Still More Oakland Bay Bridge Cali-Incompetence

Oakland Bay BridgeIt’s been almost a quarter century – 23 years, seven months and four days, to be exact – since the Loma Prieta earthquake knocked out a section of the eastern span of the Oakland Bay Bridge, causing one of the earthquake’s 57 fatalities.

Despite the huge chunk of time that’s passed, California is still bungling along without a safe replacement bridge in place. Talk about Cali-Incompetence! Yes, the new span is supposed to be ready to open this Labor Day, Sept. 5, but whether does, and whether it’s safe remain to be seen. And the cost? The first bid came in at $1.4 billion, and we’re at $6.3 billion today … with some potentially very expensive fix-it work ahead.

Here’s a brief summary and timeline of the slowly unfolding human disaster that followed the natural disaster:

  • After the quake, Republican governor Pete Wilson proposed a concrete viaduct as a replacement, which could be built cheaply ($1 billion) and safely.
  • That idea was promptly shot down by haughty Bay Area leaders, who refused to accept something as pedestrian as a viaduct. (A viaduct is mundane – just several short spans tied together, getting from one side to the other without any showiness.)
  • For the next ten years, Bay Area politicians fought over an appropriate design, while the patched-together Oakland Bay Bridge remained vulnerable to the next big quake. So what if a few more people die in the name of great bridge architecture?
  • New Oakland Bay bridgeIt was decided the western portion of the eastern span (leaving Yerba Buena Island towards Oakland) would be a “signature structure” and the rest would be … a viaduct.  A design contest was held, Wikipedia tells us, that was judged by the Engineering and Design Advisory Panel (EDAP) of the Metropolitan Transportation Commission. You might be shocked – Shocked! – to learn that many of the design finalists were proposals submitted by the very firms that employed EDAP members, and the ultimate winner was an EDAP member’s entry. “This posed a serious conflict of interest,” says Wikipedia. Indeed, especially since the selected design was more expensive than the alternatives.
  • The mayor of Oakland, one Jerry Brown, protested mightily because the signature structure was as far away from Oakland as it possibly could be. He said the design “speaks of mediocrity, not greatness.” As an Oakland native, I can say that mediocrity is actually a complimentary symbol for the town.
  • Gov. Gray Davis put an end to the squabbling and moved the selected design forward, signature span, viaduct and all.
  • When construction bids – well, there was only one bid, actually – were opened in September 2004 state officials were surprised to see it was $1.4 billion, about twice what the ace number-crunchers at Caltrans thought it would be.
  • Gray was gone and Arnold was in, and in December 2004 Gov. Schwarzenegger canceled the contract, saying it was too expensive. Instead, he wanted an all-viaduct design. Ghosts of Pete Wilson!
  • Signature span hawks fought back in a battle of conflicting cost estimates until, in November of 2005, a “compromise” was reached that returned the signature span. It’s not clear to me what the countering half of this compromise was, but the cost of the delay is clear enough: as much as $400 million. That’s a small price to pay for great bridge architecture, right?
  • Construction got underway, and a few months later, in April 2005, welds on the bridge were called into question.
  • Baby Bridge oopsieOn October 27, 2009, a crossbar and two tension rods collapsed, dumping 2.5 tons of debris onto the upper deck roadway during the evening commute. One car and a delivery truck were struck, but no one was killed. The bridge was closed to traffic in both directions for six days. (Photo credit: San Francisco Chronicle)
  • In November 2009, a cracked eyebar was discovered that would have closed the bridge had it not been under a temporary construction closure already.
  • As detailed in Crazifornia, in November 2011 Caltrans got caught covering up that one of its staffers had fabricated the results of tests on the integrity of Bay Bridge concrete pours, including pours of the structure supporting the massively heavy signature span tower. A report on what this means to the bridge’s integrity is due out in Spring 2013 – any day now.
  • In March 2013, three big bolts (3 to 19 feet in length) that connect portions of the bridge deck to concrete columns failed load tests. Subsequently, 30 of the 96 bolts failed the test. Some of these bolts cannot be removed because the bridge has been built around them.
  • And just this last Saturday, the Sacramento Bee reported that incompetent construction and bureaucratic ineptitude have led to rust forming on steel tendons that are critical to the bridge’s safe operation. First, Caltrans did a duct tape fix (Really, with actual duct tape, God bless ‘em!), then they attempted to minimize this problem, but metallurgists who know a lot more about how steel performs than Caltrans have declared the rust to be a very big deal.

