Show them the New Jersey debt for state pensions which Forbes magazine pegged at $16,838 per person, or $146.5 billion in total*.

I bring this up because at the last Union County freeholder meeting the topics of urgency were Haiti and goose management, not necessarily in that order.  They gave $5,000 to the United Way (2010-57) for Haiti and, after a 30 minute presentation on the goose problem in Union County, $347,239 to the US Dept. of Agriculture (2010-71) to off geese.

I rant about it here (about 3 minutes in; after I finish eating) but the myopia of the political class lingers with me.  They see Haiti and think $5,000 is about right.  They see geese loose and somehow consider giving a federal government agency money to hire goose-killers a priority.  Yet debts (pension, OPEB, and bonding) which now likely exceed $200 billion across the state are allowed to run wild endangering everybody’s welfare.

Do they see it?  Do they understand the scope of the fiscal fiasco?  Are they ignoring it in hopes it goes away?  Do they want to focus on diversionary problems that they see as solvable or that they can’t be blamed for?

I have no answers but I know that if government-as-usual maintains even the dumbest animals would have enough sense to want to flee.
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* Forbes used Treasury rates to value liabilities instead of the 8.25% that New Jersey is dreaming of getting.  Personally, I would put the deficit closer to $120 billion here so when you wend through their interactive map keep in mind that the pension numbers per state (all deficits) are likely overstated.

At the Union County reorgainzation meeting outside counsel who made in total at least*  $13,900 in campaign contributions in 2009 were awarded in total up to $362,500 in contracts for 2010 with more likely to come.  Why does the county which spends around $2 million on inside counsel need so much outside counsel?  In part because politicians need so much money to run campaigns so they make work.

This money, and it’s only a fraction of what Union County spends to defend lawsuits, need not be spent.

Planning Board Counsel: My one government appointment was a year I spent on the Kenilworth Planning Board after which I became convinced that we don’t need planning boards any more.  We’re not laying track through indian country to settle the west.  We’re developed here and if major projects come along they should fall within the purview of the governing body.  People moved here because they like it.  Planning boards can only muck that up.  If a master plan has to be made up then it should consist of two words: “Lower Taxes”.  With that we can do away with the planning board attorney.  In Union County that was Neil Cohen, at $27,500 per year, until that thing.

Open Space Counsel: A fund to reward political backers needs an attorney presumably to draw up contracts and check with the NJDEP because it would overburden the county counsel’s office or the freeholders to do it.

Personnel Counsel: As it was explained to me when I asked this is to represent county employees when they have grievances because inside counsel would have conflicts.  What wasn’t explained was why grieving employees need to be represented especially since many of them are in unions.  In the private sector this would be a laughable expense (”You have problems working here.  OK let me get you a lawyer to show you how you can sue me”).  In 2005 it looks like two law firms (Schenck, Price et al and Garrubbo, Capece et al) were allocated $100,000 each for this service but there was more lawyering required so Schecnck got $20,000 more (Res. 2006-95) and Garrubbo $55,888.32 more (Res. 1336-2005).^  Then in 2006 3 other law firms (DeCotiis, Fitzpatrick; Ruderman and Glickman; Roth, Horowitz) were added to the list with Schenck taking a little ($25,000) less and Garrubbo a lot ($75,000) less and those allocations have been consistent to date except the Garrubbo firm asked for and got $30,000 more in 2009 and hasn’t been awarded their money yet for 2010 (Though that might be on the agenda for the next meeting.  Could be some probationary thing or a little hardball).

What strikes me about taxpayers paying for all these lawyers, outside of how much the chosen lawyers have to pony up to make the list, is that elected officials are primarily lawmakers.  Lawyers interpret the laws they make.  If those officials are not qualified to interpret their own, or others’, laws then they should not be provided an expensive interpreter at taxpayer expense.  They should not accept a job they’re obviously not qualified to undertake on their own.
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* I excluded DeCotiis, Fitzpatrck from the campaign contribution spreadsheet since they would skew it.  The other firms contributed almost exclusively to the Union County Democratic Committee and Democratic candidates like Neil Cohen and Joseph Cryan.  Decotiis, Fitzpatrick is statewide and their contributions are in the millions to both parties.

