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California City Saves Itself by Ditching Blue Model

Cash-strapped cities across the country from Harrisburg to Birmingham are turning to bankruptcy as a last resort. As more and more cities consider taking the plunge, we wonder whether bankruptcy will allow new ideas to put the cities back on their feet.

In California, encouraging news from Vallejo: As the Washington Post reports, four years after it declared bankruptcy, its finances are stable and considerably better than many of its neighbors, and new techniques provide better services at considerably lower cost. First the city disposed with massive salary and benefits guarantees (80 percent of the city budget was spent on employee compensation). Then, imitating successful programs from other cities around the world, the city began to experiment with ways to reduce the cost of city services through technology and community initiatives:

The police went high-tech, investing $500,000 in cameras across the city that allow officers to monitor a larger area than they could before. The department deputized citizens to participate in law enforcement by sharing tips on Facebook and Twitter.

Gomes, whose husband is a retired police officer, focused on public safety. The couple went neighborhood to neighborhood setting up e-mail groups and social media accounts so people can, for instance, share pictures of suspicious vehicles and other information. “There have been countless cases where ordinary people have stopped crimes this way,” Gomes said.

The number of neighborhood watch groups jumped from 15 to 350. Citizen volunteers came together monthly to paint over graffiti and do other cleanup work.

And the city council struck an unusual deal with residents — if they agreed to a one-penny sales tax increase, projected to generate an additional $9.5 million in revenue, they could vote on how the money would be used. The experiment in participatory budgeting, which began in April, is the first in a North American city.

Cities and towns all over the country should take a close look at these ideas, especially those in dire financial straits. The trick, however, is to do these things before going bankrupt, to provide better government at a lower price. Then you can cut taxes, attract new industry and businesses—and give your residents a better life with more money and lower taxes.

It’s simple really, but it involves breaking some blue taboos. Mayors and governors willing to break the taboos can make a difference; over time, new models of state and local governance will appear that do a better job of providing essential services at a much lower cost. It’s called progress, and even if not everybody likes it, it’s a good thing.

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  • Lola-at-Large

    I love the idea of getting to vote on how taxes are spent. There’s no reason we can’t have more direct democracy like this.

  • Mrs. Davis

    There’s a great reason we shouldn’t have more direct democracy like this. It doesn’t work. It leads to mob rule. That’s why the founders of the oldest continuously operating constitutional government in the world were afraid of it and created a mixed government of checks and balances with aspects of monarchy, democracy and aristocracy. And it has been harmed to the extent we have shifted more to the democratic side (Amendment 17). I commend Federalists 9 & 10 to your attention to see how Hamilton and Madison considered this problem for New Yorkers during the ratification process. Number 10 in particular is a classic defence of the rights of the minority from tyranny by the majority.

    This particular instance is a clever way to bind the citizens more closely to a failed government, but it is unlikely to establish an effective government as Caliphornia’s addiction to referenda propositions has so clearly demonstrated for the last 40 years.

  • M. Report

    Bingo! Break the rules before the rules break you. As to “Mob Rule’ we have that now and will have more, enforced by mob violence.
    All thanks to the Progressives.

  • PTL

    Good luck in getting the politicians giving
    up power and graft. Little will be done until
    you get to the brink of bankruptcy, and then
    you have to watch the solution carefully.

  • John

    Mrs. Davis. I would point out that the founders were discussing a federal governmental system, not city. Highly removed representative government at the local level helped form the original failure of this city. Having citizens help direct what level of services they wish to be provided by the local government for, and what they willing to pay for said services is a much more healthy alternative to the block vote buying via legislation.

  • rjschwarz

    Seems to me direct voting on what to spend the money on would be like present a child with only the options you are willing to accept. If done properly things could be prioritized without creating a problem. If done incorrectly (say all the options are unacceptable) you could end up with a lot of out of work politicians when the time comes.

  • tsj

    Hypothetical City has $2,000,000 to spend on items A, B, and C. Voters self impose an additional $1,000,000 to spend only on item C. Hypothetical City now spends $3,000,000 in total: a million each on items A, B, and C.

    Voters just voted themselves a general, not a targeted tax increase. Voters shoot themselves in the foot once again.

  • Sam Schulz

    I live in a small OC town in California. When the city council tried to cut expenses, partly by cutting back on fire department overtime excesses, the AFL-CIO moved into town and rented an office for their operations. They funded union candidates in the next election and put out the people who were trying to hold the line against spending.

    This was in supposedly conservative Orange County California. So much for ditching the blue model in an age of union dictatorship.

