
San Francisco is officially $10B in the hole - jseliger
http://www.sfexaminer.com/san-francisco-officially-10-billion-hole/
======
eldavido
This is how it starts.

City booms, everyone whines about cost of living going up, unionized public
sector employees extract massive concessions from politicians whose campaigns
they fund. I'm not saying this in an ideological way; it's inevitable, given
that unions get dues by default which most employees don't bother to opt out
from, those dues get spent influencing local politics to favor union members,
and over 50% of US union members are in the public sector [1] - only 16% of
the US workforce is unionized, but 1/3 of public employees are - it's hard to
see how this ends any other way.

Eventually business wises up and realizes the obscene salaries and taxes they
have to pay their employees go a lot farther elsewhere, then they relocate and
(rightly) leave this mess behind, on the hands of the local government,
taxpayers, and politicians who ran on promises they could never deliver on,
and the public sector employees who all but extorted the taxpayers out of
their money.

This is the story of Detroit yesterday, Illinois today, and SF tomorrow. I
don't see how this ends any other way. Look at how many companies are already
hiring remote employees -- time for SF to wake up and realize how limited
their bargaining power is.

[1] [https://www.economist.com/news/united-
states/21737318-suprem...](https://www.economist.com/news/united-
states/21737318-supreme-court-poised-strike-decisive-blow-unions-are-
confronted)

~~~
jacobolus
Teachers in SF are living in closets, out of cars, two to a bedroom in shared
apartments, commuting long distances, etc. Their salaries are comparable to
the state average, but the cost of living is dramatically higher here.

The problem in SF is obscene housing costs (and, like everywhere in the US,
obscene healthcare costs), not overpayment of public employees. In CA
municipal budgeting would also be much more straightforward, effective, and
robust without prop 13.

As for unions: the US has seen several decades of intense ideological war on
organized labor, with dramatic erosion of workers rights across the board, and
in particular legislative and Supreme Court interpretation changes that make
labor organizing much more difficult and dangerous than a half century ago.
Public sector unions are some of the last hold-outs. The overall result we’ve
seen for the past 35 years is continually rising productivity but stagnant
wages and working conditions (for all workers, unionized and not), and
skyrocketing inequality. The future does not look bright for the bulk of
American workers. (Great for the financial sector though, like the hedge fund
manager [and Peter Thiel protégé] who wrote this op-ed.)

~~~
eldavido
As a US centrist, I care about the social safety net. But I also care about
efficiency. I have no love for a janitor making 200k/year. I don't care what
the laws are, that's a broken system someone has figured out how to game.

I think that in the future, decisions about redistributive action will be much
more individual and finer-grained. People sometimes forget that nation-states
aren't the only way to provide a social safety net, and in fact, they have
significant disadvantages, including tons of complex rules and an entrenched
bureaucracy that resists change.

I would much rather have the social safety net work like American Red Cross
(incidentally, to which I'm a donor) than the US federal government. The key
is to install the right social norms so that as the power of states fall,
people still feel compelled to engage in some level of redistributive personal
donation. Fewer McMansions and boats, more volunteering and donation.

In sum, just because the power of government and organized labor is declining
doesn't mean everyone is going to become a cold-hearted scrooge. I think
there's a third way, where we could help a lot more people for a lot less
money out of pocket.

~~~
rabboRubble
If it costs the janitor upwards of $100k a year to live reasonably near the
place of work, then paying the janitor $200k a year is reasonable. If a
company does not like to pay this amount towards cleaning staff, then the
company can eliminate the janitorial positions and have people working in
their own filth, or have non-janitorial staff take on custodial duties in
addition to their own.

------
godzillabrennus
Looks like the costs are being driven by offering generous compensation and
retirement packages to government employees.

I don't see that changing.

~~~
Fede_V
I'm not sure how you could call that generous give the col of SF. Do we just
expect government employees to not be able to live in the city they work?

~~~
refurb
There is a difference between a pension that allows you to live in SF and a
crazy generous pension (that encourages gaming the system) that is far more
extravagant than anything you'd find in the private sector (who have been
moving away from pensions generally).

~~~
toomuchtodo
I don’t know why public sector workers should give ground on benefits simply
because private sector workers have rolled over to corporate interests.