So, what did we get for our quarter century of waiting and 450 percent cost overrun? A bridge with a design that satisfies no one, that may not have met the basic requirement that it be safe, and that certainly will have much higher ongoing maintenance and repair costs than it should have.

Welcome to Crazifornia, and thank you, Caltrans.

Finished!

I can’t believe it! I just finished the manuscript for Crazifornia, wrapping up the difficult but ultimately very entertaining budget and pensions chapter.  Here’s an excerpt:

Hooting and Hollering on the Budget   

Californians witness the challenges of running a progressive state every year as the legislature struggles to develop a balanced budget in the face of fundamental fiscal imbalance.  The resulting budget is always a work of fiction, projecting more income than will come in, and promising more savings than will ever occur.  A mid-year correction is always needed to account for this, but the charade goes on in all seriousness year after year. It’s a tragedy; it’s a comedy; it’s California.

Over 50 state budgets ago, in 1966, the legislature’s top budget leaders and Governor Pat Brown fled Sacramento for Palm Springs to try to sort out yet another horrific California budget mess.  Nothing was getting done in soggy, cold Sacramento to fix chronic problem of revenues not covering ever-increasing government expenses, and since Brown would face the voters in November hoping to win a third term, the Democrat was adamant that the budget would be balanced without raising taxes.

Joining the senior legislators in Palm Springs was a young legislative staffer, David Doerr, who felt very lucky to get the chance to travel with the delegation, not so much because it involved a boondoggle trip to the desert, but because he actually hungered to see how California’s budget sausage was made.  And see it he did.  Ultimately, the budget was balanced on a number of gimmicks, including one that was unusually elegant:  a switch to accrual accounting from cash.  With the change, all the money due the state could be applied against expenses, no matter how far back it was in the pipeline.  With this trick and a few others on the books, Brown was able to face Ronald Reagan in November armed with a balanced budget and no tax increase.

There were plenty of other gimmicks that came out of the Palm Springs session, but one really stuck in Doerr’s mind.  Showing his uncanny ability to remember financial matters from the distant past in exquisite detail, Doerr told the tale in a small conference room at the California Taxpayers Association, the wall behind him lined with shelves displaying his 811-page tome, California’s Tax Machine, A History of Taxing and Spending in the Golden State.  He spoke in the light, wispy voice of a man who had heard far too many politicians argue far too loudly, and his hair was as white as snow – an expected side effect of being the single Californian who knows the most about the state’s budget-making process. 

“After not really getting much of anywhere in the negotiations,” he said, “one of the suggestions that came up, casually, just sort of a throw-away was, ‘Why don’t we just delay paying the state employees by a day so one pay period will go over into the next year?’ At first everyone was quiet and I wondered if they would really do something like that, but then they began to hoot and holler, laughing like this was the craziest thing they ever heard of.”

Doerr, who ultimately spent three decades as chief consultant for the Assembly Revenue and Taxation Committee before becoming the Chief Tax Consultant of the California Taxpayers Association, continued the story:  “Jumping forward over 50 years, no one in the legislature hooted or hollered one bit when the idea of shifting one pay period into the next fiscal year came back, this time as a way to balance the 2008-2009 fiscal year budget.  The legislature just did it, knowing full well their action would come back to haunt them a year later, when they would have to balance a budget that had one extra payroll period in it.” The subterfuge saved $1.2 billion for the moment – that’s what it cost per payday to pay the state’s bloated payroll.