^ A situation the county can’t blame on the Rennas who left their employment by then.

Government employees are being laid-off and furloughed with their pensions raided and still get scapegoated for the sins of politicians.  In an earlier blog I wondered at the silence of Union County employees who weren’t getting raises while the county was wasting money on musicfests and banquet halls.  I think I see why now, based on my past experience…and that of the Rennas.

I wrote my first letter 25 years ago.  It was to the president of the Home Insurance Company objecting to a memo he wrote criticizing the work effort of the staff that I was a part of.  I believed we were working hard and did everything asked of us and more.  I spoke honestly.  I was fired.  I walked away.

Joe Renna had a similar experience working for Union County.  He perceived corruption in the awarding of printing contracts and stood up for what he saw as right.  He was fired.  He ran for freeholder but, as a Republican with post-Iraq-war George W. Bush topping the ticket in Union County, he lost by the same percentaget W did.  He and his wife, Tina Renna, didn’t walk away.  Tina Renna founded and maintains the most informative website covering government I’ve ever come across and has commented frequently at freeholder meetings.

I also comment at those meetings but my situation is quite different.  I don’t get dogged. There is nothing the freeholders can do to me that they can’t do to any other resident (i.e. raise my taxes).  But the Rennas belong in government.  They have the experience and the inclination to make government work for people.  In a parallel universe where qualifications and dedication to the public were all that mattered Joe Renna would be the County Manager and Tina Renna would be the Public Information Director.  But their honesty and outspokenness has made enemies within the establishment running their gravy trains.

The Renna saga is not lost on those county employees denied raises as vanity projects get green-lighted.  They sit silently hoping some pension money remains for them instead of speaking up demanding accountability.

That letter I wrote in 1985 was the best career move I ever made.  The Home Insurance Company was badly run and went bankrupt within 10 years.  Had I not spoken up I would have been dependent on the vagaries of insurance regulation and been either  unemployed or a toady for life.  Instead I moved into pensions where I answer to my 427 clients who allow me the freedom to speak honestly.

County government will likely be phased out in New Jersey within the next decade with pensions severely cut back, even for current retirees.  This is no down cycle.  This is government being destroyed from within by mismanagement masked by debt.  Those IOUs will come due and government employees will pay a large chunk of them as taxpayers won’t have the wherewithal.  The Rennas may be better off on the outside but taxpayers surely are not and, in time, those sheepish county employees might come around to that view too.

This week Union County freeholders recommended a freeze on “salaries for all directors, elected officials, and 640 non-contractual (exclusionary) employees, resulting in an anticipated savings of $1 million in the 2010 budget” yet they passed resolution 2009-1181 at their meeting authorizing the “County Manager to award a contract KemperSport, North Brook, Illinois pursuant to an RFP process for Galloping Hill Clubhouse Construction Management Services, in the amount not exceed 10% of the costs associated with the development, design and construction of the clubhouse in an amount of not to exceed $1,000,000.”
Why are they not giving money to their employees but giving money to contractors? Because contractors kick back a bigger percentage of the money they get from the pay-to-play game regardless of how silly the project.

As explained in the presentation before the vote, the idea is to build a banquet facility specializing in weddings at Galloping Hill golf course that, they admitted, would take up to five years to get going. I had three, what I thought to be fairly obvious, objections to the project:

We’re in a depression: Successful wedding mills that have been around for decades are cutting rates for even the high-end business* and VFW halls dominate the low-end. A start-up with no track record will get eaten up.

It’s a golf course: The wedding-hall business is seasonal with a large concentration of dates during summer weekend afternoons which coincides with the golf cycle. Will they close the course at 1 pm to accommodate cars and partiers or will they play through?

It’s still a golf course: Being a guy it wouldn’t bother me. I’d be OK with a wedding reception at Chuck E. Cheese’s if the DJ wasn’t a Macarena guy. However, for the single most important event to cherish in the lives of most women, I don’t see them jumping at the chance to gather their retinue for photos around a ball washer. It’s a golf course. Maybe one suggestive snap with the hole pole but generally more romances end than begin on a golf course.

