The gravy train continues to roll

They receive paid days off for Christmas shopping, donating blood and weddings. And when these public employees retire, they can cash in tens of thousands of dollars worth of unused sick time and vacation days.

Extensive taxpayer-funded benefits for some local government employees are straining the budgets of New Jersey municipalities, according to a report the State Commission of Investigation released today.

Despite a recession that has depleted tax revenue and forced layoffs, the report says, municipalities continue to spend tens of millions of dollars on big payouts to retiring workers.

“The gravy train continues to roll without impediment for select groups of employees on the public payroll,” it reads. “Startling amounts of taxpayer-funded booty continue to be dispensed across New Jersey without regard for the common good.”

The SCI, which examines crime and corruption and reports to the Legislature, said it discovered $39 million in extravagant payouts after reviewing 75 towns, counties and local authorities. State employees can receive a maximum of $15,000 for unused sick time, but such limits aren’t standard at the local level.
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The SCI report is a black eye for municipalities who have clamored for more state assistance to help cope with the recession. Lawmakers on both sides of the aisle expressed outrage over the expensive perks.

“It shocks the conscience,” said Assemblyman Lou Greenwald (D-Camden), who pledged legislation to cap severance payments. “The taxpayers have every right to be offended.”
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Montclair State University Brigid Harrison expects political power struggles if the state cracks down on employee benefits at the local level.

“Counties are often political fiefdoms,” she said. “County freeholders or executive boards get to pad the ranks of public employees with political supporters.”

NJ industrial rents fall to “lowest in a decade”

Over the years, as the real estate markets for offices, residences and stores in New Jersey have gone through peaks and valleys, the market for industrial real estate has been like the buildings themselves — not flashy, but big, solid and reliable.

No longer. The tenor of third-quarter market reports about the warehouse sector has ranged from unhappy to abysmal.

One big commercial real estate services concern, CB Richard Ellis, reported, for instance, that 11.7 percent of the state’s industrial property was available for either purchase or lease as of Sept. 30. That was the highest rate it has recorded since 1992 and a 32 percent rise in 12 months.

Another company, Cushman & Wakefield, uses somewhat different parameters in its calculations, but said it agreed with the “thrust and reasoning” of CBRE’s report. Its measure of the vacancy rate for warehouses and distribution centers was 8.8 percent as of Sept. 30.

Furthermore, industrial specialists said that asking rents were plummeting statewide, and that in many submarkets, effective rents were the lowest in a decade.
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“Staggering,” Mr. Knee said. “I haven’t seen it in all my 21 years in the business.”

President Obama is going to pay your mortgage

The Obama administration on Monday plans to announce a campaign to pressure mortgage companies to reduce payments for many more troubled homeowners, as evidence mounts that a $75 billion taxpayer-financed effort aimed at stemming foreclosures is foundering.

“The banks are not doing a good enough job,” Michael S. Barr, Treasury’s assistant secretary for financial institutions, said in an interview Friday. “Some of the firms ought to be embarrassed, and they will be.”

Even as lenders have in recent months accelerated the pace at which they are reducing mortgage payments for borrowers, a vast majority of loans modified through the program remain in a trial stage lasting up to five months, and only a tiny fraction have been made permanent.

Mr. Barr said the government would try to use shame as a corrective, publicly naming those institutions that move too slowly to permanently lower mortgage payments. The Treasury Department also will wait until reductions are permanent before paying cash incentives that it promised to mortgage companies that lower loan payments.

“They’re not getting a penny from the federal government until they move forward,” Mr. Barr said.

New goal is to become a manager at Lowe’s

For Richard Crane, the “new normal” in the labor market began when he was laid off from a New Jersey battery plant in the summer of 2006.

Mr. Crane had been earning more than $100,000 a year operating heavy machinery at Delco, a former unit of General Motors. He worked there for 23 years, since graduating from high school. But when he lost his job he was thrust into a netherworld of part-time gigs: working the registers at Taco Bell, organizing orders at McDonald’s, whatever he could find.

“I thought it would be temporary,” says Mr. Crane, 49 years old. Three years later, he is selling outdoor furniture by day and pumping gas by night, while worrying about his skills atrophying and spending scant time with his teenage son. He makes about a third of his former pay.

Mr. Crane is part of a growing group of underemployed — people in part-time jobs who want full-time work or people in jobs that don’t employ their skills. Since the recession began two years ago, the number of people involuntarily working part-time jobs has more than doubled to 9.3 million, according to the federal Bureau of Labor Statistics, the highest number on record.
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State labor officials and economists generally label the underemployed as those who are working part-time when they would prefer full-time work, as well as people who are working beneath their skill level.

Federal figures on the underemployed, however, don’t count that second group — those who are overqualified for their jobs. Still, the government’s broadest measure of labor underutilization — known as the U6 — has more than doubled in the two years since the recession began to 17.5%, and it is up from 12% just a year ago, according to the Bureau of Labor Statistics. This means that nearly one in five people are either unemployed, involuntarily working part-time or “marginally attached” — they want jobs but haven’t searched in at least a month. It also counts “discouraged workers” who have stopped searching.

“The number would be much higher if we included the mechanical engineers working at 7-Eleven,” says Heidi Shierholz, who studies underemployment at the Economic Policy Institute, a left-leaning Washington think tank.

Afford Home Rule

A recent poll says residents are not as enamored with their home towns as some think.

A Quinnipiac University poll asked residents if they would support merging school districts and municipalities to lower property towns. Some 73 percent said yes. Only 22 percent said no.

That response does not surprise us. Of course, a majority of New Jersey residents probably would agree to just about anything if the offer was accompanied by the words, “reducing property taxes.”

Notwithstanding, the results are interesting.

It is true that merging some towns and school districts is not going to solve the state’s property tax crisis. No one should think that. But merging jurisdictions and eliminating high-paid public jobs, and the benefits that go with them, would help.

Most of those who like home rule are those doing the ruling. That is why we do not see mergers.

Just about every recent governor has talked about reducing the more than 1,100 combined school districts and municipalities in New Jersey, but the talk does not go very far.
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The record is clear. With rare exception, towns are not going to combine themselves. (One exception may be the Chesters in Morris County where a merger is being considered.) Before that, the last municipality to voluntarily “go out of business” was Pahaquarry in Warren County. The town had fewer than 50 full-time residents and most of it was parkland.