Bankrupt States, Counties and Municipalities

Bankruptcy:  States, Counties and Municipalities across the country are unable to cover their debts, and some may actually end up declaring bankruptcy.  The current facility, administrative, entitlement, and employee costs, and also the long term pension/health benefit costs of retired government employees, are all cost drivers.

Possible Ways Forward out of the Financial Morass:

A.  Consolidation: Recently moved to the Pittsburgh area. Was shocked at the real estate tax rates for the area (at least as compared to where I lived before).  Was looking at a Pittsburgh county map, and noticed that there were in excess of 50 townships (some call them bureaus).

Started thinking about the above. It's no wonder that taxes are so high - rather than consolidating, you have 50+ of everything - political officials, township bldgs, police bldgs, administrative support personnel, utility bills, school districts, etc, etc, etc. Have to believe that if states (I'm assuming that the Pittsburgh area is not unique in this situation) would consolidate to the maximum extent possible, huge savings would be garnered for the taxpayers of the Pittsburgh area (and other cities, townships and counties across the U. S.). Probably the most logical consolidation level would be at the city level, or in absence of a big city, at the county level. Township governments should be avoided to the maximum extent possible. Most people don't even know who their local township officials are.

Actually, I'd be shocked it Pittsburgh couldn't reduce taxes by at least 50% if they were to consolidate. Realize that such a proposition would be fought tooth and nail by all the political officials/the govt employees in the Pittsburgh area as consolidation would obviously be a real negative for them. But - it's what's best for the taxpayers............ Monies could be spent on what people wanted rather than on unnecessary duplication of effort.

We don't need over 50 sets of peoples doing exactly the same kinds of things. Consolidation could lead to massive tax cuts. Also, the long term burden for states and localities would be reduced - less employees = less retirement costs (pensions and health care costs) NOTE: You can attrition the personnel down, rather than have massive personnel cuts.

B.  Government's Role:   Before retiring I was a Comptroller of an organization with approximately 800 employees, and $400M/year in revenue. I sort of liken overhead costs at our organization with the function of the federal and state governments - with the federal/state governments being the overhead to the private sector. The federal/state governments have numerous vital functions - national defense, national guard, the courts, providing for the safety net, social security, etc. However, in general, believe that overhead at an activity and the role of the federal/state governments are basically the same - provide for vital functions for the organization/country/state at the lowest possible cost.

When I say provide vital functions - this does not in any way include make work projects just to get people off the unemployment roles. This also does not mean farming out monies for the Solyndra's of this world - or for PBS for that matter. Vital means vital. If it isn't absolutely necessary, you don't do it. We need government to be as small as it can be. Keeping costs down will help with the deficits, and free up taxpayer monies for taxpayer usage. We need to grow the private sector (which will help even more with the deficits), not the government sector. Growing the government sectors just increases our debt.

C.  Unions

Right to Work States vs Forced Unionization: In the United States, we have Right to Work States and Forced Unionization States. Approximately 50% of the states are in each category. With Right to
Work States, people have a right to work anywhere in that state without being forced to join a union/pay union dues. For Forced Unionization States - if a company in one of these states is unionized, you must join the union, or you won't be able to work for that company. Each state has laws specifically relating to this "right to work" union issue.

 Advantages of Right to Work States: Aside from not compelling people to join unions/pay union dues, businesses in Right to Work States can typically put themselves in a more competitive position domestically and internationally due to the decreased power of unions in regards to the negotiation of pay, leave, benefit packages, and hirings/firings. This increased viability of businesses in Right to Work States benefits not just the owners of the business, but also the employees of that business, and increases the tax base of the state through higher employment. Comment: While the concept of unionization in general is fine, union members, and specifically union management, need to keep in mind that excessive demands, that make the companies/industries that their union members work for uncompetitive, is totally counterproductive - i.e., not in the best interests of, the union members that they are representing. NOTE: If you'd like to read more on union competitiveness, go to "Unions - Competitiveness and Intimidation Tactics" at "onemanandhisview".

Unions and Marginal Employees:  The practice of unions protecting and preserving the jobs of marginal employees is a disservice to not just the entire business (through decreased production) but puts added pressure on coworkers who try and cover for the underperforming employees.  Likewise, public unions protecting marginal government employees decreases production and requires the utilization of additional taxpayer dollars to cover the underperforming employees.

Public Unions and the Democratic Party: The practice of public unions donating a substantial portion of their union dues to the Democratic Party, who then - if elected, grant pay, leave, and benefit packages that are favorable to the unions, is unseemly at best. It certainly gives the appearance of impropriety - a conflict of interest for the elected Democratic politicians who, once elected, are supposed to be exercising the judicious use of taxpayer dollars, and not "paying back" those that helped them get elected. NOTE: Take a look at the current budget situation in California if you want to see where this "pay back" gone way awry can lead you.

Unions and the Federal Government: In the federal government, public unions are not allowed to bargain for pay and benefits. They are only allowed to bargain/negotiate over conditions of employment - employee safety and working conditions.  This practice/policy should also apply to state/local government employees as well.

Summary:  Consolidation, performance of only vital governmental functions, and union regulatory/behavioral changes, would dramatically improve the financial position of state/local governments.  Likewise, improvements to the national economy - improvement in the mortgage crisis, employment gains, and increased investment/job growth - which is currently stymied by Obamacare, Dodd-Frank and EPA over regulations and tax/dividend increases on the rich, all need to be rectified for optimal growth.  NOTE:  See my article on "Capitalist Manifesto" - at "onemanandhisview".