  • dmitryb

    Mrs. Davis, there is a huge difference between governing a city, vs a state, vs. a country. Some methods work better on a smaller scale, while others are better on a larger scale. It’s not at all infeaseable that direct democricy works well when applied to a small, more homogenious population (e.g. a city). The rule of mob is harder to impose at this level as people have more freedom and opportunity to also vote with their feet.

  • JorgXMcKie

    Good luck with getting public employee unions to give up their compensation and benefits voluntarily. I’m watching Detroit right now, and the unions seem determined to go down with the ship.

  • Bruce B

    Solutions like this require leaders that want better government and not leaders that can’t escape the power rush. Those that become addicted to the power becomes slaves of those who will aid in their re-election, which often comes at the expense of the general population. It’s up to the populace to see that addicts are run from office.

  • gsarcs

    “provide better government at a lower price.”
    Now there is an idea that I would vote for!

  • stonedome

    cities must go bankrupt to free themselves of public union graft, because the unions and their members don’t compromise or sacrifice. use wisconsin as your model for public union members behavior…it’s on display to for all to see. your supposedly friendly union neighbors displaying their selfish true colors when the chips are down…

  • MarkB

    Mrs. Davis – I agree with you in the case of the Federal Government (or even State Gov’t) but I think that you are shooting a fly with a cannon here. Having a specific and limited class of money set aside in a single community that is to be spent according to citizens’ preferences strikes me as a public good of the first order. What “mob rule” is this subject to? That everyone will vote to use the money to oppress a minority? Somehow I doubt that this will ever prove to be an issue.

  • T. Smith

    When considering whether direct or representative democracy is best please consider that the answer may depend on the issue. As a federal system of government, the U.S. Constitution allows for aspects of direct democracy at the local level (e.g., town hall meetings) and representative democracy at the national level. Where the public is closest to the information and able to directly judge the results(e.g., education, crime) some aspects of direct democracy may function well. For some national and international issues (e.g., the interstate economy and foreign affairs) federal officials may actually have a better understanding of the issue (because the issue requires either a broad perspective or incorporating various perspectives or federal officials have better sources of information). At these times, representative democracy may be best, because it provides the federal officials some distance/insulation from the public (this is when Federalist Paper #10 applies).

  • T. Smith

    BTW — good work Professor Mead. I really enjoy how your blog uses contemporary events and analysis to suggest the events’ relevance and significance.

  • Cory

    Mrs Davis, direct democracy can work on the small scale. The founders were very opposed to it at the national level, not necessarily at the city level.

    Most problems are problems of scale. Even dictatorship works on the small scale. Families are dictatorships and they have been the backbone of society for thousands of years.

    Dictatorship and direct democracy are disasters at the national level and should be vigorously opposed.

  • Shelby

    It’s been encouraging to watch Vallejo turn things around; there was a good article a few months ago about changes in its fire services to accomplish more with less. And driving through it I don’t see signs of a city in dire straits, though it’s still no boomtown.

    Ms. Davis, direct democracy works much better in a smaller setting (a city) than a large one (a big country). There are plenty of federal and state protections for minorities in Vallejo. Give the city a chance to experiment with solutions; I can’t see how they “bind the citizens more closely to a failed government” rather than involving them in saving their own city.

  • Sage

    Mrs. Davis, your entire comment bears the hallmarks of a very common misconception, namely that the Founders intended for every municipal, county, state, and other non-federal civic echelon of government is somehow supposed to be an exact mirror of the federal government, with a localized version of the US Constitution operating as the governing document of every level of government across the country. But that obviously isn’t the case.

    Local government was ALWAYS intended to be much more direct, participatory, and transactional than the federal government, which was saddled with tremendous inefficiencies precisely so that substantive government at the local level could operate in a way that was flexible and responsive to local wishes and exigencies. People in California, to the extent that they are governed by state and local institutions, simply are not governed by a smaller version of the Constitution, and this is no violation of federalism, but rather a direct instantiation of it. People in South Carolina may wish for something different, and within that state there may be wide local variation.

    The idea that people should NOT be closely bound to local government is a silly idea often put forward by well-meaning adorers of the US Constitution. Te idea that there is something un-American or at odds with the Founding about having direct democracy at the municipal level is ahistorical nonsense. It is party also a consequence of how deeply the illegitimate Incorporation Doctrine has seeped into people’s assumptions about the American civic way of life. Look at how the early American municipalities and states were governed, and you will find that many of them were straight-forwardly theocratic while others were aggressively secular, some had an aristocratic character of government and others were far more democratic in bent.