All on deaf ears. The resolution passed unanimously, per usual. Galloping Hill golf course will get a banquet hall and a lot of contractors will get a lot of money, per usual.

* Except, from what I hear from a client in the field, the Manor which has the name to maintain their rates. Most everybody else can be bargained down these days. Galloping Hill is not exactly a ‘name’ when it comes to weddings.

Kenilworth decided this week to table the building of a new public safety building because taxpayers could not afford it. Cranford is looking to fire cops. Scotch Plains is looking at layoffs. Union County even laid off 28 people and closed Oak Ridge golf course, in part to have their musicfest there, to protests from golfers and muckrakers.

These are unquestionably tough times which is why last night’s Union County freeholder meeting, held in Clark to a packed house, included in the agenda a truly bizarre resolution. .

Union County closed Oak Ridge golf course which reportedly lost $410,000 last year, though it benefited thousands of golfers, but it will spend $586,972 to upgrade a dog park.

The dog park, which could also be called a fence, is the only one in Union County. We do have two other golf courses. So on that score it makes sense. But, unless plans are afoot to charge admission to get inside the fence, expected revenue is $0 with very little possibility for growth. A well run golf course in a densely populated area which doesn’t have property taxes or mortgage debt could easily turn a profit if everybody paid for their rounds.*

In the last year that I’ve been attending these freeholder meetings I’ve seen some good things. Draft agendas are now on the internet hours before the meeting instead of being handed out minutes before and those agendas are slimmer (i.e. looks like fewer no-bid contracts being resolutioned out). There’s free garage parking available now in Elizabeth. These mobile meetings have brought more than the three of us ‘members of the public’ out.

But in one major area the county still has a ways to go: governing. Sure they get to make the decisions but it must be decisions by and for the people who they need to hear from, and not after a decision has been taken. Oak Ridge was closed in 41 days with no public input beyond whining at the decision. $586,972 is being spent on improving a dog park when pension payments are being deferred, workers are being laid off, and golf courses are being closed. This is not the people’s agenda though it may be somebody else’s. I still wonder whose?
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* Speaking of which Paul Mulshine was a no-show at this meeting though he assured an anonymous blogger he would attend.

Running a newspaper is a business and you make money from it primarily by attracting advertisers, even if they’re the people you cover. Last January I whined about losing my column in the Union County Local Source just months before an election because that paper was seeking to curry favor with the county. I noted that they failed since this year’s Resolution 2009-11 read:

CHAIRMAN MIRABELLA, designating the Star Ledger, La Voz, Courier News, The Home News Tribune, Luso Americano, Vistaso Hispano, El Especialito and the Westfield Leader as the newspapers to receive legal notices for the year 2009.

So the Local Source was still on probation, that is until last week and Resolution 2009-460. Your Local Source will be a little fatter as you flip through what will likely be a few thousand dollars worth of legal ads. Will this compromise the way the paper covers the county and lead to a new golden age of corruption?

No, quite the opposite. I lifted that ‘golden age of corruption’ line from an interview Stephen Colbert conducted with San Francisco Chronicle editor Phil Bronstein about the consequences of newspapers dying. The comment was obviously a joke and everybody knows it.

Newspapers have been the defenders of the status quo, however corrupt, because they have been the ones corrupted. Will the Local Source use that additional revenue to scour budgets? Will the the paper now print anything other than press releases from the county? Will its staff columnist, Frank Capece, Esq of the law firm of Garrubbo & Capece, PC, which receied $67,525 from the county in 2008 for specialized legal services, criticize the county more than Cranford parking?

In their defense, the Local Source (and every newspaper) is not in the business of informing you about how corrupt their advertisers might be. You’re on your own there. So maybe the demise of newspapers may be a good thing. At least then you won’t be assuming someone’s watching out for you, and not their own bottom byline.

The first time most people knew that Oak Ridge Golf Course in Union County would never open again was January 22, 2009 with the release of County Manager George Devanney’s executive budget letter for 2009 recommending closing Oak Ridge to save $740,000. The decision was finalized on March 4, 2009 at a Wednesday night Union County Freeholder finance committee meeting. That’s 41 days to close a 169.4-acre golf course in a county where it can take years to repair a footbridge.