If you don’t want a union, cool, but don’t complain about the outcome then.
Comparing to private sector workers is disingenous.

~~~
eldavido
Look, obviously you and I have pretty different ideology, I get that.

But I think you should consider why union membership is declining in the US.
It's not some giant right-wing conspiracy. It's because the structure of
industry is changing, firms are getting smaller, and the overall economy is
getting more competitive. It's not like all the employees just decided, hey,
we should all voluntarily decide to take a worse deal, great idea, let's do
it.

What upsets me as a taxpayer is why this same thing doesn't apply in the
public sector. Like, I get that teachers work hard, but if we paid by
outcomes, the way any sane private-sector company does, half of teachers would
just get fired. Look at any major big-city school district if you want to see
the mediocrity in action, whether Chicago Public Schools (CPS), Oakland
Unified, etc.

So yeah, it seems a little unfair that one sector of the economy gets paid for
being mediocre at best, and other fires people and demands performance. Yeah,
I'm a little upset.

~~~
toomuchtodo
I can appreciate we have different viewpoints. I can appreciate that, as a
taxpayer, you’re upset. I also see the issues with institutions like CPS
(having lived in Chicago proper). I don't believe paying teachers for outcomes
when outcomes are primarily driven by influences outside of a teacher's
control [1], but that is a discussion for another thread.

I don’t think it’s a secret I’m hard to the left. People first. That’s how
empathy works, economic efficiency be damned. Are there issues with how
pension systems are gamed? Certainly, and fixes need to be put in place
(benefit systems should never have the capacity to be gamed). Should public
sector workers have reduced benefits or salaries because the American public
has allowed their representatives to hand all the gains to Corporate America?
Absolutely not.

We have slowly, over decades, mortgaged the future (at local, state, and
federal levels, speaking specifically about the US). The bills are coming due,
and everyone is surprisingly shocked. I can’t tell you what to do, but I have
gotten involved in politics and intend to contribute to a solution. I
encourage you to do the same.

[1] [https://www.mckinsey.com/industries/social-sector/our-
insigh...](https://www.mckinsey.com/industries/social-sector/our-
insights/drivers-of-student-performance-insights-from-north-america)

~~~
GiorgioG
Pensions (guaranteed payouts) are simply unsustainable - that’s why they’ve
gone away in the US private sector. The public sector can’t afford it either.
I lived in upstate NY, the property taxes were high because of strong public
unions.

I moved south 4 years ago, my taxes are less than half of what they were in NY
for a 2500sq/fr home compared to our current 4000sq/ft home. The education
system is no better in NY than it is down here in my town. The public
workers/teachers down here are not unionized - it’s not great for them, but
I’m not willing to pay for their gold-plated benefits and pensions.

People continue to vote with their feet in situations where the local
governments are unwilling/unable to change. In my subdivision, of 100 families
95% are transplants from up north. It doesn’t take a genius to figure out why
- that old style of lush benefits for public workers is no longer competitive.

~~~
rileymat2
Why are the pensions unsustainable? The actuaries should be able to estimate
how much a cohort will need on average reasonably well. The wage share has
been decreasing
[https://en.wikipedia.org/wiki/Wage_share](https://en.wikipedia.org/wiki/Wage_share).

I suppose it is not sustainable to increase earnings and maintain pensions
forever.

~~~
GiorgioG
Because most pension systems are not fully funded.

[http://www.governing.com/gov-institute/voices/col-public-
pen...](http://www.governing.com/gov-institute/voices/col-public-pension-cuts-
unsustainable-retirement-systems.html)

[https://www.cnbc.com/2017/10/18/state-pension-funds-
continue...](https://www.cnbc.com/2017/10/18/state-pension-funds-continue-to-
fall-behind-heres-how-much-you-owe.html)

~~~
8note
that seems like a different problem than pentions being inherently
unsustainable.

------
imjustsaying
Entirely predictable and only a matter of time, but talking about it IRL is
equivalent to downvote fodder on HN. I want workers to get fair wages, but it
often seems the boomers/Gen X achieve that by loading debt onto millennials
and future generations.

>BART janitor grossed $270K in pay and benefits last year

[https://news.ycombinator.com/item?id=12852104](https://news.ycombinator.com/item?id=12852104)

~~~
Boxbot
having seen what BART janitors have to deal with, I say give them a raise and
double the headcount.

~~~
eldavido
We don't need more janitors. We need to get serious about fare enforcement.
Fence in all the fare-paid areas so people don't blatantly jump over them, and
get rid of the swinging doors that people walk through with zero consequence.

