The News Journal Strikes Again

Last night Founders Values had our annual membership meeting.  This meeting revolved around the 2nd Amendment and that is always a good draw.  Even with the expectation of poor weather and some late notices, we had a good turn out.  One of our members, Bob Wilson, approached me before the meeting and asked where I found some information that I had written about concerning Delaware's pension and retiree health care benefits.  I told him that I had taken my information from a Pew Center Study that was done in 2008 about our state of underfunding.  As you may note, the Pew Center is no right wing think tank, this isn't information from the Heritage Foundation, Americans for Prosperity or some other such conservative organization.  The Pew Center leans left and is far more optimistic about governments deficit spending than even most Americans are.  That's why when they say that our State Employee Pensions are underfunded to the tune of $600 million and our retiree health care plan is unfunded to the tune of $5.4 billion, I take notice.  When they post a study that says we should be concerned about the retiree plan that is LESS THAN 2% funded, I think it's worth citing. 

I soon found out why he was so interested in my source.  Bob had written a letter to the editor of the News Journal.  He's written letters before and almost always received a verification call from the same person.  This time the call came from a different person, John Sweeney.  Sweeney is the editor of the News Journal editorial pages so it's understandable that he might jump in and make a verification call on an editorial submission.  The problem comes when you read the letter Bob submitted, and the one that was printed.  I'll start with the version the News Journal printed:

In the March 11 News Journal, the spokeswoman for the Delaware State Education Association stated that it has a history of collaboration with the state government. My question would be, “Who are they collaborating against?” In this situation, it could only mean the taxpayers of Delaware. Is this a good thing?
The executive director of the American Federation of State, County and Municipal Employees said that any kind of effort to change the status quo would cause the unions in Delaware to unite.

The only reasonable conclusion would be that they would unite against the taxpayers and citizens of Delaware.

You know, the ones who have to pay for all of this.

Does anyone think that all of the unfunded liabilities may have come from this type of cooperating and collaborating?

Bob Wilson, Newark

And here is what Bob ACTUALLY wrote:

According to the Common Sense Communities Society, Delaware's public employee pension fund is underfunded by $600 Million dollars and the public employee retirement health care fund has an unfunded liability of $5.4 Billion dollars.  Now what can possibly go wrong here?

In the March 11th News Journal the spokeswoman for the Delaware State Education Association stated that they have a history of collaboration with the state govt.  My question would be who are they collaborating against?  In this situation it could only mean the taxpayers of Delaware.  Is this a good thing?

In the same piece the Executive Director of the AFL-CIO, who happily is also a member of the state House of Representatives, stated that the Unions have been so successful in the political process that they don't even have to negotiate with the state.  What!!  All they have to do is tell the state what they want and they get it?  That's a sweet deal!

The executive director of AFSCME said that any kind of effort to change the status quo would cause the Unions in Delaware to unite.  The only reasonable conclusion would be that they would unite against the taxpayers and citizens of Delaware.  You know the who have to pay for all of this.

Does anyone think that all of the unfunded liabilities may have come from this type of cooperating and collaborating?

Nah, nothing to see here, just keep on moving.

Bob Wilson
Newark

Now, I understand that the editorial pages retain the right to edit submissions, but to TOTALLY change it in such a drastic way by omission is rather pathetic.  I'm urging you to call the News Journal and demand an answer as to why this letter was edited to such an enhanced degree.  The removal of all of the facts make the op-ed almost entirely incoherent.  You can call the News Journal at the number below:
302-324-2500
Be sure to mention that John Sweeney should apologize for his actions publicly.

