I made a passing reference to this earlier in the week but, here's a Rolling Stone feature by Matt Taibbi on the shell game Wall Street has played with public pension funds in municipalities all over the country.
This is the third act in an improbable triple-fucking of ordinary people that Wall Street is seeking to pull off as a shocker epilogue to the crisis era. Five years ago this fall, an epidemic of fraud and thievery in the financial-services industry triggered the collapse of our economy. The resultant loss of tax revenue plunged states everywhere into spiraling fiscal crises, and local governments suffered huge losses in their retirement portfolios – remember, these public pension funds were some of the most frequently targeted suckers upon whom Wall Street dumped its fraud-riddled mortgage-backed securities in the pre-crash years.
Today, the same Wall Street crowd that caused the crash is not merely rolling in money again but aggressively counterattacking on the public-relations front. The battle increasingly centers around public funds like state and municipal pensions. This war isn't just about money. Crucially, in ways invisible to most Americans, it's also about blame. In state after state, politicians are following the Rhode Island playbook, using scare tactics and lavishly funded PR campaigns to cast teachers, firefighters and cops – not bankers – as the budget-devouring boogeymen responsible for the mounting fiscal problems of America's states and cities.
Toward the end of the month, the New Orleans City Council will begin holding its annual budget hearings. The Mayor presents his budget October 15. Council will then hold a series of hearings with individual departments during the last week of October and first week of November. The schedule was posted on Friday.
Given what we heard at the Mayor's series of community budget meetings we can anticipate he will stress the burdens placed on the budget by the prison and police consent decrees, as well as the firefighters' pension fund.
At the District B meeting, Mitch told us that the NOFD pension was "the greatest threat to the budget." That was before anyone told us about the expected jump in workers' comp costs.
So now there's that too. It's bad enough that the mayor already talks about the city's obligations to its employees and to the public safety in terms of "sacred cows" that need "slaying." But, now.. just as the budgeting process is about to ramp up... the bankers have issued their opinions as well.The city of New Orleans’ 2014 budget will include an $8 million increase for workers’ compensation to reflect a spike in claims since 2012, Budget Director Cary Grant told the City Council’s budget committee on Thursday. But he and Courtney Bagneris, the city’s interim risk manager, did not explain a reason for the sudden increase, saying an audit is still in process.Prior to 2012, workers’ compensation claims were typically under $17 million per year and didn’t significantly exceed what was budgeted, Grant said. In 2012, however, claims spiked to $22 million, well above the $15.6 million budgeted.
Fitch Ratings has downgraded the rating outlook for New Orleans’ bonded debt because of concerns about the city’s ability to cover an underfunded firefighter pension program and court-mandated increases in spending for public safety.So if care about the policy choices your elected representatives make, you can attend the budget meetings, write your councilperson, you know.. vote.. or whatever. But the chances are the bankers will have to be made happy before you are.
Mayor Mitch Landrieu’s administration has been warning for months the city cannot afford to implement simultaneous federal court consent decrees mandating major changes at the New Orleans Police Department and Orleans Parish Prison without making deep cuts in other departments’ spending, probably involving furloughs or layoffs.