Tag Archive for 13th Check

A Dead Man Walking: Wayne County

Your Least Loss is Your First Loss

Bankrupcy WC 2Wayne County Executive Warren Evans told the assembled self very important persons at the Mackinac Policy Conference last Friday that he now believes that his county government can avoid bankruptcy. “He is now comfortable with the options” was the report. Little did he know that, on the very same day, Wayne County Circuit Court Judge Lita Popke gave the County 48 hours to pay its retirees $ 49 million dollars to restore their 2010 ’13th check’ retirement benefit. Wayne County told the court flat out that it doesn’t have the money.

The Wayne County Commission voted yesterday to tap most of the last remaining funds in the County’s much abused Delinquent Tax Revolving Fund, however Warren Evan’s subsequent veto threat all but assures that this summer’s county property taxes will increase 1.23 mils to pay this judgement. This property tax increase will not even require a vote of affirmation under the Headlee Amendments to the Michigan Constitution, because it is pursuant to a court order.

’13th checks’ are a devious method of looting pension funds which began in the 1980’s, in Michigan. When some Michigan public pension funds earned more than their targeted rate of return in a year, say 8%, the ‘surplus’ earnings got doled out to retirees in the form of a 13th check.  These 13th checks could amount to far more than the pension fund’s actually surplus.  Retirees never had to give back their prior 13th check payments when the pension funds dialed up a big loss, so the 13th check was an opportunistic form of looting – not an equitable form of risk & gain sharing. This practice has occurred in state pension plans, county pension plans, and city pension plans across Michigan. The particular problem in Wayne County is that Robert Ficano stripped his pension funds of the 13th check payment funds in 2010 to make his books look better. Worst of all, Wayne County’s pension funds are only about 44% funded and their OPEB’s (retiree medical care, etc.) are essentially unfunded.

Wayne County’s accounting is nebulous, to be charitable. A read of their 2014 CAFR (22 MB document, it took a lot of lipstick to make this dead pig look good!) shows that the County is carrying forward an unassigned deficit of $ 82.8 million, and only got it down to this awful level by diverting $ 91.7 million from their dwindling Delinquent Tax Revolving Fund to their General Fund in 2014. Then, depending upon whom in Wayne County government you are talking to, Wayne County is still losing another $ 4 – $ 5 million each month.

This amounts to something over $ 50 million per year.

You Betcha! (19)Nuh Uh.(1)

We’re looking at a new level of cognitive dissonance coming from Lansing.

A long time ago, I would be asked to accompany family members who wanted to go to the local Fretter or Highland whenever they wanted to buy any appliances/electronics (yes, I know that I’m dating myself here). Part of it was because they knew that I had a vehicle big enough to bring home whatever they bought without much trouble. The other was that I could usually be counted on to hook it up after I brought it in.

One of the things I hated most about those experiences was dealing with the salesmen when actually making the purchase.

Even though my relatives were usually buying something listed in the newspaper ad so what we should be paying going out the door wasn’t a mystery, at the counter the salesman would always give them that sincere look and always ask them if they wanted to purchase additional items to go with what they were there to buy in the first place. Looking a little baffled at the salesman’s question and not appearing certain about how to answer, I’d step in at that point and tell them firmly, but politely, that I’ve hooked up enough TV’s, stereos, etc. to know what else I would need to get it to work and would’ve had it on the counter if we actually needed it. Being a little put off, but still undiscouraged, they turn to them again and ask about getting additional “warranty/insurance coverage” for their purchase. More often than not, it wasn’t any better than the manufacturer’s warranty. I strongly told them “no” for a second time.

At the time I didn’t know this, but they were using a technique called “upselling” which is a used for the benefit of the seller in additional to the actual sale of the item.

“Upselling” is also a technique being used by the Republican Leadership in Lansing to rationalize to the people they represent why they have abandoned their own stated principle of, ‘government practicing fiscal responsibility and allow individuals to keep more of the money they earn.’

 

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You Betcha! (8)Nuh Uh.(0)

Detroit Bailout: Why the “Grand Bargain” is actually a Faustian Bargain.

Not actually Gov. Rick Snyder

 

Like most Conservatives here, I was disappointed, but honestly not surprised in the least, by last weeks vote in the Michigan House on the “Grand Bargain”.

I say this because leading up to the vote, when my sources go dark, or when they do finally return my calls and begin to waffle, that is almost always an indication that things are going bad rather quickly.

I’m not going to mince words here. Aside from absolutely hating that misleading term “Grand Bargain”, I still can’t see why people in Lansing can’t/won’t do their homework on what is really going on here and why they are reticent on calling a bailout what it actually is: a bailout.

You’re probably asking yourselves; what causes people like that to lose their way?

Limited government and fiscal responsibility were once hallmarks of the Republican Party platform a long time ago.

Let’s take a look as to what happened, shall we?

 

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You Betcha! (6)Nuh Uh.(2)