Broker Check

 July 23, 2012

New Jersey Leads the Nation

          Several years ago, Senator Torricelli was running for re-election and dropped out of the race 75 days before the election date. The law was clear that if the candidate dropped out within 90 days of the election, no candidate could be substituted in the election.  The New Jersey Supreme Court acknowledged the law and said in this case it was different and Frank Lautenberg could be the substitute candidate.  So, in effect, the Supreme Court ignored the law.

          In the case of Obamacare, the President and Congress specifically said the insurance mandate was not a tax.  It was a payment.  The Supreme Court called the mandate a tax and upheld Obamacare under the taxing power.  So, in effect, the Supreme Court ignored the law.

          The New Jersey Supreme Court has numerous times caused us to look at it in contempt.  The U.S. Supreme Court has, in this case, looked to join it in the mud.

NY Ironworkers Bend on Wages

          The Ironworkers’ union, desperate to regain market share from surging nonunion construction, and afraid of missing out on the upcoming work at Hudson Yards and the Tappan Zee Bridge, agreed to cut their overall hourly compensation by 15% ($14 per hour), and agreed to work rule changes that could slash project costs by up to 25%.

          The unusual decision to amend their existing contracts was made as the ironworkers faced the distinct possibility that the Tappan Zee Bridge could be rebuilt without them, with steel fabricated offsite in order to save money and that Coach’s new corporate headquarters in Hudson Yards could be built with reinforced concrete, instead of steel.

          This is another sign that there isn’t enough money to go around anymore.  This may   give incentive to other unions to maintain their membership and keep their members working. Crain’s New York Business 5/28 – 6/3/12 p.1

          It’s all about jobs!  

The Outlook in New York Becomes Grimmer

          Eroding tax bases and surges in pension and health care costs have caused Utica, Yonkers, and Long Beach to see their credit ratings slashed, raising fears of bankruptcy.  The mayors of Syracuse and Rochester said they may join Nassau County and yield to having financial control boards.  In each case, Governor Cuomo sent emergency cash to each city of $10,000,000 to prop up each city.

          Like Pac Man, bloated pensions gobble up all available funds.  Syracuse’s $30,000,000 pension bill is 14 times larger than the $2,100,000 cost in 2000.

          Long Beach is looking to cut all discretionary spending and freeze wages or it will have to raise taxes by 41%, to stave off bankruptcy.

          Utica laid off 5% of its workforce and 10% of the firefighters. Wall Street Journal 4/13/12.

          Are you wondering why the roads have so many potholes in them?  There is no money to fix them.

          Somewhere in America, there is a church with a sign that says:
                                 “HONK if you believe in Jesus
                                  TEXT if you want to meet him NOW.”

Our Attention Is Diverted to Wisconsin

          Like any good magician, your attention must be diverted away from where the action is.  Recently, all media attention was focused on the unsuccessful recall election in Wisconsin of Governor Scott Walker.  This caused our attention to be diverted from two very important and unique elections, that of San Jose and San Diego.

          In the heart of Silicon Valley, San Jose’s recently retired police officers and firefighters average a $95,336 per year pension.  San Jose’s annual pension obligations soared 336% to $245,000,000 from $73,000,000 in 2002.  In prior cutbacks of employees, the public safety workers were spared.  San Jose is one of the few places in the U.S. where voters have the unilateral power to restructure pensions; and the voters voted to restructure.  They recently voted to force current city workers to either contribute more to keep their promised benefits, or accept a more modest pension.  The city was also given the right to suspend cost of living raises for retired workers.

          In September, voters in Hollywood, Florida similarly approved large cuts in pensions for police, firefighters, and other city workers.

          In San Diego, voters opted to eliminate pensions for new workers (except police) and instead provided new hires with a 401(k) program.  The voters also approved a 5 year freeze on pensionable pay levels and removed the politicians’ ability to improve retirement packages without a popular vote.

          In all these cases, it was stated the current system is unsustainable.  In all cases, the   voters and taxpayers triumphed. Wall Street Journal 6/2 – 3/12 p. A1.  The media chose to ignore all except Wisconsin where they turned it into a political fight, which it wasn’t, they are all economic fights …… There just isn’t enough money to pay what was promised by politicians in the pay of unions! 

Wisconsin Unions’ Rank Dropped Ahead of Recall

          How important do you think automatic dues check off is to a union?

         AFSCME, which represents state workers in Wisconsin, had its membership drop from 62,818 to 28,745 workers.  The drop in membership was attributed to the elimination of automatic dues collection.  AFSCME dropped members from its rolls after it failed to get the members to affirm they wanted dues collected.

          In the American Federation of Teachers, 6,000 of the 17,000 membership quit once dues payment was not a mandatory requirement of having a job. Wall Street Journal 5/31/12 p. A1.

          As always, if you have any questions about these or any other matters, do not hesitate to call us.

          Remember, We’re Here For You!