The New York Times Proves Me Right

I have pointed out that Wisconsin is not the only state to see their pension/healthcare benefits become unsustainable. The same thing is happening all over the country, especially here in Delaware. Local union leaders and public employees have called me crazy, they've attacked me, they've insisted I was lying, that public employees are not paid as well as private sector workers and that they simply planned better than the rest of us. They have defended collective bargaining as "a human right" (we'll get to that later). Today, the New York Times did a story and released a study that shows that in fact, as a whole, public sector employees are better paid than private sector workers. They do downplay the numbers as you would expect a left wing "news" outlet to do but the facts are even undeniable for them. They point out that state and local government salaries w/benefits nationwide average $70,000 while private sector workers average just $61,000 and that gap isn't shrinking, it's growing. The NYT tempers this analysis by pointing out a discrepency in the TYPE of worker (blue collar vs. white collar) but what they don't point out is that the private sector salary includes the $58 million per year CEO and the $13 per hour retail salesperson. The next stat is stunning, public sector workers put in FAR fewer hours per week than private workers and they cost 70% MORE than private sector workers. While the NYT makes an argument defending public workers for having higher degrees (doesn't seem to help with the way our government runs), it fails to point out that their study includes young workers in the private sector who are either in college and working full-time or simply haven't gone to school. In addition, the Times breaks down individual sectors (a favorite of union leaders since salaries fluctuate based on occupation type) and finds descrepencies among service jobs (which they explain away with the caveat that it includes Police, Fire and Rescue workers) and clerical jobs (where they point out a slightly less obvious gap). The average private sector clerical worker costs their employer about $24 per hour while public sector clerical workers average about $29 per hour. The picture on the left details the unfunded retiree healthcare liabilities (not pensions, wages or active worker healthcare costs) for the U.S. as a whole. What about Delaware? Our retiree healthcare costs (not pensions) are only 1.45% funded. That's right folks, as of 2008, the Pew Research Center found that Delaware owed 5.4 BILLION in retiree healthcare and more than $100 million in pension benefits (to give an idea of the current levels, TODAY our pensions are underfunded by $700 million).

Continue reading on Examiner.com: New York Times Proves That Public Sector is Paid More Than Private Sector - Wilmington Education |

Indiana Dems have joined Wisconsin Dems in running for Illinois to hide out.  Below you can see a video of them leaving for Kentucky and Illinois.

Please read my full Examiner article which contains the excerpt below:


What does this all mean for Delaware? Well, as I've mentioned in previous posts, the personnel costs in Delaware are 30% of the total budget. Meanwhile, the leadership of Delaware's public employee unions say:

In Delaware, public employees' health insurance and pension programs do not constitute a huge "budget buster," as they do in other financially troubled states. Our budget woes result primarily from the continuing effect of the Great Recession on state revenues.

Well there must be a fundamental disconnect her because I see 30% of the budget being devoted to employee costs as a "budget buster". The slide show on the left contains a couple of charts that show the benefit packages that state workers recieve and the current underfunding of Delaware's state worker pension packages. Also, let's keep in mind that Delaware state workers contribute 3% to their pension accounts while the state contributes 7.5% to that plan over and above. Add to that the fact that state workers are becomming more brazen and demanding to know "When am I going to get a raise..." even as the Governor is looking at the budget and seeing a nearly $300 million shortfall (almost twice what Wisconsin is closing with their bill). At some point, Governor Markell is going to have to face the facts that DSEA, AFSCME and other unions MUST have their deals restructured to ensure that out state remains solvent. That doesn't mean that we have to destroy the current way of life of union workers. We can institute changes that affect new hires, we can offer early retirement to those who are at the end of their careers and we can make minor changes to the current benefit packages (like increasing employee contribution by 2% and decreasing State contributions by the same amount making the contributions equal at 5% each).

Wisconsin shows Delaware how it's done

Delaware Governor Jack Markell was acosted by a state worker at a townhall this week who asked "When am I going to get a pay raise?"  Markell answered, "I don't know...I don't know..."  With everything going on in Wisconsin with the public employee unions protesting Gov. Scott Walker's decision to close the state's $1.8 Billion shortfall by asking the public employees to...*GASP* contribute to their retirement plans, healthcare and the bill would " make various changes to limit collective bargaining for most public employees to wages. Total wage increases could not exceed a cap based on the consumer price index (CPI) unless approved by referendum."  In addition, Walker's bill cuts elected official and political appointee retirement calculations down to public employee levels.  Currently, those officials are given higher payouts.  Another contention with the bill is the removal of collective baraining for certain state workers such as family child care workers,  University of Wisconsin Hospital and Clinic employees, University of Wisconsin faculty and academic staff.  In short, "This bill limits the right to collectively bargain for all employees who are not public safety employees (general employees) to the subject of base wages. In addition, unless a referendum authorizes a greater increase, any general employee who is part of a collective bargaining unit is limited to bargaining over a percentage of total base wages increase that is no greater than the percentage change in the consumer price index."

You can read the bill summary here and the full bill here.

The bill calls on public sector employees to up their healthcare contribution from 6% to 12% (the average private sector employee contributes 24% to their plan) and it calls on them to contribute 5% to their pensions while the average private sector worker contributes just over 50% to their plans.