Doesn’t the public need to be notified and consulted? What about the DEP or the city in which the course is located?

Paul Mulshine wrote a column where he seems to think so because of Green Acres regulations. I reviewed the key section (with my emphasis):

(d) For the purposes of this section, a change in recreation and conservation purpose or use of parkland shall not include:
1. The replacement of existing recreation and conservation development or facilities with development or facilities for another recreation and conservation purpose or use, or the renovation or repair of existing facilities, as long as such replacement, renovation or repair involves less than one quarter acre of additional permanent disturbance of parkland;

and I don’t think these regulations apply to switching Oak Ridge from a golf course to a park. Yes it was a change in the recreational purpose but, unless they use more than 169.9 acres for any new facilities they’re planning (which are still under wraps), they would not have disturbed that additional half-acre.

The real question for me is why the freeholders, within a bureaucracy where you need a permit and have to follow detailed procedures and notification requirements to cut down a tree, need not be accountable to anybody when arbitrarily deciding to alter the use of a facility that impacts tens of thousands of residents.

Whether Oak Ridge golf course should have been turned into a park is a matter for debate. I can see both sides. However, what I can’t see is why that debate only took place among a handful of people working in the Union County Administration building.

The 2009 Union County budget with a 5.3% tax increase was passed unanimously on April 16. Comments on the budget were entertained and there were a lot of them - almost all praising the freeholders for doing a great job on this budget from people who might have benefited directly from it as representatives for some Home Services outfit, a YMCA, a YWCA, the Elizabeth Vo-Tech, and an archer all gave thanks. There were also about 5 union representatives who were grateful for the county supporting project labor agreements. No representatives from law firms like DeCotiis, Fitzpatrick or contractors like Harbor Consultants, Inc. took to the podium but maybe they had other outlets to show their appreciation.

This praise-fest seemed orchestrated but don’t tell freeholder Holmes or you’ll lose points from him. I had to question where the thousands of tax-day protesters from the day before were when they might have done some good? Were they pooped from all that teabagging? I didn’t ask that though. But I did ask about a number in the budget that still bothers me.

Under statutory expenses there is a line item titled Unemployment Compensation Insurance with a 2009 appropriation of $2,488,300. In budgets going back to 2004 this line item had always been $168,300. What gives?

I was first up on budget-comment time and I posed the question, which got a little awkward since freeholder chairman Mirabella seemed to be anticipating only comments here but after a brief stare-down period Finance Director Lawrence Caroselli was beckoned to explain the appropriation. As it turns out Union County self-insures unemployment compensation and they recently had 30 layoffs so they were planning for those payouts.

Fair enough, I had my answer. So I sat down and thought about it over the course of a dozen laudatory comments and a 65 minute executive session break. I worked out the numbers in my head and was planning a comment. No question this time so I expected chairman Mirabella to be proud of me. But that’s not how it played out. Here’s what I wrote out and I think I got out most of it:

$2.5 million for unemployment insurance seems like an awful lot for just 30 people. That would come to $83,000 per person. Considering that payouts might range up to $500 per week for at most a year and these people, being trained county employees, might not use all their benefits a better per-person estimate would be $20,000. It makes no sense to budget that much unless you were planning many more layoffs. This board has a history of springing unpleasant surprises (Oak Ridge golf course closing) after decisions have been taken. It looks to be like you’re anticipating laying off another 150 to 200 employees based on this budget item.

That’s as far as I got, both in what I wrote and what chairman Mirabella allowed me to say as he objected to my insinuations with a terse “let me stop you there” and objected to layoff rumors being spread. When I asked if there were going to be any more layoffs this year he responded that there had been “no discussions of layoffs.” I noted that it wasn’t a straight no, just “no discussions” which took me back to memories of “no war plan being on the table” and definitions of what “is” is.

In a tight budget year when cuts like closing a golf course to save $400,000 were eagerly pounced upon why would they raise the appropriation for anticipated unemployment benefit payments by over $2.3 million unless there were plans to use it hatching somewhere? Maybe some county employees know more about this - or will find out soon.

