California Cities Have a Revenue and a Spending Problem

Bloomberg

Yesterday morning, I saw a presentation from Tom Tait, the mayor of Anaheim, California, on fostering economic development in a time of fiscal stress. He presented two charts that reinforce the fact that California's cities have both a revenue problem and a spending problem. The first chart shows Anaheim's total compensation costs per employee, which rose about 70 percent from 2001 to 2012 (more than 30 percent after adjusting for inflation). Real wages per employee were flat over this period; the entire inflation-adjusted increase is attributable to benefits, which grew by 130 percent per-employee. This is Anaheim's spending problem: It's spending too much on employee benefits.

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