The 1966 junket to the desert ended up not doing Brown any good, as Ronald Reagan drubbed him by 16 points that November, sweeping all but three counties in the state.  And the 2008 roll-over of one payday didn’t help Governor Schwarzenegger either, and he declared upon announcing the inevitable budget revise that May, “We’ve run out of Band-Aids.”

“Gimmicks and band-aids aren’t new,” Doerr said.  “There have always been battles over the budget and crazy balancing tricks as long as I’ve been here, and that’s been 50 years, more than one-quarter of the time California’s been a state.”

There’s a lot more good stuff in the chapter and in the book. If you haven’t already, be sure to fill in the box in the upper right, so I can notify you when this baby rolls off the press.

That will be a while longer, since I have four dedicated editors marking up the manuscript. They’re making some really great suggestions, so I’ll be doing a fair amount of rewriting before I can claim, finally, that it’s ready for the publisher.  I’m still on target for a May publishing date.

Daily Caller: Brown’s Hand Is Union Made

As California Budget Battle Sequel XXXVIII (Or is it LXXIX?  I get so confused.) heats up, I actually got so ballistic I wrote a Daily Caller op/ed just one day after the one you see in the post below.  Note the headline – they’ve agreed to brand my pieces with the “Crazifornia” moniker. Very cool.

 

CRAZIFORNIA:  JERRY BROWN SHOWS HIS HAND – AND ITS UNION-MADE

California’s 32,000 prison guards and parole officers — notorious for enjoying political clout wildly exceeding their meager numbers — tried to negotiate a new contract with former governor Arnold Schwarzenegger for four years but got nowhere. After just three months of negotiations with Jerry Brown, they got their contract, and hapless Californians got the clearest signal yet that Brown is not going to deal responsibly with the state’s unfunded public employee pension liabilities of as much as $500 billion.

The details of the new California Correctional Police Officers Association contract haven’t yet been made public and haven’t yet been analyzed by people who, unlike me, can tell a POFF from a PLP. (If you’re curious, POFF II contributions are suspended for two years under the new contract and one PLP will be granted every 12 months.) Still, it’s easy to read the net result.

In a letter yesterday to his board of directors, CCPOA executive director Chuck Alexander wrote, “The majority of the rights and protections that exist in our old MOU have been carried forward in this new MOU.”

Any objective California governor would realize the state can’t afford to do that. It’s not like this is a union that needs more coddling. It has grown at a rate of almost 1,000 members a year since its formation in 1980. It has a 70-person staff that includes 20 lawyers.  Even that’s apparently not enough, since Brown’s new contract with the union includes even more new positions. You’d think California was a state that’s not in a fiscal crisis. [Continue reading]

I particularly liked the last paragraph of this one.  Give it a look.

Catching Up

It’s been a busy week, so let me catch you up quickly with a couple of my op/eds – published here first – that have hit the big time.

The Daily Caller picked up “California’s public universities are the best. No really,” detailing Berkeley’s recent designation as the world’s (yes, the world’s) greenest college campus.  The award was based more on sustainability practices than on its excellence in turning normal students into raving eco-warriors, but it’s all the same game, as the key paragaph of the piece points out:

Now don’t get me wrong. Green space is great and eco-sustainability policies are as cool as it comes. Whether there’s a looming eco-catastrophe or not (I think it’s “not”), nothing feels better than whipping out that re-usable grocery bag at Safeway. No, the problem with Berkeley’s newfound glory is that it’s the outgrowth of the deeper commitment to deep green brainwashing that goes on at UC campuses. If it weren’t for regents who have bought into environmentalist doctrine, a faculty that’s bought into environmentalist extremism, and a curriculum that ensures wave after wave of freshly minted environmentalist soldiers will graduate every spring and go into battle for Mother Earth, Berkeley would not be at the top of the green university rankings.

Read the rest here.