Walker's bill has led to teachers unions and other employees unions staging walkouts, using CHILDREN as protest tools (despite the fact that most of the children have NO IDEA why they are protesting).  It has led to teachers and other union members carrying signs depicting Scott Walker as Hitler, placing bullseye targets on him and even calling Gov. Walker, a dictator.  The video below depicts some of the scenes from the Wisconsin protests and the rhetoric (that I remember the left BLASTING the TEA Party for after a left leaning psychopath shot a Democrat Congresswoman):

So what does this have to do with Delaware?  Well, as I mentioned, state workers (and their union leaders) right here in Delaware are beginning to call for pay raises and they have been resistent to any changes in their current compensation package.  Delaware is facing a $280 million budget shortfall and since Delaware has a balanced budget amendment that gap must be closed.  Delaware's largest employer is the state of Delaware which is followed by New Castle County government and therefore, government workers are one of the greatest costs to the state.  This includes police, EMS, teachers, inspectors, clerks, mechanics, electricians, construction workers, drivers, office managers, etc. and is not limited to public safety employees despite the fact that the left will point to teachers, police and EMS technicians as the only people affected.

I want the people at the top to take the cuts first like everyone else.  I want to see our politicians and public servants sacrificing FIRST.  Governor Markell likes to talk about the 20% paycut he took but he fails to mention that the office of the Governor had an 18% pay INCREASE when he was elected.  He then took a 10% pay cut right off the top, meaning that the office of the Governor actually got an 8% pay INCREASE when he took office.  Now he has taken another 20% pay cut after his 8% raise.  So he has now finally taken a 15% pay CUT from where he SHOULD have been when he was elected.  So while I would like the cuts to come from the top, there comes a point where we have to realize that cutting the pay at the top will not solve all of the budget problems.  There also comes a point where the state has to recognize that it is living beyond its means and needs to change the way it does business. It’s time to make cuts and these unions and state workers with these incredible compensation plans to recognize that they have been living beyond their means: http://sunshinereview.org/index.php/Delaware_state_government_salary

State workers and their union leadership are beginning to spend time and money pointing out that the state workers are being punished for planning for their retirement and that they are the scapegoats for the economic disaster.  They are saying that state workers make less in pay than those int he private sector in exhcange for better benefits.  I decided to look into these "facts" and what I've found is a bit disturbing.  The average salary for FT state workers in Delaware is $50,124.  The average Delaware worker’s salary (including public AND private sector employees is $46,270. Some simple math helps you find out that the average private sector worker makes $42,416 which is almost $8,000 LESS than state workers. Not to mention, we private sector workers pay for our medical plans…which the state workers don't.  State workers (as illustrated below) pay nothing for their healthcare or their family's healthcare unless they want the ultra-high end plan with little to no office co-pays and other "perks" that many private sector employees don't even have the option to purchase. The chart below details the payouts from the state and from the state employees per month in order to receieve the plans.  You will also notice that they pay a whopping $193 per mth for the highest end plan.  The average private sector worker pays around $250 per mth for a MUCH less comprehensive plan.  In fact, the avg private sector worker pays $250 per month for the same plan that the Delaware state workers pay $82.44 per month for.

Oh and their definied benefit package which they call "prudent planning"?  They contribute 3%. jus like the average private sector employee.  So what is the difference?  The state contributes 7.5% MORE to that plan but in the private sector you MIGHT get the 3% matched by your employer if you are lucky.  The real problem is that the average private sector employee contributes to a defined CONTRIBUTION plan that grows as you contribute which is called a 401(k) whereas the state workers contribute to a defined benefit package that grows at an ASSUMED rate (meaning it could grow less or more) of 8% per year.  NOTHING is growing at 8% per year right now and that is why these plans are rarely offered in the private sector.  These plans are usually only seen in industries where unions control the collective bargaining and negotiations.  Unions have such a stranglehold on political candidates and wield so much power today that they often have a TREMENDOUS advantage over corporations and even governments.  Let's remember here that While that doesn't mean we shouldn't honor the committments we've made in the past, these are CLEAR reasons why we should follow the example of Gov. Walker in Wisconsin and restructure the deals going forward.  A final look over the pension funding shows that Delaware has about $700 million in unfunded liabilities.

