Volsky on “Alvarez ‘Bleak’ Numbers Bad News for Slesnick”

GEORGE VOLSKY

ALVAREZ “BLEAK” NUMBERS BAD NEWS FOR SLESNICK

At 7:15 a.m. Sunday, a friend who is very knowledgably about the intricacies of Coral Gables politics, woke me up. Without apologizing for that early (for Sunday) telephone call, he said: “ Get up and tell me how do you think Slesnick felt when he saw the  front page of today’s Herald?” Still half asleep I asked what he was talking about. “Have a look; I’ll wait.” After reading the “Bleak poll numbers for Alvarez” headline, and reluctant to overstate, I said: “I presume Don wasn’t very happy about it.” My friend snubbed me into silence: “You are kidding me, Slesnick must have had a fit, and that’s because he knows that he’ll get another, even worse headline very soon.” Asked to explain cryptic statement, my friend refused. “You will see in a day or two and it will hit a person close to his re-election strategy. Go to sleep.”

I didn’t. After I read the whole Herald article about the March 15 election to recall Miami-Dade County Mayor Carlos Alvarez and Commissioner Natasha Seijas, I thought I understood my friend’s interpretation of Slesnick’s mood this morning. (Presumably he at least glanced at the Herald’s page 1. On Monday, the Herald front-paged results of another poll according to which Miami-Dade voters, irrespective of their social background and political orientation, strongly disapprove of all county elective official,  a negative attitude that could not be much different in most local municipalities.)

It turns out that according to two prestigious polls, 67 percent of the county’s voters (which obviously include those of our city) want Alvarez removed from his post. (For Seijas, the number is 60 percent.) According to Fernand Amandi, managing partner of the prestigious Coral Gables polling firm Bendixen & Amandi, those politically highly adverse numbers prove that the Alvarez and Seijas “face a perfect storm of voter unhappiness, anger and frustration.” (In Monday’s Herald, Amandi is quoted to say that “The sense of voters is there is something rotten in County Hall.”

It would be denying reality to say that Coral Gables voters are not unhappy, angry and frustrated by the ten-year-long Slesnick mayoralty, of which during more than eight years the mayor run the city in tandem with the disgraced city manager David Brown.

Specifically, the principal reasons why county voters want Alvarez out, cited by the Herald,  fit Slesnick’s negatives like a well-fitted pigskin glove: A)  47% because he “raised the property tax base.” Under Slesnick, our taxes were raised at least three times, in addition to the increases in the cost of services and permits. B) 15% because he “has been generally ineffective as mayor.”  Only Slesnick acolytes say, with their fingers crossed, that he has been an effective mayor. C) Other anti-Alvarez recall reasons include “improper use of taxpayers money” – Slesnick-Brown lavish, city-paid meals in which (as the Bard would say) “a few small gins cours’d one another down his innocent throat in piteous chase;” and “ethical lapses” – one of many examples are our mayor’s less-than-truthful statements to the city commission about the purchase of the JCI building.

The negatives of Natasha Seijas are similar to those of Alvarez, except an additional complaint about her rudeness. That characteristic dovetails Slesnick’s behavior judging by statement by many residents-recipients of highly discourteous letters from the mayor, and his treatment of critics during commission meetings.

Later in the day, when I mentioning my friend’s puzzling statement about Slesnick’s campaign to another well-informed local political observer, his comment was that it could refer to City Hall rumors that it was Slesnick who had found and prompted an unknown Hispanic candidate to jump into the race for Chip Withers’ commission seat, which that man did practically within minutes from the qualifying deadline. According to rumors, the observer said, the mayor wants to draw the votes from two Latin contenders already in the race, Gonzalo Sanabria and Frank Quesada.

“This is an obviously ploy to help Brad Rosenblatt,” the observer continued, ”because it is a known fact that Brad and Don work together.  Brad is an active member of community groups that are either directly or indirectly controlled by the mayor,  like Don’s PAC, Gables Good Government,   the Coral Gables Community and the Coral Gables Museum Corp.”