Also last week, California Watchdog ran “A clue to Governor Brown’s pension plan.” It relays an interesting last-minute appointment by Schwarzenegger: Cameron Percy to the California State Teachers’ Retirement System board of directors. What’s interesting is that Percy was one of the student authors of Stanford’s breakthrough study into California’s real pension liability, which they pegged at a deeply disturbing half-trillion dollars, so I explain why it’s suddenly the appointment to watch:

Percy’s nomination will give us a clear insight into Brown’s thoughts as he grapples with this dilemma.  The appointment must be confirmed by the Dem-dominated Senate, but Percy may not even get that far, since Brown has the power to boot him and name his own appointee. How Brown acts on the appointment will tell California voters and public employee union bosses what they can expect from the new administration. It’s routine for incoming governors to replace the nominees of out-going governors, but there’s nothing at all routine about the Percy nomination.

Read the rest  here.  I really appreciate it when you click through.  The more hits my op/eds get, the more it supports my efforts with Crazifornia.

A Clue to Brown’s Pension Strategy

Shuffled in with Arnold Schwarzenegger’s last-minute appointments was one – a very good one – that almost slipped by largely unnoticed, until The Buzz blog at the Sacramento Bee outed it today:

Among other actions on his way out the door, then-Gov. Arnold Schwarzenegger appointed Cameron Percy to the California State Teachers’ Retirement System board in December.

Percy, 26, has a graduate degree from Stanford. While he was a student, he helped write “Going For Broke: Reforming California’s Public Employee Pension Systems.”

That’s the report that Schwarzenegger and Co. used as a source for the oft-cited and highly disputed calculation that California’s Big Three pension systems faced a collective $500 billion in unfunded liabilities.

If there’s one thing California’s public employee unions hate, it’s the Stanford report – so they are decidedly unhappy with Percy’s appointment.  When Percy et. al. released their study (which you can download here), CalPERS immediately fired off a page chock full of stats that lacked one critical piece of information:  Its own calculation of the unfunded liability.  I’ve spent over 30 years in the communications business where we have a word for that sort of thing:  stupid.

The unions’ pension unfunded liability calculation, it turns out, is about one-tenth that of Stanford’s: a measly, insignificant $55 billion.  Why worry? That’s only $1,500 out of the pockets of every man, woman and child in the state and, heck, it’s not going to get any bigger, right?

The difference between the two numbers is that Stanford used a 4.14 percent “risk-free” discount rate, the rate private companies must use when calculating their pension liabilities.  California’s public employee pensions use between 7.5 percent and 8 percent – a performance they’re not achieving, and most experts agree they have no hope of achieving on a sustained basis, and certainly not now.

With public support for Brown’s special election tax increase proposal barely breaking 50 percent in the early polling, he knows passing the tax increases may force him to bite the union hand that fed his election campaign, and submit a companion pension reform proposal with real teeth.  So far, Brown, who left Oakland with its own $310 million in unfunded pension liabilities, has only talked about minor tweaks – just enough to not tick off the unions, but hardly enough to show voters he’s really serious about fixing California. Look for support of the tax increase measures to drop dramatically if Brown doesn’t take the unfunded pension liability more seriously.

Percy’s nomination will give us a clear insight into Brown’s thoughts as he grapples with this dilemma.  The appointment must be confirmed by the Dem-dominated Senate, but Percy may not even get that far, since Brown has the power to boot him and name his own appointee. How Brown,and the Senate act on the appointment will tell California voters and public employee union bosses what they can expect from Brown. It’s routine for incoming governors to replace the nominees of out-going governors, but there’s nothing at all routine about this case.

From RINO to Redux

(Please read this post at The Daily Caller, since they’re interested in how much traffic their authors generate. Thanks!)

Today, Arnold Schwarzenegger signs his last gubernatorial documents and spiffs up the governor’s office so he can get his security deposit back as the next tenant prepares to move in tomorrow.

