Blaze Books sat down for an in-depth interview in TheBlaze’s New York newsroom this past Tuesday with former Reagan appointee and California-based lawyer and political communications company executive Jim Lacy, author of “Taxifornia,” to discuss the major challenges facing California that threaten to turn the state into one big version of Detroit.
Below is our interview, transcribed from our interview with slight edits for clarity. All links are ours.
Make your elevator pitch for why Blaze readers should pick up this book?
Lacy: Well public employee unions are really transforming government throughout the United States and the negative effects of that are being played out in California right now. So what my book does is very closely examines the political control that the public employee unions—specifically the California Teachers Association (CTA) and Service Employees International Union (SEIU) have accomplished in the state, and it discloses their swamped political spending: spending that is three, four, five-fold more than traditional special interests like Chevron which is just completely dwarfed by their political spending. AT&T, the California Chamber of Commerce, none of them can match the political spending, and as a result of this political spending, the public employee unions really do have a lock on the outcome of political decisions in the state that effect the economy. And this involves a connection between the problems that we’re having with public employee pension obligations, bankruptcies of local government, and taxes being raised to the very highest levels in all categories.
For two years in a row California has had the highest rate of poverty in the nation according to Obama’s census bureau. The unemployment is still completely out of whack. California has depending upon what survey you read either the first highest, third highest or fifth highest unemployment in the nation. So my theory is that people need to have that information because the information that they are getting right now from the mass media is that California has a surplus and Jerry Brown and the liberal Democrats are doing a great job and the reality is they aren’t – the state’s getting ready to explode economically in a negative way. And so that’s what my book, “Taxifornia,” is about.
Why should non-Californians care about California’s problems?
Lacy: Well we know that the largest municipal bankruptcy in the country was in Detroit right? Well before Detroit what was the largest municipal bankruptcy in the country? It was the city of Stockton, California. Yes again, California leads the nation – it leads the nation in municipal bankruptcies. USA Today says that there are probably ten more cities in California that are ready to go bankrupt. So we have to ask ourselves the question, “Well why?”
A big part of the reason that the municipalities are having these problems is because of public employee pension obligations. And as a result of those, they’re raising taxes. I’ll give you an example. San Jose is the third-largest city in California. It’s also the 10th largest city
in the nation. So your question was “Why should the rest of the nation care?” And what I’m gonna tell you is that because of the way that the liberals and the public employees have controlled California politics, this is what’s coming in municipalities all across the nation. It’s just playing out in California first because the liberals have been in control for so long. The city of San Jose just put together its latest city budget, and they have a reform mayor. The budget’s a $1 billion budget. 30% of the budget is dedicated to paying for pension obligations for public employees that have already provided services. If 30% of the budget today is to service debt on past services by public employee union members, what’s it gonna be tomorrow, two years from now, or three years from now? Because people are living longer, and because of the salary obligations of two generous salaries that the politicians have given.
And I’ll give you an example. In the county that I live in, the average pay for a firefighter is $234,000 a year. That firefighter can opt to retire at age 50 or age 55 and depending upon the calculation from anywhere from 50% to 75% or 90% of that salary over time. In the last 10 years San Jose’s obligations to pay for public employee pensions, which by the way are all underfunded (they aren’t paying enough) have quadrupled to $300 million. So if they’re going to go up exponentially, I would say that probably in the next 10 years it’s quite conceivable that San Jose’s public employee pension obligations will constitute the majority focus of government spending.
So what’s happening in California is that the purpose of government is shifting – government is no longer primarily organized to provide police, fire and public safety services. What it’s primarily organized for right now – the direction that it’s going in — is to provide pensions to past employees. And that’s a real problem. And it finds itself in too-high salaries, and too-generous pensions under defined benefit plans. And there’s a whole reason that we have that in the state, and part of what “Taxifornia” does is reveal that.