Bankrupt California cities slash public services to fund six-figure pensions

A local newspaper headline announces bankruptcy in Stockton, California.(REUTERS / Kevin Bartram)

Source: Russia Today

http://rt.com/usa/news/california-bankrupt-taxpayers-pensions-874/

As some California cities face bankruptcy, public services are being slashed so unusually high pensions can stay on the books. Stockton’s former police chief rakes in a pension of more than $200,000 a year, while also working another job.

­Former Stockton Police Chief Tom Morris retired with a $204,000 pension after just eight months on the job. While his California city became the largest in the US to file for bankruptcy, he moved to another city and makes an additional $76,066 salary at a new job.

The former police chief retired at age 52, and was among four of the city’s chiefs who held the job for less than three years, while retiring with an average of 92 per cent of their final salaries.

But Morris’ unusually high pension is not an isolated incident. City councils across California have allowed public safety employees to retire after working for 30 years and collect 90 per cent of their top salaries. But while raking in a sizable pension, they often take jobs elsewhere, while still in their early 50’s.

Two former police chiefs in San Bernardino receive similarly high pensions. Keith Kilmer receives $216,581 annually, while working another job. His predecessor, Michael Billdt, who has no college degree and was accused of trying to bribe an officer to withdraw a union grievance in exchange for a dropped investigation, receives $205,014.

“We have some safety retirees that are actually earning more in retirement than they earned when they were working, because they were able to manipulate the system enough in that last year that they could crank that last year’s income and then get 3 per cent times their 25 to 30 years,” said Kathy Miller, the city’s vice mayor, in an interview with Bloomberg News.

And these pensions are significantly higher than normal – an average annual payout from the California Public Employees’ Retirement System is $36,780.

While Stockton decided on Morris’ exceedingly high pension before going bankrupt, at a time when its finances seemed promising, it is now struggling to confront rising pension costs while also dealing with increasing unemployment and declining property and sales tax revenue.

While local California governments continue to pay six-figure lifetime benefits for some retirees, they are slashing local police and fire services to make up for the costs. They are also cutting library hours and other public services to keep up with the payments.

“We didn’t have very many people looking out for the taxpayers when these deals were negotiated,” San Jose Mayor Chuck Reed told Bloomberg News. In the past 10 years, his city increased retirement spending from $73 million to $245 million.

Stockton, which filed for bankruptcy protection on June 28, continues to fund expensive employee pensions that it can’t afford.

In 2007, the city borrowed $125 million with a bond issue in order to pay for enhanced pension benefits. But when the market crashed, Stockton's assets lost one third of their value, and the town still owes $124 million on the bonds.

Meanwhile, San Bernardino, which filed for bankruptcy on August 1, had already lowered its retirement age for public safety workers from 55 to 50. In the past year, the city was forced to use 13 per cent of its budget to pay for its pensions, an increase from 9 per cent in 2007.

Lowering the retirement age took a strike at San Bernadino's budget that may have contributed to its bankruptcy filing.

But after they are made, pensions are usually set in stone, which causes a dilemma when cities like Stockton, San Bernardino and Mammoth Lakes go bankrupt.

“You don’t want [employees] in a vulnerable position where [the pensions] easily could be lost, but then you also have to make sure that you have a fair system that can make adjustments if a city’s finances are tanking,” said State Controller John Chiang.

But while Stockton’s former police chief is living the life with a quarter million dollars coming in a year, the broke city has been left in the dust as it struggles to continue funding the young retirees' income.

Super rich stash 21 trillion in offshore havens

Alex Wong / Getty Images / AFP

Source: Russia Today

http://www.rt.com/news/overshore-economy-trillions-report-789/

Wealthy tax evaders, aided by private banks have exploited loopholes in tax legislation and stashed over $21 tn in offshore funds, says a report. The capital drained from some developing countries since 1970 would be enough to pay off national debts.

­The findings show the gap between the haves and the have-nots is much larger than previously thought.

The document, entitled The Price of Offshore Revisited, was commissioned by The Tax Justice Network campaign group and leaked to the Guardian. The report provides the most detailed valuation of the offshore economy to date.

"The problem here is that the assets of these countries are held by a small number of wealthy individuals while the debts are shouldered by the ordinary people of these countries through their governments," wrote James Henry, expert on tax havens and former chief economist at consultancy McKinsey in his report.

The document cites the world’s leading private banks as cherry-picking from the ranks of the uber-rich and siphoning their fortunes into tax-free havens such as Switzerland and the Cayman Islands.

The wealth of the super-rich is "protected by a highly paid, industrious bevy of professional enablers in the private banking, legal, accounting and investment industries taking advantage of the increasingly borderless, frictionless global economy."

Henry writes that a large part of the trillion dollar hoard belongs to around 92,000 individuals, an elite class of super-rich who make up 0.001 percent of the global population.

"These estimates reveal a staggering failure: inequality is much, much worse than official statistics show, but politicians are still relying on trickle-down to transfer wealth to poorer people," said John Christensen of the Tax Justice Network.

The report records the flow of capital from countries into offshores over the past few decades. Saudi Arabia saw almost $300 billion drained from their economy since the 1970s, while Russia saw almost $800 billion leave its economy in hidden assets since the fall of the Soviet Union. Nigeria issued a loss of $300 billion since the mid-1970s.


Henry points the finger at the world’s top ten private banks, among them UBS and Credit Suisse, for aiding wealthy clients to dodge taxes.

According to Henry’s figures, the top financial leaders processed more than $6 trillion in funds in 2010, more than double the previous year.

Banking system – rotten to the core

Last week the US Senate released a report damning the actions of the UK bank HSBC. The report highlighted evidence of the bank’s laх security policies leading to money laundering cases.

It referenced $7 billion in cash that had crossed the Mexican border into the US and been deposited in HSBC from 2007 to 2008. The report suggests that the billions of dollars could have come from drug sales in Mexico.

The probe also shed light on a number of other instances when the bank bypassed US safeguards, potentially bankrolling terrorists and drug lords in the process.

The bank had previously had to pay out $1bn to US authorities for money laundering offenses committed between 2004 and 2010.

The G20 has repeatedly made calls to end tax-free havens since the beginning of the financial crisis in 2008, but these plans have not yet come to fruition.

El Baradei calls for reforms in Egypt

Source: PressTV
http://www.presstv.ir/detail.aspx?id=122325§ionid=351020502


The Egyptian former director general of the International Atomic Energy Agency (IAEA) Mohamed ElBaradei has issued a public call for change in Egypt.

ElBaradei, protected by plainclothes security officials, urged about 700 people in a village in northern Egypt on Friday to add their names to a petition calling for reform, reported Reuters.

"Once we gather as many names as possible we will put it forward and bring about real change," ElBaradei said.

The petition seeks constitutional change to make it easier for independents like ElBaradei to run for president after decades of autocratic rule under President Hosni Mubarak. It also aims to revoke the Emergency Law that allows detention without charge and bans anti-government political activity like ElBaradei's outdoor public speech and earlier visit to Mansoura, where up to 1,500 supporters greeted him.

"The state may be a centralized power, but the people are stronger," he told the crowd, part of which had come with him from the nearby provincial capital Mansoura in the Nile Delta.

Returning home after 12 years as head of the Vienna-based IAEA, ElBaradei said that he may run for next year's presidential election.

Mubarak, 81, who returned from Germany on March 27 after gallbladder surgery, has not said whether he plans to run for a sixth six-year term in the election. If he does not, many Egyptians believe he will try to hand power to his son Gamal. Both father and son deny such plans.