The man who promised his charisma was sufficient to break down the boxes that hobble Sacramento leaves the place with all its boxes intact, and more than a few new boxes to boot – they’re just painted a greener shade of regulatory over-kill.  As it turns out, the Schwarzenegger legacy isn’t governmental and budgetary reform; it’s AB 32 and SB 375, California’s hysterical global warming twins, and the passel of business-strangling regulations spawned in their wake.  The incoming governor is apparently intent on protecting Schwarzenegger’s green legacy with the appointment of John Laird, co-author of AB 32, as Secretary of Natural Resources, ensuring that natural resources, not resourceful humans, will continue to be the focus of California state government.  The leftist YubaNet.com declared the Laird appointment “sets off green fireworks,” adding:

On the first day of the New Year, Governor Brown showed that he is committed to a green agenda by appointing John Laird as the Secretary of Resources. … From waste reducer to wildlife protector Laird is sure to make 2011 a great year for the environment.

But California’s regulatory crusade to coddle the environment without care for the cost is not going to be the focus for Jerry Brown, as much as he might like it to be – it’s going to be the budget, debt and the ever-less-sustainable public employee pension funding gaps.  If Jerry Brown is going to succeed on that score, he’s eventually going to have to take on the public employee unions he empowered in the 1970s when he signed the law giving them truly impressive collective bargaining rights.

It was the unions that terminated the Terminator.  When Schwarzenegger put four mostly sensible reform initiatives on a special election ballot in 2005, he was handily disposed of by the unions, particularly the California Teachers Association, which mortgaged its headquarters to buy even more anti-Schwarzenegger ads.  By most accounts, Brown is also plotting a special election strategy to fix the budgetary mess.  First, he will get a budget through Sacramento (now, thanks to Proposition 25, requiring only the votes of the Legislature’s Democrats) that will include sweeping cuts in spending for popular state services, then he will call a special election and ask the voters to do what even the state’s all-powerful Democrats don’t have enough votes to accomplish:  raise taxes and fees.

He should be able to count on union support for the higher taxes, but the voter’s mid-term rejection of Prop 21’s “park tax” and their approval of Prop 22’s and Prop 26’s restrictions on Sacramento’s non-tax revenue generation tricks indicates Brown’s going to have a tough time pulling off a special election win.  Even if he does – and especially if he doesn’t – he’s still going to have to deal with pension reform if he has any hope of fixing the state’s fiscal mess.  Meaningful reform seems just about impossible under Brown, as Orange County Register opinion columnist Mark Landsbaum wrote today:

Considering their clout, if public employee unions had a better candidate to run for governor, wouldn’t they have run him? Why didn’t they? Because Jerry Brown’s candidacy was their dream come true.

California’s future will be anything but golden unless Brown pulls off a “Nixon goes to China” with the state’s public employee unions and brokers sweeping and significant changes to public employee benefits.  Tweaking at pension formulas isn’t going to be enough.  Even the wholesale selling out of younger public employees by older pension-rich ones isn’t going to pull California out of the hole.  No, dialing back California’s half-trillion-dollar unfunded pension liability before the state’s finances collapse entirely is going to take the kind of reform that will pose a threat to the future clout of the very public employee unions that swept Brown into office.

Can he do it?  I don’t think so.  His appointments thus far, while still few in number, indicate that the Jerry Brown we’re getting is the Jerry Brown we feared we’d get – Moonbeam Redux.  He will use the Democrat’s complete control of Sacramento and the money and influence of his union benefactors to do everything he can to protect the status quo, because unlike where Sacramento was when he first came into office on the heels of Ronald Reagan, Sacramento today is exactly as he would like it to be – fat with government jobs and programs, committed to environmental over-regulation, and firmly in the hands of the unions he knows and loves.

Jerry Brown’s real challenge arises from the fact that the status quo will be impossible to protect unless the state’s businesses shake off the national recession and the state’s obsession with business-flogging and somehow begin to generate more jobs and more tax payments.   Short of that unlikely salvation, it’s anyone’s guess how Brown will succeed in keeping his benefactors happy while dodging California’s looming fiscal black hole.