    Finding an anti-Constitutional conspiracy under every attempt at better government is one of the many ways that conservatism has essentially locked itself out of any meaningful role in local government across the country.

  • elkh1

    “The trick, however, is to do these things before going bankrupt, to provide better government at a lower price.”

    Wrong! The trick is after, so the towns/cities could restructure. Do you think the virtually bankrupt California can ditch its “obligations” to its public employees? Nope, governor Brown is raising taxes to drive away employers. Wisconsin governor is suffering from a recall for doing what Vallejo is doing after its bankruptcy.

  • koblog

    It’s the union pensions, every time. Government employees should not be in a union. When the “negiotate” with elected officials like a mayor who will be gone in a few years, they are actually negotiating with the people’s future tax money, and those people are not at the table. The people always lose, leading to bankrupcy.

  • Michael Kennedy

    Sam, I live in another small OC city and we organized a citizens group to try to stop overspending. We elected our own candidates who promised reform. We were very disappointed when the new council members made new friends and joined the free spenders. The difference now is the coming bankruptcy. The unions must be defanged.

  • DCE

    @ Mrs. Davis: “There’s a great reason we shouldn’t have more direct democracy like this. It doesn’t work. It leads to mob rule.”

    Really? That’s news to me. We have been using the “voters decide how their tax dollars are going to be spent” system for over 200 years here in New Hampshire. It’s called “town meeting”, where the taxpayers (who are also registered voters) get to decide how their town is going to spend their tax money. Works pretty well, for the most part. But then again, we are frugal Yankees up here.

  • Vinny B.

    Bush’s tax cuts for the rich destroyed the economy as we could not afford to pay for that massive give away to the richest Americans. Now, they blame the black president and every town that has a black mayor for the country’s problems, because that’s all Republcans know how to do, blame minorities, women, and gays for everything so they can cover up the trillions given to Big Oil, Wall Street, and Halliburton, and now to cover up the Hiroshima-like destruction of many businesses that Bain Capital did under Romney in order to make him and his rich cronies richer.

  • jfxgillis

    Oh. They raised taxes.

  • CatoRenasci

    Vallejo is barely started – the unions didn’t get broken and the pensions are (mostly) intact.

    Junior Brown was responsible for California’s public employee unions the first time he was governor – it’s fitting the state is now collapsing under their weight his second go at ruing the state.

  • JP

    Wow! A rational discussion. I have to compliment everyone who posted. This was a real joy to read.

  • DCE

    AVinny B: “Bush’s tax cuts for the rich destroyed the economy as we could not afford to pay for that massive give away to the richest Americans.”

    After the Bush tax cuts, a lot of people no longer had to pay any income taxes…and it wasn’t the rich.

    Almost 50% of American wage earners pay no federal income taxes, yet the Bush tax cuts were for the rich? I guess that claim would be true if you define “rich” as “anyone with a job”.

    The US Government doesn’t have a revenue problem. It has a spending problem. The same is true of California and its many struggling municipalities. Raising taxes on the already overtaxed doesn’t solve the problem, it makes it worse. (This is particularly true during a recession.) Bush’s overspending had two causes, one of the biggest being Congress during his last two years in office. Obama doubled and tripled down on the deficits and got nothing in return for it other than the endless gratitude of the labor and public employee unions and the others who bankrolled him.

    If you want to point the finger at anyone, then it’s got to point to the “spend like drunken sailors” federal, state, and local governments.

  • Liz

    The idea that this CA city was the first to let their voters decide on projects is amazing – lots of cities have such votes. Usually they are related to specific bond issues, but there are some cities that propose sales tax increases to support specific purposes.

    Oklahoma City has had special, and temporary, sales tax increases since 1993 to fund specific projects. The timeline was very specific and the projects were defined before the vote. The money was collected before the construction began and there was a citizen advisory board to monitor the process. The city financial reports are on the OKC website. Here is the link to the projects. OKC is now on the fourth series of capital improvements – the original plan to build or improve 9 “quality of life” projects. Then there was a small one to improve the arena, which helped get the Thunder to OKC. MAPSfor Kids focused on schools and MAPS 3 is more construction to improve quality of life.

    Oklahoma County did the same concept of having voters approve a bond to buy the shut-down GM plant and then lease parts of it to Tinker Air Force Base. What Tinker doesn’t need is leased to other related industries.

    We’re doing fine.


    New England Townhall Meetings are much the best way to govern on a local basis. California (and wherever else) should deep-six the professional city manager model asap which would cut overhead dramatically (city managers are way overpaid for their value) and go a long way to decoupling the city employees from the influence of unions. City managers are in bed with unions.