Union County took a pension deferral of $9.4 million, closed a golf course, laid off the engineering department, instituted a hiring freeze, and still saw their 2009 budget rise to $442,573,639 ($265,056,170 from taxes).

Here are the summary numbers and my take:

OVERVIEW
…………………………………2008…………………2009……..CHANGE
Total Appropriations……437,757,959…………442,573,639………+1.1%
Less: Surplus……………(18,500,000)…………(18,500,000)………0.0%
Less: State/Fed Rev……(52,306,664)………….(50,957,568)……..-2.6%
Less: County Revenue..(115,293,632)………..(108,059,901)……..-6.3%
Raised by Taxation…….251,657,663…………265,056,170………+5.3%

APPROPRIATIONS DETAIL
Mind the differences (i.e. Morris just lists a Park Commission without a salary breakdown and Union has this unclassified item; I just put these, along with Public Works, under Operations. Morris also runs a county library which inflates their Education expenses. Union, being more ‘urban”, feels the need to spend more on Public Safety.)
Note: S = Salaries; E = Expenses
………………………………..2008………………….2009…………CHANGE
General Gov’t S……………25,045,114………….22,198,755……-11.6%
Gen Gov’t E………………..65,060,565………….65,779,017…… +1.1%
Public Safety S……………71,200,429………….73,998,299…….+3.9%
Public Safety E……………14,469,643………….15,047,879…….+4.0%
Operations S………………..9,853,621……………9,909,728…….+0.6%
Operations E………………19,054,084………….20,520,573…….+7.7%
Education S…………………..534,931………………516,233…….-3.5%
Education E……………….17,331,401………….17,452,429…….+0.7%
Health & Welfare S………..63,597,393………….65,362,175…….+2.8%
Health & Welfare E………..54,096,119………….57,800,347…….+6.8%
State/Federal Programs….23,762,612………….21,920,612…….-7.8%
Contingent………………………50,000……………….50,000……..0.0%
Capital Improvement……….2,600,000……………2,900,000……+11.5%
Debt Service………………42,820,000………….42,895,709…….+0.2%
Deferred Charges…………….125,000……………..125,440……..+0.4%
Pensions/Soc.Sec………..28,157,047………....26,096,443……..-7.3%
TOTAL……………………437,757,959………..442,573,639…….+1.1%

PENSION COST DETAIL
…………………………………2008………………..2009…………CHANGE
PERS……………………….7,130,437………….6,448,087………..-9.6%
Police & Fire………………9,483,311………….5,745,056……….-39.4%
Sherrif/Detective…………….150,000……………150,000………….0.0%
Defined Contribution………… 25,000…………… 25,000………….0.0%
TOTAL…………………….16,788,748……….12,368,143………..-27.3%
Total Payroll…………….170,231,488………171,985,190………. +1.0%
Pension as % of payroll………9.86%………………7.19%.

Conclusions:
1) The amount to be raised by taxes will be going up by $13,398,507 (5.3%) even with a deferral of $9.4 million in pension obligations which otherwise would have raised taxes by 9.1%.

2) Outside of the pension contribution numbers there are an awful lot of ‘+’s in those year-to-year comparisons, as per usual, even in unusual times.

3) Debt service of $43 million (10% of the budget) will surely rise as this week Moody’s assigned a negative outlook to the creditworthiness of all local governments in the United States which, with escalating interest rates in the near future resulting from titanic increases in the money supply, should see at least a $5 million annual jump in the county’s debt service for the foreseeable future.

4) Possibly the most disturbing part of this budget is that it’s all consumption and maintenance with no plans or investments being made that could contain future tax increases. Where, for instance, are plans to use county facilities as money makers? How about turning one the parks into a golf course or skeet range to raise revenue? It’s not there. This is a bad budget but the lack of vision will make future budgets even worse.

Last January I did a comparison of 2008 budgets for two counties comparable in population. Morris County had a budget of $294,298,045 with $193,480,382 to be raised by taxes. Union County had a budget of $437,757,959 with $251,657,663 to be raised by taxes.

