Think about the kiddos

The public needs to quit referring to the City Council’s latest move as a “water rate increase” because it isn't. Instead, it is a per citizen tax for use of the most fundamental life sustaining commodity. Commodities prices are way down and water should be as well now that we are well out of the mythical state sponsored “drought”.

This move is an obscene and highly “regressive tax” as it impacts those with a lot of people living at home (i.e., young families), the poor, the out of work, and those on fixed incomes.

The Federal government is currently pumping out $100B+ in new debt per month, CA is way past insolvent, and real estate/building will grind down further once the trillion dollar Federal supports begin to fade. We are not in a “V shaped” recovery, rather the elevator is momentarily stalled on the way down by unsustainable Federal money printing, and government bailouts of banking, housing, autos, insurance, states, employment, etc., and Enron-esque accounting schemes.

Thus just about every revenue stream to OUR city is down and will continue to fall for many years to come; yet I have not seen one painful and necessary adjustment in how the City of Encinitas spends OUR tax dollars. The are running with full sails into a hurricane.

The rating agencies that the City Council hides behind use a convenient snapshot approach that ignores all the obvious future obligations and revenue shortfalls to say “all is well”. If you were to use reasonable real world comprehensive financial analysis that included future tax revenue drop offs, the looming pension liabilities, and the crater that used to be the CalPERS pension fund – all is not well.

Lastly, these were the same rating agencies that said that Lehman, Bear, AIG, Enron, FreddieIndyFannie, Countrywide, B of A, WaMu, etc. were just fine – mere months before they were vaporized. They lied then and your 401K got hammered and they are lying now and YOUR city will pay. Encinitas is not immune to these problems we are just currently better off than other cities and earlier in the process of circling the drain.

In the near future when the pension shortfall costs and our current fixed debt payments collide with declining tax revenues; services will have to be drastically cut because the our City Manager and City Council created spider web of legal contracts that put the payouts to union employees above all else – like roads, water, etc.

But before they move to cut our services they will continue to operate in denial and cook up all forms of abusive fees and taxation to paper over the truth. The water tax was just the canary in the coal mine.

By the time the forced cuts come the decent, friendly, but seemingly uninformed public will realize they have been had and will push back very hard. But it will be too late, and so our mess will go to the courts and all these platinum retirement packages and will be cut down and OUR city services will operate on life support - there will simply not be enough money to go around.

My street already looks like a Detroit back alley with wild city spending today so I can just imagine what it will look like in 2012. This problem is so fundamental that it transcends “taxpayers fed up with outrageous pay packages”. It is about solvency in the next few years and everyone getting burned. Just ask a CA public school teacher in 2011 what happens when State politicians spend out of control and make impossible retirement promises and then leave the next generation holding the bag.

All the bad things noted above are the present reality and not fear mongering. However, with deep cuts today (like the private sectors has already done), restructuring to focus on the basics, retirement packages, and future revenue shortfalls, and saying “no” to new debt; we can avoid total capitulation in the future.

As adults today we owe it to our children to take the hits now and not leave them with crushing debt loads and terrible services, roads, and infrastructure in the future. I highlighted many of these issues at the last City Hall meeting and no one on the Council or the audience seemed to care what I was talking about. There was just silence and then the meeting carried on - I would strongly advise people to do their homework and quit focusing on relatively trivial issues.

We either take this reality head on or suffer a financial death of a thousand cuts. No matter what moves are made I do not want to hear City Council claim that they “had no idea this would happen” in a few years. You have been warned many times over.

Regards,

Charlie McDermott

homeowner, husband, father of 4, and taxpayer