Looting by public officials in Bell California

Political Economy | Edward Harrison | July 23, 2010 2:19 pm |

I heard this about Bell, California on the car radio this morning. The sums involved are absolutely astronomical for a town of 37,000. This may be an extreme case but it far from isolated.

Hundreds of residents of one of the poorest municipalities in Los Angeles County shouted in protest last night as tensions rose over a report that the city’s manager earns an annual salary of almost $800,000.
An overflow crowd packed a City Council meeting in Bell, a mostly Hispanic city of 38,000 about 10 miles (16 kilometers) southeast of Los Angeles, to call for the resignation of Mayor Oscar Hernandez and other city officials. Residents left standing outside the chamber banged on the doors and shouted “fuera,” or “get out” in Spanish.
It was the first council meeting since the Los Angeles Times reported July 15 that Chief Administrative Officer Robert Rizzo earns $787,637 — with annual 12 percent raises — and that Bell pays its police chief $457,000, more than Los Angeles Police Chief Charlie Beck makes in a city of 3.8 million people. Bell council members earn almost $100,000 for part-time work.
City Attorney Edward Lee said the council members couldn’t discuss salaries in public without advance notice. The council then adjourned for a private session. About an hour later, the council members returned, and Hernandez read a statement saying the city would prepare a report on the salaries and seek public comment at the next council meeting, scheduled for Aug. 16.
Residents shouted in protest. Lee said he would have the room cleared if people continued to speak out of line. Police Chief Randy Adams said the fire department wanted to end the meeting because the crowd outside was blocking the door.
-Bloomberg

What the Bloomberg story didn’t say is that these individuals did not receive severance but will receive pensions equal to about two-thirds of their salaries. There must be a legal way to disgorge them of these ill-gotten gains.

I see it as an agency problem where the interests of a principal and her agent are not aligned. We see the same problems in the U.S. cropping up regarding public sector pensions, regarding executive compensation and most definitely in the financial sector. This looting will continue until people put an end to it.

Here are related articles from the LA Times, which broke the story:

« On Liquidating Fannie and Freddie and Other Links «

» A Mid-Summer’s Reflection »

Fire1
The worst is that it is only an example - and the public response (and media) is to typically only respond to the extreme. Thus, gutted city pensions, like San Diego and some other major cities,counties and, yes, New Jersey, will serve as the examples for which state legislatures and the Feds will "solve" local problems with the iron fist.

Nevermind they have their own problems they haven't addressed. Thousands of public sector workers will be screwed out of their legitimately earned and funded pensions (many with their own added contributions) so that higher level politicos can meddle in local politics by "riding to the rescue" with no-cost-to-them solutions.

DisinterestedObserver
Astronomical? Maybe they just got delirious and thought they were working for Goldman Sachs. After all, their salaries are basically the amount of Wall Street bonuses in a bad year. This is what happens when we sanction continued looting on Wall Street; Main Street decides it's time to emulate the money grabbers ...

Max
"This looting will continue until people put an end to it."

You're more optimistic than I am. I believe the looting will accelerate until economics puts an end to it.