BART is totally lawless. In the past 4 years, I've had a knife pulled on me,
and had someone try to steal my computer. Every day I see dance shows,
littering, people passed out on two seats, people blasting music, rampant fare
evasion, and drug use at Powell/Civic Center. I'm tired of it and want the
system's rules to be enforced.

~~~
xienze
> I'm tired of it and want the system's rules to be enforced.

Won't happen because, let's face it, minorities are going to predominantly be
affected by enforcement. SF's far too progressive to let that happen.

~~~
eldavido
I wouldn't be so sure.

Let's see what happens in the mayoral election. If London Breed gets elected,
I take that as a signal that the city wants something different.

Politics in the Bay Area has changed noticeably in the 7 years I've lived
here. Guys like Wiener are getting more of a voice passing sensible common-
sense solutions without getting shouted down by head-in-the-sand idealists
that won't see things for what they are. Long-term, I think SF is going to
become more like NY, a place with plenty of traditional progressives, but also
a healthy share of pro-business, socially liberal conservatives who just want
the trains to run on time, and don't give a damn about political correctness.

Or maybe I'm just dreaming.

------
diogenescynic
If Jane Kim becomes mayor it will get exponentially worse. The city is
incredibly poorly run and dirtier than any other city in America that I’ve
been too.

------
sethev
It seems weird to insist that all future obligations have to be funded with
money that's set aside now. To give a small example, it would sound crazy if
someone said people had to set aside a fund whose interest could pay all the
cost of raising a child in advance.

~~~
bko
If you're promising someone something in the future (pension) for work that
they're going to do now, then you should fund that. If your salary included a
big bonus or deferred benefits, would you mind that your manager doesn't set
aside any money for that promised benefit?

~~~
sethev
It's the indefinite funding of a fixed obligation that seems weird to me. If
my manager said, "I'm sorry I can't pay your $5000 bonus next year because we
don't have $111,000 set aside in a fund earning 4.5% in perpetuity" i'd be a
lot more upset. Honestly there's probably something about the accounting that
I don't understand.

~~~
closeparen
Pension is not bonus. You don’t get to modulate the amount depending on how
generous you’re feeling in a given year. Workers have as much right to it as
to the wages they’ve earned and saved into a 401k or IRA. It’s the enployee’s
money; the employer is just a steward. Failing to pay a pension is the same as
robbing a former employee’s house to take back the wages you’be already paid
them.

~~~
ghthor
I'd never take a pension over a 401k. I'd much rather be able to pick some of
the investments my retirement is funding/being funded by then none. Seems
crazy to me not researching and picking the investments, but maybe I'm bias by
my understanding and intelligence versus the average American.

------
pmoriarty
Could taxing all the marijuana businesses that are springing up like mushrooms
all over SF help?

~~~
gwern
The tax revenue numbers here seem like they would exclude recreational
marijuana but would include medical marijuana. Unless you think legalization
alone will increase SF-local sales by like $1 billion/annually (that's a lot
of weed! and most of that will be in cash, making it harder) it's hard to see
it making a big difference.

I didn't see _that_ much marijuana being consumed when I was there last week,
and the one recreational dispensary I went to was selling fairly small
quantities in dollar terms... (I bought $17 of edibles, so I'm afraid I didn't
help much in plugging the SF deficit.)

------
pfarnsworth
The $300 million per year that SF spends on homeless should be reevaluated.
The fact that there is no metrics, targets, or accountability should make this
the first thing on their list.

------
Taniwha
Read the article: $10B is the budget, $250M is the amount of that that isn't
funded, it's still a big hole, but 40 times smaller - please change the header
above

~~~
avalys
No, there’s a $250M deficit annually, and a total of $10B in future
liabilities. Coincidentally, that is the same amount as the entire annual
budget. But $10B is the right number.

~~~
danielvf
"Using the official numbers, San Francisco is $10 billion in the hole ($4.2
billion of health care liabilities, plus $5.8 billion of pension
liabilities)."

Then later, he estimates that the actual amount is approximately twice that,
since the official ten billion figure is based over optimistic assumptions.

~~~
kaennar
He states that it could be twice that not that the actual amount is that
value.

He was stating that the 7.5% return they wanted is not likely, that 6.5% is
much more likely, and that he wouldn't be surprised if the return was less
than that 6.5%.

