How Much Is A Firefighter Worth?
A couple months ago I decided that I was going to cut down the amount of financial programs I listen to. I admitted to myself that I was spending a lot of time being told about how bad things are, how the system is rigged and how there’s a looming catastrophe just around the corner. I get it. I’m already taking measures to deal with the possibility of going through some hard times. I’ve been putting that podcast time towards other things I want to learn about. There’s only two financial podcasts I listen to regularly. One is Follow The Money Weekly. I think this one is good because it’s more proactive than reactive and I learn a lot from it. The other one is NPR’s Planet Money. Planet Money is cool just because it’s almost always really interesting and informative. It’s the kind of show that after it’s over you can turn to whoever is next to you and talk about what you just heard. The link is to a Planet Money podcast that I heard a few weeks ago.
Here’s the condensed version of the story: A long time ago the city on Contra Costa, California made promises to the firefighters that they would receive a set percentage of their final pay as their pension. When they made that deal the city assumed that their tax revunes were going to keep going up and up and they would be able to foot the bill for not only the current fire department, but the retirees as well. That growth that they counted on didn’t happen and the city is stuck with a huge bill for fire services and pensions.
Some in the city are claiming that that since the majority of calls the firefighters go out on are of a medical nature instead of fires, they can get away with a lot less. One commenter in the blog (who says he is a firefighter) points out that the increase in medical calls reflects a growing dependence on emergency medical services as primary care among the poor/uninsured and not necessarily a decrease in fires. The commenter also brings up the fact that when a fire does happen, everyone is going to want the right amount of firefighters on hand and cuts in staff can make it difficult for the firefighters to do their primary job.
After a lot of talk between the city and the union, they came up with the idea of putting out a ballot measure for a $75 across the board tax increase to help fund the firefighter’s pension fund. They needed a 2/3 vote and ended up short of that, so the measure didn’t pass. Now they have to make some very deep cuts in fire service in order to make up the shortfall.
While this is the story of just one American town, I think it reflects a few themes and growing trends:
– We tend to count our chickens way before they hatch and probably assume that one of those chickens is going to lay a few golden eggs. I think the idea that everything is just going to keep going up and up is too deeply engrained into our financial workings. Unfortunately reality is something completely different and assuming that the future is going to be like the past can be dangerous.
– As a society we want more things than we’re willing to pay for. That’s understandable – who doesn’t want more than what they pay for? I always like to get a good deal on things. I like the idea of putting a tangible amount to the measure and putting it out to the public on what things actually cost per household. I would love to see a website that had goverment expenditures on everything broken down to per capita, i.e. “we spend X amount per person on foreign aid to Djibouti and Y on the military presence in Korea”. It’s easy for us as citizens to say “they should do this” and “they should do that” when we’re not directly seeing the bill but if we actually saw the costs I think the conversation on a lot of things would be a lot different. By putting out the costs you’re not exactly making judgments on whether or not it’s a good deal, but you’re letting the taxpayers theoretically decide whether or not they think it’s a worthwhile expenditure. The elephant in the room on that subject is that a lot of those expenditures get passed on to future generations through government debt. At any rate, I think most people are really disconnected from what things actually cost. I think sometimes people think that these decisions to cut services are made just because someone has a spiteful heart and wants to make their life miserable rather than fiscal reality.
– To use another colloquialism, a lot of our financial system really seems like a giant game of hot potato. Just keep passing it on. Eventually it’s going to get too hot for someone to hold. The US government can always print money, cities can issue bonds and raise taxes, but someone has to be willing to buy those bonds and raising taxes could chase away people who would otherwise pay in. Das FedGov can unload every bond they issue to the Federal Reserve. I went a little deeper into this subject (and some of America’s muncipal/state debt woes) in this article: Scranton Mayor Slashes Pay For All City Employees to Mininum Wage – Austerity Comes To America
– Unfortunately it’s easy for politicians to make deals that they won’t be around to take the heat for. This kind of ties into the “people want more than they’re willing to pay for” idea. Sometimes tough decisions don’t make good material for reelection campaigns.
– I think we’ll be seeing more of this in the years to come as local governments are going to have to keep making cuts in order to stay afloat. People aren’t going to like it, either. At the end of the day, there’s usually only so much money coming in and only so much you can do with it so difficult decisions will have to be made. When a city gets over the head in debt, they’ll go to the county. When a county gets in over their head, they’ll go to the state. When the state is over their head, they’ll go to the federal government. The economies of many US states are quite large (especially California and Illinois – two states in a lot of trouble) so a state going under will probably have a big effect on international scene, just like Greece has been. People around the country and within states aren’t going to be happy about bailing out other cities/states. Should be an interesting ride…