‘Pre-Recession Spending’: Economics Under Anaheim’s Council Majority


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“Those who cannot remember the past are condemned to repeat it.” George Santayana in The Life of Reason, 1905.

“I do not support new taxes to [hire more police officers] because we have a thriving economy.” Anaheim City Council member Kris Murray, at a city-sponsored Budget Workshop promoting a return to “pre-recession” spending.

 

 

 

 

 

 

 

 

 

To whatever extent the ‘boom and bust’ cycle is unavoidable, the same can not be said for the 2008 Financial Crisis and subsequent Great Recession. Nothing in history or economics suggests that everyone and everything everywhere must be leveraged to the hilt when there is a contraction in the market. For local governments, the take-away moving forward is that the severity of an economic slow-down will turn on a municipality’s current and future spending obligations. No lobbyist nor politician can change the fundamental nature of things; quite apart from ‘boom and bust’ unnecessary spending (waste) will lead to higher taxes, an increasingly hostile business climate, and ultimately, cuts to public services/staff.

Councilwoman Murray’s belief in a tax-free increase in public safety spending, quoted above, reflects what is policy at City Hall: don’t worry, just keep spending. The Council Majority regularly assumes unrealistic growth, while grossly exaggerating the economic benefits of the spending itself, i.e. jobs. New police will increase economic activity, and increased economic activity will pay for the new police.

This is the approach that brought about the severity of the recent crisis. Unrestrained spending during (relative) times of growth limit a government’s ability to reassure markets in a state of panic. Debt and other future obligations inevitably factor into the equation, foreclosing on options that would otherwise lead to a quicker recovery.

The ‘spend for spending sake’ mentality has been on display all summer. Last week, the Council once more debated and approved a $200 million expansion to the Convention Center. As it’s not just lying around, the city must borrow to construct the 200,000 square feet glass structure. The no-bid contract was approved, therefore, alongside $300 million in new bonds (debt). The taxpayers of tomorrow – and for the next thirty years – will pay $15 million annually to cover the bonds, while the Council Majority… capitalizes… on the no-bid deal with developers this year, an election year.

Pending for months, the consequential plan for the Convention Center’s seventh upgrade faced mounting criticism. From the beginning, it was opposed by Mayor Tait because of the high, per square foot, cost of the project and in light of other debt obligations on the city’s horizon. Outside City Hall, the Orange County Register Editorial Board argued:

Convention centers are a risky venture to begin with, and expanding a convention center is an even riskier proposal. Many such venues across the country routinely lose money and are dependent on taxpayer subsidies.

It would be far better for private entities to assume the risks of such a venture, determining whether the market could benefit from such an expansion, rather than the taxpayer.

Leaving the accumulating criticism unanswered, the Council Majority kept pushing the project through arguing it would create jobs and keep the Convention Center competitive. The Majority’s line was publicly stressed by some of the coalition’s biggest supporters: the building trade unions spoke of jobs, while elite business interests spoke of competition.

As it turned out, litigation caused the aforementioned scene to be repeated months later, and all throughout proponents were reminded that no one opposed expanding the Convention Center,  creating jobs or keeping the venue competitive. Completely ignoring, missing or misconstruing the criticism, Councilwoman and candidate for mayor, Lucille Kring, stated: “You could say these conventions won’t go, but they are absolutely going.”

 

 

 

 

 

 

 

Ms. Kring made the same argument when she voted to amend the city’s stadium-land lease with Arte Moreno. If the team owner is not given vastly more favorable terms, she maintained, the Angels will leave Anaheim. Before any deal could be negotiated however, Ms. Kring voted with the Majority to extend the opt-clause in the current lease with Moreno, thus providing him with an additional two years to move the team.

For her part, Ms. Murray gave a familiar argument throughout the debate on the Convention Center. A consistency matched, unsurprisingly, by her dedication to the state’s high-speed rail boondoggle. “Anaheim is ahead of the curve… cities are considering a sales tax increase because they are cutting services and can’t make ends meet.”  In Anaheim, she then concluded, “we aren’t in that position, we are reinvesting.” She might as well said, “I do not support new taxes to do this because we have a thriving economy.”

In conclusion, I’d like to reach-out to another group of supporters enabling the Council Majority: government labor unions. I get it, the appeal that is, because it does sound great. These people are promising to increase your budgets with money that manifests in thin air. In reality, the Majority is making a promises on the back of the next generation. The Majority has no idea whether the obligations will be kept or whether they are sustainable. In any event, when it is time for Murray’s new police officers to collect pension, she will have long left the City Council.

During the Great Recession, Anaheim, unlike many localities, managed without laying-off firefighters or police officers. Under the economics of the Council Majority, sadly, the younger amongst them today will not be afforded the same luxury.


About Daniel Sterling Lamb

Daniel is an attorney in Orange County, California. A conservative activist born in Anaheim, he is driven by his dedication to fiscal responsibility and transparency in local governments. "Government does not solve problems—it subsidizes them” Ronald Reagan, first said in 1967 and used many times as governor of California and while campaigning for president of the United States. He loves that quote! Follow Dan on twitter @DanSterlingLamb