  • AirAlan

    Dear Mrs. Davis: If the efficient fair government we get in New England town meetings are “mob rule” then I say we need more of it.

  • willis

    “we wonder whether bankruptcy will allow new ideas to put the cities back on their feet.”

    It depends on whether they return the democrats to office.

  • Ed Sevennten

    Was the retired police chief give back some of his 185,000 per year pension? Me thinks THAT mentality is a big part of the problem.

  • George Taylor

    Mr. Mead, as a resident of Birmingham, I respectfully demand a retraction that “cities like Birmingham” are resorting to bankruptcy as a solution to their problems. Sloppy journalism is no excuse for your making slanderous statements about our City. The City of Birmingham has incredibly sound finances, boasts reserves of some $2.5 Million Dollars and has a AA+ rating. If you would look into the facts you cite, you would understand that it is Jefferson County, Alabama, not the City of Birmingham, that has suffered bankruptcy issues, and even in that case, it is not because of general fiscal mismanagement but because of misguided financing tactics on the new sewer system. As to your statement regarding Birmingham, if you are a respected journalist, you need to print a retraction now.

  • Wayne Lusvardi

    Vallejo does not even come close to the antithesis of the Big Blue Model.

    The city of Laguna Niguel in Orange County would likely be untouched by the future wave of pension obligations in California. Its pension debt is less than 20 percent of its annual operating budget and it has $40 million in financial reserves for a city of about 65,000 people. The city is known for its political conservatism and has only 17 retirees and 59 current full-time employees, as it contracts out most of its services. The only role for municipal governments and school districts is public financing. Everything cities and school districts do should be contracted out.

    Same thing goes for special districts such as water districts. When water districts have big pipeline or reservoir projects they swell in size and put on new permanent employees. When the projects wind down they have too many permanent employees who now need gold plated retirement packages. This is why the California Public Employees Retirement Fund is only 80 percent funded at best (maybe int reality only half of that). Too many employees put on full time permanent jobs. But this model allows politicians to buy jobs and votes and thus power.

  • Lee Reynolds

    The only problem with all of this is that it works.

    Leftists don’t want government that works, they want government that continually grows in size while becoming continually more dysfunctional.

    They want government that, rather than providing basic services and otherwise leaving citizens to pursue their own interests, is in the business of picking winners and losers while granting favors in exchange for political support.

    They want government that regulates society rather than the other way around.

    What they want in other words, is feudalism, with themselves as the aristocracy, and the rest of us as serf and peasants.

    Nothing is more fearsome to a would-be lord than a should-be peasant who is armed.

  • RC

    For all of you people that think direct democracy can work on the smaller scale of a city or town you are mistaken. Exactly the same behavior that is observed at the federal or state level occurs at the city/town level. I even have a real life example for you. In my city (I won’t name it because it’s too shameful) the city put together a citizens advisory council to decide what the priority projects for the city should be. Instead of all the health, safety and infrastructure things that should have been considered they decided the city needed a new park downtown to “revitalize” the downtown area (yes many of you will think this a nifty idea, as if supporting losing business propositions for their “charm” is a function of government). But a new downtown park, only mildly awful since it simply reflects a usual waste of funds. Of course it didn’t stop there, in order to get the land to build the park they had to “condemn” the successful businesses downtown because they were sitting on the land and then seize that land via eminent domain.

    The moral, one group of people shouldn’t get to have authority over another, even (or especially) if they are the majority. That is “mob” rule, and it costs somebody something.

  • Ken James

    “I love the idea of getting to vote on how taxes are spent. There’s no reason we can’t have more direct democracy like this.” It’s kind of like those gay marriage referendums that are voted against during elections and over-ruled by one judge in a court. There is ALWAYS a small group who does not want what the majority wants and they take the issue to court. They live to over-rule the masses and are infuriatingly successful because the left rules the courts.

  • Penny

    I’ve lived in Vallejo for a little over a year. I don’t much follow local politics, but I have observed that the bankruptcy has engendered a sort of libertarianism-by-default. As the drunk bipolar guy down the street likes to yell, “Go ahead, call the police, they won’t come!” Vallejo cops can’t come to a mere “drunk guy making noise” complaint.

    People know they have to solve problems themselves and not expect the government to step in and fix everything. This is good. There are too many laws anyway, and if the city can’t afford to enforce the superfluous ones, good. Sure I wish the guy at the end of the block would fix his tacky-looking broken fence, but I’d rather rely on social pressure instead of code enforcement to encourage him to do it.

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