It's pretty clear from our look over the FACTS that the union leaders and their spokespersons are at best misleading Delaware citizens and at worst, out right lying to the people.  I will leave it to you to decide which it is but the facts are unmistakeable.  State workers make more than private sector workers on average, they pay less for their healthcare benefits and they contribute far less than the average state worker to a pension plan that most people couldn't even dream of.  It's time to fix our fiscal house and it's time to decrease the size and scope of our government.  Noone wants to see people unemployed but unfortunately, that means we have to look into how to make government more efficient and how to transition public employees to private sector employment.  Of course, that means that the government will have to actually help the private sector create jobs, something Alan Levin and Jack Markell can't seem to wrap their arms around...but that's for another post.

New Castle County is more BROKE than we thought

Recently, the News Journal broke stories (2 months too late) that prove Chris Coons is nothing short of a liar.  Both were from a report by Independent observer Dace Blaskovitz.  Coons spent more than 6 months telling Delawareans (especially New Castle County residents) that he was responsible with the County finances and that it was not in trouble.  He told us that everything was fine and that he was able to save the county from the brink of a fiscal meltdown.  Today, the News Journal's Chad Livengood has another story on the fiscal woes of New Castle County.  The new County Executive, Paul Clark (the man of a thousand ethics problems), has put in place a 30 person transition team ($$$$) to figure out how to get the county out of the HUGE hole it's in. 

What hole you ask?  If you've only been listening to Chris Coons, Paul Clark, Tim Sheldon and the rest of the Democrats in New Castle County government you would be unable to see the huge hole in county finances that they were hiding.  If County Council did not know the MASSIVE gap between spending and revenue existed then it is time to fire every single one of them (and this includes Councilman Weiner if he knew and was silent).  Folks, this is an absolute TRAVESTY of justice.  New Castle County began the new millennium with a $200 million SURPLUS and by 2015, if nothing changes, we will be $68 million in debt.  It will have swung 134% in the opposite direction.  This is DESPITE an increase in sewer fees of more than 60%, increases in other fees including the introduction of a new fee on contractors and a 54% increase in property taxes.  Does this sound like fiscal responsibility to you?  Could you do this at home?  Let's say you already had a huge savings account but were spending more than you made and you asked your boss for a raise of more than 60% and got it.  Now your pay has increased by more than 60%, you are spending all of your income and you still are eating into your savings account at more than 6% per year . You are to the point where you will be IN DEBT within 4 years.  Would it be time to go your boss for another raise or perhaps to address your spending habit?

Well according to Clark's transition team ($$$$) it's time to come to you for a raise.  Oh, Clark doesn't think that you property owners can afford more property taxes.  Instead he and his team will focus their "revenue enhancements" on "raising sewer bills to pay for federally-mandated improvements, charging for inspections of rental homes, cutting grass in county parks less frequently and county-wide reassessment of property values."  No mention of selling county land BACK to the private individuals who managed it before (like Carousel Park which was a net PLUS before the County took it over).  The report also calls for personnel cuts but it does not get specific except to say that the county should hire MORE employees in key areas.  In fact, the finance committee ($$$$) stated that it did not want to recommend specifics to actually FIX the structural problems with County government yet later in the report they call for Clark to lobby the General Assembly for the same 911 tax that Chris Coons lobbied for in 2007. 

The countywide reassessment of property values would be painful to some and easing on another.  The fact is that it MUST be done.  Homeowners today have their land values assessed at the 1983 level.  That's the same value as houses built almost 30 years ago.  Also addressed by the transition team is the suggestion that Clark address the county employee pay and benefits.  Currently many (mostly union members) county employees are receiving step increases annually and have MASSIVE pensions that are coming due more and more rapidly.  About 45% of the 1,400+ full-time county employees currently receive "step raises".  On the pension front, the report calls for the county pensions to be rolled into a more manageable 401(k) plan that is in line with private sector benefits.  This has of course, set the public employees unions into a tizzy.  Some of the county leaders have shouted that Coons and Clark have filled vacancies and then forced current employees to take pay cuts thereby punishing current employees.  ENOUGH!  I'm sick and tired of this stupid argument, hurting current employees by hiring new ones.  FOR YEARS the suggestions from every transition team and independent audit has been to deal with two things:

1. Public employee Pensions
2. The cost of the size of government (a.k.a. personnel costs)

And for years the unions and county managers have screamed that the county politicians are hiring new people and screwing current employees.  Meanwhile politicians have asked for the unions to take pay cuts.  Folks, they are both right!  The bottom line is that vacant positions must be eliminated and public sector employees must take cuts to pay and benefits.  It's unsustainable as it stands and the people don't want the cost for the services they are provided.  It's THAT simple.  That may mean we have to cut services or do more with less.  That is an issue that private companies face every single day.  It's called a tough choice and these politicians claim that they make them every day.  They are lying to us.  Their answer is to raise fees, that's the easy way out.  It's like us telling our bosses that we are going to TAKE a raise and not simply asking for it.

