Category — Economy
Talk Back: Union presses Ritter on pay-raise bill
May 21st, 2010 — Economy, Labor, Press, Talk Back
This story is getting a lot of press attention partially because the Denver Metro Chamber of Commerce and the Denver Post management don't like it. It's frustrating because neither group has taken the time to learn about problems with the current state compensation system and how this bill addresses them.
It's hard to understand why either group even cares about this bill; they apparently believe the bill will give some benefit to state employees (beyond general good management) and that goes against their general bias against employees.
Talk Back responds to media coverage with my comments in blue.
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By Tim Hoover
The Denver Post
Posted: 05/20/2010 01:00:00 AM MDT
The largest union representing state employees has launched a campaign urging Gov. Bill Ritter to sign legislation revamping the pay-raise system for state workers. >The effort by Colorado WINS comes amid worry over whether Ritter, who has expressed concerns about House Bill 1409, will veto the bill. Ritter's office has said only that it is giving the bill careful consideration.
"We need to do our due diligence to let the governor know this (bill) is a priority," said Bob Gibson, executive director of Colorado WINS.
The union's website urges WINS members to call the governor's office and express support for the bill, which would move the state from a pay system that is now based primarily on performance to one that would, in theory, grant gradual pay increases as long as workers get satisfactory evaluations.
The current system is not "based primarily on performance." It was originally called "Pay for Performance," but it never lived up to that name, The Ritter Administration changed the name to "Achievement Pay" is partial recognition that it lacks a performance component.
It doesn't even matter if the system includes a performance component or not. The Governor's Deputy Personnel Director testified in committee that the state does a "very bad" job of evaluating employee performance. Very little employee compensation has been based on performance and the minute amount that has been is awarded almost randomly.
"In the final hours of the 2010 Colorado Legislative session, Colorado WINS members helped to pass House Bill 1409 to eliminate the broken 'pay for performance' system," the website says. "But we're not done yet — we need to call Governor Ritter and urge him to sign HB 1409 into law."
Ritter officials have expressed concerns about whether the bill diminishes the governor's power to recommend raises. Under current law, the governor — in his budget recommendations — can call for performance-based pay hikes for employees, but they still must be approved by lawmakers, who write the budget. Ritter then can veto line items in the budget, if he chooses.
The state's current Achievement Pay system included two components: salary survey and performance pay. The Governor can recommend whatever he wants, but the legislature decides whether salary survey, achievement pay, or both get funded and how much money goes into them. The Governor could line-item-veto either of them, but that would kill all of the salary survey or all of the performance pay, not the amount that goes to individual departments or employees. In practice, of course, we haven't been putting any money into either of them. We've cut state employee salaries for this year and next year.
The bill would qualify state employees who are meeting performance standards for 12 annual incremental pay increases, but any pay hikes still would have to be approved by lawmakers. No pay increases would take effect for at least three years, and that's assuming the state had money to fund them.
State employees have had no raises the past two years and had furloughs in the current fiscal year ending in June. They face 2.5 percent pay cuts in the next fiscal year, on top of higher contributions they must make to their pensions.
Rep. Jack Pommer, D-Boulder, sponsored the pay-hike bill and said its prospects are shaky.
"The indication I've had is that he (Ritter) is probably going to veto it," said Pommer, who said the governor's office initially agreed to support the bill but got cold feet when the Denver Metro Chamber of Commerce came out against it.
"This is the weird thing," Pommer said. "We had an agreement."
But Evan Dreyer, Ritter's spokesman, denied the office broke any deal.
"Not true," Dreyer said. "What's true is that with every piece of legislation, the governor has an open-door policy — where lawmakers, interested parties and constituent groups have the governor's ear and the ear of his staff.
"Not true," says I. Evan Dreyer is wrong. We had an agreement. The Governor's office told us what we would have to put into the bill to get the Governor's approval, we put it in the bill and the Governor's office said he would sign it. Two days later, the Governor's office told us the Governor's position had changed.
The Governor may have an open door-policy, but he's rarely familiar enough with a topic to actually negotiate it. His staff does that. It would be impractical to negotiate with the Governor himself on every issue.
Negotiating with the Governor's staff can be difficult. They, and we, have to assume that they have the authority to negotiate for the Governor. We know that their views can diverge from the Governor's, and that the Governor can change his mind; we're always mindful of that, and the staff is pretty good letting us know when they have to check with the Governor on a point.
I'm using the term "Governor" here in a generic sense. "Governor" doesn't necessarily mean the person; it's usually the consensus among the person and all of his aides. "We need to run this by the Governor," can mean reviewing it with the Governor's legal counsel or chief-of-staff.
To get back to the point, we negotiate all the time and we all know that things change, this was different.
