody cared.

    For years, the public has professed profound indifference to all aspects of state and local finance, including borrowing, compensation and pensions. The sole exception has been taxes, which everyone cares about.

    Perhaps indifference is too strong. Maybe it’s just that the public has trusted public servants to do the right thing.

    This is about to change, and it’s about time. How much do your city managers make?

    (Joe Mysak is a Bloomberg News columnist. The opinions expressed are his own.)

    To contact the writer of this column: Joe Mysak in New York


  • #2
    Re: Watch Your Locals.

    That's about a 15% increase every year for 17 years ($72k to $787k). I wouldn't mind a job like that.