Folks, how long will we continue to sit back and let these people take every dollar we make in taxes?  When is enough going to be enough?  A sewer fee is no different than a property tax folks.  It's a tax in a different area of our life but it is a tax.  Are we that STUPID New Castle County?  Where is the line?  Please tell me, comment here, let me know, where do we draw the line?  When do we hold Chris Coons, Paul Clark, Tim Sheldon and the rest of these people accountable?  Electing Tom Kovach doesn't hold them accountable, Tim Sheldon is still on County Council.  Electing Tom Kovach is a STEP in the right direction but folks we need to elect people who will actually TAKE these steps that need to be taken.  We need to stop the union control of the county and work to bring the county back in line.  By balancing county government we will be able to focus on job creation in the private sector, returning companies like Dupont and others to prosperity by opening up new opportunities to bring their business efforts BACK to Delaware.  I say the time is now, what say you?

Blaskowitz lays out his report

Yesterday, Dace Blaskovitz, who set New Castle County a buzz with his report on county government finances and their dire situation, wrote an op-ed in which he detailed what he believes is the problem with county government.  His report received lots of attention when columnist Ron Williams wrote his own opinion piece agreeing with Dace.  Blaskovitz states that "NCCo government is simply unsustainable" in his report and points out that "from 2005 to 2010, NCCo property tax rates increased 55 percent. Sewer rates increased more than 60 percent from 2005 to 2011."  Despite these increases, New Castle County government outspent revenues and blew through a previous surplus.  "From 2000 to 2009, pension assets increased $9 million, while the county's unfunded accrued actuarial liabilities increased over $140 million."  This includes problems like "The county pension assets currently total about $350 million", and "The retiree health care cost is a nearly $250 million unspoken future black cloud."

Blaskovitz takes particular aim at the county's pension, retiree health care and the number of employees because the county has let things get so out of control.  He cites an example of retired New Castle County police officers who "receive a never-ending, no-cap 3 percent compounding COLA. Therefore, most NCCo police will average...the same compensation in their retirement as when they were employed. For reference, an NCCo police officer with five years experience is paid around $85,000 a year (in salary alone)."  Dace points out that 75% of the county's spending occurs in the personnel field.  The size of county government is astounding, the county employs around 1,500 people and most are full time employees.  This places New Castle County government in the list as the 5th largest employer in the State of Delaware, with more employees than Barclays Bank and ING Direct combined (state government is the largest).  New Castle County has "Almost 100 full-time county employees are paid close to or more than $100,000. With few exceptions, gold-plated health care extends to the grave."

Blaskovitz smacks readers in the face with his honest assessment of the county financial situation (where was this in October when former County Executive Chris Coons was lying to the public about New Castle County I wonder) when he writes, "after years of delaying executive decisions, hoping an economic bounce would magically undo the dilemma, dwindling reserves are now forcing a day of reckoning."  Dace further points out that the unions aren't done asking for more and more county tax payers.  He doesn't just spotlight the county problems, Dace presents solutions that I for one agree with.  He suggests that "citizens should demand a reduction in head-count. NCCo's actuary has pension and health care proposals waiting for action. Salaries have to reflect the balance sheet. Perhaps a spending oversight board would assist in fiscal restraint."  He even calls for the possibility of merging or consolidating New Castle County, municipal and city infrastructure where practicable which is something that Republican County Council President candidate Tom Kovach has pointed to as an area he would work to attack immediately.  While the Democrats who joined Blaskovitz and Republican Wayne Smith on the committee that put together the report issued a suggestion that the county raise taxes AGAIN, Dace suggests that " it is unconscionable for "revenue enhancements" to even be mentioned in our report."  He calls for county government to tighten its belt instead of heaping their bad financial practices on the people of Delaware.