"The legislative process is a dynamic process," he said. "Bills change as they move through committee from one chamber to the other and back to committees."
May 21, 2010 No Comments
Can you handle the truth? With a straight face?
April 26th, 2010 — Economy, Press
OK, most of the comments that appear below online news articles are just the vapid rantings of a few disgruntled people with a lot of time on their hands. But every once in a while, there's a real gem. Like this one. It was posted someone called COMFORTABLYSMUG after a New York Magazine article on Lloyd Blankfein and Goldman Sachs. It's based on Jack Nicholson's monologue in "A Few Good Men."
“You want the truth? You can’t handle the truth. Son, we live in a country with an investment gap. And that gap needs to be filled by men with money. Who’s gonna do it? You? You, Middle Class Consumer?
Goldman Sachs has a greater responsibility than you can possibly fathom.
You weep for Lehman and you curse derivatives. You have that luxury. You have the luxury of not knowing what we know: that Lehman’s death, while tragic, probably saved the financial system. And that Goldman’s existence, while grotesque and incomprehensible to you, saves pension funds.
You don’t want the truth. Because deep down, in places you don’t talk about at parties, you want us to fill that investment gap. You need us to fill that gap.
“We use words like credit default swaps, collateralized debt obligation, and securitization… We use these words as the backbone of a life spent investing in something. You use ‘em as a punchline. We have neither the time nor the inclination to explain ourselves to a commoner who rises and sleeps under the blanket of the very credit we provide, and then questions the manner in which we provide it!
We’d rather you just said thank you and paid your taxes on time.
Otherwise, we suggest you get an account and start trading. Either way, we don’t give a damn what you think you’re entitled to!”
Here's the original monologue by Aaron Sorkin:
Jessep: You want answers?
Kaffee: I want the truth!
Jessep: You can't handle the truth! Son, we live in a world that has walls. And those walls have to be guarded by men with guns. Who's gonna do it? You? You, Lt. Weinberg? I have a greater responsibility than you can possibly fathom. You weep for Santiago and you curse the Marines. You have that luxury. You have the luxury of not knowing what I know: that Santiago's death, while tragic, probably saved lives. And my existence, while grotesque and incomprehensible to you, saves lives…You don't want the truth. Because deep down, in places you don't talk about at parties, you want me on that wall. You need me on that wall.
We use words like honor, code, loyalty…we use these words as the backbone to a life spent defending something. You use 'em as a punchline. I have neither the time nor the inclination to explain myself to a man who rises and sleeps under the blanket of the very freedom I provide, then questions the manner in which I provide it! I'd rather you just said thank you and went on your way. Otherwise, I suggest you pick up a weapon and stand a post. Either way, I don't give a damn what you think you're entitled to!
April 26, 2010 No Comments
Recession Over, Pain Continues
December 18th, 2009 — Budget, Economy
The recession is probably over in Colorado, but any return to good times is a long way off, according to the Legislature’s economics staff.
For the state budget, that forecast translates into $40 million more in cuts for this year (Fiscal Year 2009-10) and $200 million in cuts for next year (FY 2010-11).
Colorado’s Economy
"It looks like the recession is over and the recovery is beginning," according to Legislative Council Chief Economist Natalie Mullis.
She presented Leg Council’s December economic forecast to legislators this morning. You can get the full forecast here.
She tempered the good news about the recession with bad news about the recovery.
"It appears the recession was deeper then previously understood," she said. The recovery, she added, will be held back by banks unwillingness to lend money to businesses and consumers.
In fact, she said her forecast only looks out to 2012 and "we don’t expect that employment will reach its preemployment peak until after that date."
December 18, 2009 No Comments
Let Them Eat Words
September 22nd, 2008 — Economy
One of the troubled funds that holds CSAFE money (see the previous post) is The Primary Fund from a company called The Reserve. The fund, in Wall St. parlance, broke the buck. That means each share of the fund is worth less than its $1 Last week The Primary Fund has only 97 cents for each dollar its investors paid.
Just for entertainment, here’s a letter the the chairman and CEO of The Reserve sent out less than two months ago:
September 22, 2008 No Comments
A Rising Tide Drowns Everyone
September 22nd, 2008 — Economy
Local governments try to get the most out of their money, but they don’t want to take risks with public money. So they keep their day-to-day spending money in checkable money market accounts. The accounts earn some interest, the districts can write checks right out of the funds and, most of all, they’re safe. Or were save until the financial wizards of Wall St. started drowning in their own greed.
One of the country’s largest (and oldest) money market fund just froze its assets to protect itself against an “It’s a Wonderful Life” - type run on its assets.