Going into 2009 the talk was hiring freezes, furloughs, and belt-tightening. Morris County even claimed a tax cut, though that was after taking into account the reduction in the Open Space tax which is a separate budget. On the official budget for 2009 Morris will spend $298,531,323 ($201,365,440 to be raised from taxes) while Union will spend $442,573,639 ($265,056,170 from taxes).

What strikes me initially is that, even with pension contribution deferrals and job cuts, the direction of these budgets is still upward. If budgetary time bombs like public debt and pension expenses go off due to rising interest rates and contributions that can no longer be deferred respectively, neither county is in a position to cushion the tax explosion.

Here are the summary numbers and my take:

OVERVIEW
……………………………………….MORRIS………………….UNION
Total Appropriations……………298,531,323……………..442,573,639
Less: Surplus…………………….(20,000,000)……………..(18,500,000)
Less: State/Federal Revenue..(59,111,793)……………..(50,957,568)
Less: County Revenue………..(18,054,090)……………..(108,059,901)
Amt. Raised by Taxation……..201,365,440………………265,056,170

APPROPRIATIONS DETAIL
Mind the differences (i.e. Morris just lists a Park Commission without a salary breakdown and Union has this unclassified item; I just put these, along with Public Works, under Operations. Morris also runs a county library which inflates their Education expenses. Union, being more ‘urban”, feels the need to spend more on Public Safety.)
Note: S = Salaries; E = Expenses
………………………………………..MORRIS……………………UNION
General Gov’t S………………….15,323,146……………….22,198,755
Gen Gov’t E……………………….39,149,583……………….65,779,017
Public Safety S…………………..43,827,684………………73,998,299
Public Safety E……………………4,141,188……………….15,047,879
Operations S……………………..11,458,240………………..9,909,728
Operations E……………………..27,780,000……………….20,520,573
Education S………………………..4,586,940…………………..516,233
Education E………………………19,357,383……………….17,452,429
Health & Welfare S……………..25,809,773……………….65,362,175
Health & Welfare E……………..40,910,100……………….57,800,347
State/Federal Programs……….10,902,391……………….21,920,612
Contingent………………………………20,000……………………..50,000
Capital Improvement………………..900,000…………………2,900,000
Debt Service………………………36,649,895……………….42,895,709
Deferred Charges…………………………….0……………………125,440
Pensions/Soc.Sec……………....17,715,000……………....26,096,443
TOTAL……………………………298,531,323……………..442,573,639

PENSION COST DETAIL
……………………………………….MORRIS………………….UNION
PERS……………………………….5,785,000……………….6,448,087
Police & Fire………………………5,000,000……………….5,745,056
Sherrif/Detective………………………70,000…………………150,000
Defined Contribution………………… 10,000…………………. 25,000
TOTAL…………………………….10,865,000………………12,368,143
Total Payroll……………………101,005,783……………..171,985,190
Pension as % of payroll…………10.76%…………………….7.19%.

Conclusions:
1) Pension costs are at pitifully low levels. A lifetime pension that begins as early as age 55 with 60% of replacement income would cost about 20% of salary for the average employee. If the state pension plan is to remain viable those under-contributions will need to be made by future taxpayers and that debt is staggering.
2) Debt service has stabilized since interest rates have dropped but the current level can’t be expected to sustain. Both counties are hooked on debt and when even moderate inflation returns this budget item will spiral.
3) The rate of growth of the most pertinent number (the amount to be raised by taxes) shows no sign of abating, even with the gimmicks and cost-cutting. It will be 4.1% for Morris and 5.3% for Union. At a time when government revenues are shrinking with the economy government expenditures must follow.
4) Shouldn’t somebody be doing this comparison other than me? Isn’t there some Division of Local Government that could be coming up with handy spreadsheets before these budgets are approed? Isn’t there some major newspaper that can put even a mailroom guy on this? The reason I see these budgets escalating is that they get put together in secret with input from vested constituencies mostly and the public an active participant only at the very final stage, when they get their tax bills. It’s like ordering dinner without seeing the menu and winding up with table scraps but having to pick up the full tab. It can’t help but make your stomach turn.

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Next: A look at Union County: 2008 to 2009.