He  recalled that something similar happened in 2001 when Slesnick run against   Mayor Raul Valdez-Fauli. “At the last moment an unknown Latin candidate appeared on the ballot, ‘magically’ in no time collected a campaign chest of more than  $100,000 and unsettled the election.”

Apt Description, Political Marketing in Miami-Dade and Coral Gables

I like this description of politics in Washington.

I think that the same perceptions applies to local government, Miami-Dade and Coral Gables.  Clearly, sharp commentary and strong questions are not welcome in local government forums.

The city is beautiful (except now for the horrible snails) and the politics are easy where you can get away with just about any sort of distortion of the truth in the commission chamber and in the election campaign.

Washington has become a city of ideological marketing, where those who would note that the emperors have no facts are unwelcome in their own newsrooms. It is a city where access matters most and those who ask tough questions don’t get access.

via tax.com: Breaking News: Tax Revenues Plummeted.

State Pension Funds are only temporarily Underfunded

This summarizes the finding of a recent paper (found cited in the New York Times blog of Paul Krugman) and was prepared by Center for Economic and Policy Research that demonstrates that at the state level the pension problems come from the recent stock market decline, and will come back as the market grows over time.

The data in this report show that the Florida state pension fund is on solid ground and much better than many other states.  The Wisconsin state retirement fund is fully funded!

Most of the pension shortfall using the current methodology is attributable to the plunge in the stock market in the years 2007-2009. If pension funds had earned returns just equal to the interest rate on 30-year Treasury bonds in the three years since 2007, their assets would be more than $850 billion greater than they are today. This is by far the major cause of pension funding shortfalls. While there are certainly cases of pensions that had been under-funded even before the market plunge, prior years of under-funding is not the main reason that pensions face difficulties now. Another $80 billion of the shortfall is the result of the fact that states have cutback their contributions as a result of the downturn.

• The argument that pension funds should only assume a risk-free rate of return in assessing pension fund adequacy ignores the distinction between governmental units, which need be little concerned over the timing of market fluctuations, and individual investors, who must be very sensitive to market timing.

This argument also fails to recognize the fact that over a long period, future stock returns are inversely related to current price-to-earnings (PE) ratios. If the current PE ratio is relatively low, as is now the case, then the assumption that the market will provide below average returns implies a further decline in the PE ratio, given the generally accepted growth projections for the economy. As a practical matter, the stock market has provided an average real return of more than 8 percent for 30-year periods when the PE ratio at the start was under 15 to 1.

It is worth noting that if pension funds stop investing in equities, as some have advocated, this would imply higher taxes and/or lower benefits for public employees. It would also mean that other investors could expect to see higher future returns on their stock holdings.

The size of the projected state and local government shortfalls measured as a share of future gross state products appear manageable. The total shortfall for the pension funds is less than 0.2 percent of projected gross state product over the next 30 years for most states. Even in the cases of the states with the largest shortfalls, the gap is less than 0.5 percent of projected state product.

It is also worth noting that some of this shortfall has likely already disappeared as a result of the recent rise in the stock market. If this rise is not subsequently reversed, then a substantial portion of the funding shortfall has already been eliminated.CEPR The Origins and Severity of the Public Pension Crisis 􏰁 2

In sum, most states face pension shortfalls that are manageable, especially if the stock market does not face another sudden reversal. The major reason that shortfalls exist at all was the downturn in the stock market following the collapse of the housing bubble, not inadequate contributions to pension funds.

Coral Gables’ Election and Candidate Information: Community Outreach

During the coming weeks I will be publishing all of the information I can get my hands on of the views of candidates on critical issues of the city of Coral Gables.

Issues include city finances, taxes and budget, pension reform, transparency concerns, city services and organization, community participation, investments, among others.

Please submit information you may have to this website.