Of course in this version of the movie Jimmy Stewart would be saying:
“I don’t have your money, it’s in Mr. Sullivan’s $47 million severance package, in the Bear Stearns bailout and a hundred other schemes for protecting rich and powerful people from their own ineptitude and malfeasance.”
Local governments in Colorado keep their spending money in two privately-managed funds. One is called the Colorado Trust and the other is called the Colorado Surplus Asset Fund Trust (CSAFE).
About 360 local governments (including school districts, water districts, etc.) put their money in CSAFE. CSAFE, in turn, invests, some of the money in three money market funds. Two of them have frozen their assets and the third is probably thinking about it. It totals up to about $1 billion out of the fund’s total of $2.5 billion assets.
The money itself is probably safe. “We don’t have concerns about losses here,” said State Treasurer Cary Kennedy. The problem is liquidity. Credit markets are tight and the money market funds can’t get their hands on enough cash to cover all of the immediate requests for withdrawals. That means CSAFE can’t withdrawal as much money as it needs to meet the requests it’s getting from the local districts.
CSAFE is managing the crisis by limiting local governments to withdrawing no more than 5% of their assets per day. It’s handling critical needs for more money on a case-by-case basis.
Kennedy says that’s OK for now, but if it goes on too long, some districts are going to have trouble paying their bills.
September 22, 2008 No Comments
It is a Dismal Science
September 22nd, 2008 — Budget, Economy
It turns out being a mile high isn’t enough to avoid the financial tidal wave that hit the country. It’s hurting our current state budget, our plans for the future and even local governments.
Our economists are revising their forecast – and it’s bad. They’re cutting $200 million from their estimate of General Fund revenue for the current year. The GF is what pays for most of our core state services. The lower revenue forecast has two immediate effects:
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It eliminates the $100 million SB 1 transfer to transportation
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Eats into our GF budget by another $100 million
By law our GF can increase by 6% a year, and it usually does. If enough money comes in to pay for the 6% increase and then some, the money over 6% gets transferred to transportation (that’s required by SB 97-01). Our last forecast, in June, predicted enough revenue to pay for the 6% increase in the state budget and to transfer $100 million to transportation.
The new forecast is “far from that,” in the words of Legislative Council Chief Economist Todd Harried.
They’re forecasting 2.5% less revenue, which amounts to a $200 million. Half of that would eliminate the SB 1 transfer, the other half would have to come out of the 2008-09 budget, or our reserve.
Keep in mind, until the end of the year all of our budgeting is based on forecasts. We balance the amount we estimate we’ll be spending to the amount we estimate we’ll receive in tax revenue. Both the spending and revenue estimates can change.
In this case it’s even more difficult because of the difference between the two, official state forecasts. Yes, there are two: one from the legislature’s economists and one from the governor’s economists. They’re usually different, but today the difference is significant. [Read more →]
September 22, 2008 No Comments
Foxes, Henhouses and Government
August 10th, 2008 — Consumer, Economy
Wall St. is weighing in on the mortgage crisis and its assessment is both corageous and cowardly. The most astonishing finding is in the cover letter to the U.S. And other governments:
“in a highly competitive marketplace it is very difficult for one or a few institutions to hold the line on best practices or to stand on the sidelines in the face of booming markets.”
The cover letter is signed by E. Gerald Corrigan who runs Goldman, Sachs & Co.and Douglas J. Flint of HSBC Holdings plc. Their convoluted comment is obviously an attempt to put the best face on what’s actually a brutally accurate assessment of what went wrong, and consistently goes wrong, in our financial markets.
A quick translation into real English would be: “Sharks can’t control themselves when there’s blood in the water.” The sharks being Corrigan, Flint and their Wall St. (or City) colleages and the blood being your savings, or your home or any other money you may have managed to accumulate.
Wall St. put together a panel to assess the crisis and make recommendations for preventing similar problems in the future. It’s called Counterparty Risk Management Policy Group (CRMPG). It’s members are a who’s who of Wall St.
After concluding that the crisis was ultimately caused by immutable, natural forces the report seems to call for better regulation:
"It is this sobering reality that, for centuries, has given rise to the universal recognition that finance and financial institutions must be subject to a higher degree of official oversight than is necessary for virtually all other forms of commercial enterprise."
Both comments are interesting because they don’t single out a few individuals, or even a few companies, for blame. They say the crisis is the natural result of “collective human behavior,” a “sobering reality” learned over centuries and the “unmistakable” lessons of history.
Unfortunately, the report goes on to say that that same people who can’t “hold the line on best practices” shoud ultimately be responsible for holding the line on best practices. It’s kind of like ending the Declaration of Independence with a recommendation to replace King George with a better king.
August 10, 2008 No Comments
