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THE CHIP'N'DON SHOW
June 18, 2009
Expressions of relief and joy from supporters of Don Perata were both understandable, expected, and proper in the wake of the decision by the United States Attorney’s office to drop their years-long corruption investigation of the former California State Senate President. Had an indictment gone forward, Mr. Perata faced, at the worst, possible jail time and heavy fines if convicted and, at the least, the end of any plans to run for mayor of Oakland in 2010. This is not a “full vindication” or “a complete affirmation … that I've acted appropriately in both my professional life and my career in public service,” as Mr. Perata asserted in a statement released immediately after the announcement, since U.S. Attorneys—or federal juries, for that matter—cannot prove innocence of charges, they can only prove and decide guilt. Until then, by U.S. law, innocence is presumed, and needs no proof. Still, this is an enormous victory for Mr. Perata, and he and his supporters have earned the right to gloat.
That being said, we have to point out that the, um, giddiness with which the Chronicle’s East Bay columnist Chip Johnson approached the matter went a ways over the top, since Mr. Johnson moved immediately from a discussion of the dropped indictment to an interesting assumption on the state of the upcoming Oakland mayoral race.
“With the dark cloud of a lingering federal probe behind him,” Mr. Johnson wrote, “there is nothing standing between former state Sen. Don Perata and the Oakland mayor's office but time, opportunity and blue skies.” (“With Probe Over, Perata Primed To Lead Oakland” May 29, 2009)
Not to equate Mr. Perata with either of the dark lords, Sauron or Voldemort, but this does have a sort of Tolkienish or Potteresque ring to it, with the boldness and rashness of the followers increasing as the time of their master’s promised return grew closer. But even Mr. Johnson—if you could have poked a hole in his cloud of euphoria on the day he wrote his “blue sky” column—might have admitted that well, yes, there is actually something else besides blue skies which comes between Mr. Perata and the Oakland mayor’s office and that is, of course, the necessity of actually being elected by the voters to serve in that office. But such little details sometimes get overlooked in the swirl of celebration.
There are many who believe that Mr. Johnson has long been the carrier of Mr. Perata’s message on Oakland city politics and, if that is so, we can expect a pumping of the volume and exuberence of the Chip’n’Don show as Mr. Johnson uses his Chronicle column in many different ways to promote his favorite candidate for Oakland mayor.
A little over a week after the “blue skies” column, for example Mr. Johnson dropped a bombshell when he wrote that Oakland officials were considering declaring bankruptcy in the wake of the city’s budget problems.
“Even though city officials would prefer to avoid a public conversation,” Mr. Johnson wrote, “behind closed doors the Oakland City Council has discussed filing for bankruptcy protection in the midst of a $100 million budget deficit.” (“Budget Woes Have Oakland Mulling Bankruptcy” June 9, 2009) Mr. Johnson then quoted District 5 Councilmember Ignacio De La Fuente that “we have asked the (bankruptcy) question because we wanted to know the impact. In closed session, the question has been asked, and an answer was given.” Mr. Johnson quoted Mr. De La Fuente as saying that City of Oakland bankruptcy is “a possibility. Things are that bad.”
How does this help Mr. Perata’s mayoral candidacy? Mr. Perata’s electoral narrative will be that Oakland is broken, and he has the credentials to fix it and, obviously, the broker the city is—and literally broke, as in the case of Mr. Johnson’s bankruptcy allegation—the easier it will be for Mr. Perata to argue that his special brand of fixing is needed.
Being printed in the Chronicle, of course, the column had immediate impact, none of them favorable to Oakland. I was covering the Berkeley City Council meeting on the Tuesday night the Johnson bankruptcy column appeared, and several Berkeley City Councilmembers referred to Oakland as the example of the kinds of problems Berkeley didn’t want to slip into. That doesn’t help Oakland’s reputation around the region. And there were serious financial implications as well. This week, Oakland City Manager Dan Lindheim said that a representative of one of the organizations that set Oakland’s bond ratings was “freaked out” by the story that Oakland was considering bankruptcy, and Lindheim and his staff spent the following week trying to convince the bond-rating organizations that bankruptcy wasn’t on the table. If those organizations decide that Oakland’s fiscal house is in imminent danger of collapse, they will lower Oakland’s bond rating, which would mean millions of dollars in extra costs to the city to service its bonds. Mr. Lindheim said that he will find out “next week” whether he was successful in staving off the ratings panic.
Mr. Johnson can’t be faulted for the bad consequences of reporting bad news about Oakland. But that raises two questions. First, is Oakland really seriously considering declaring bankruptcy, as the Johnson column implied? And second, was it proper for Mr. Johnson to make that disclosure?
That answer to the first question, is Oakland seriously considering bankruptcy, appeared to come in the latest newsletter sent out by Oakland City Councilmember Jean Quan, the chair of the Council’s Finance Committee.
“[T]he Chronicle column by Chip Johnson with the misleading headline suggesting that we are considering bankruptcy set off an unfortunate media wave that shook our bond raters and investors,” Ms. Quan wrote. “I have spent much of the week talking to reporters and investors, but fear our upcoming bond ratings may be affected and that will cost us in higher interest rates. I want to make it clear that the only consideration of the issue was a question asked by a Council Member about when a city would consider bankruptcy. The Council is not considering bankruptcy…”
One line from Ms. Quan’s newsletter entry is crucial to understanding what may have happened in Council’s closed session, that “the only consideration of the issue was a question asked by a Council Member about when a city would consider bankruptcy.” That seemed to indicate that the Council was not looking at an imminent financial collapse and the defaulting on employee paychecks and payments to creditors and wholesale abandonment of city-funded projects, but was, perhaps, prudently looking at possible contingencies to solve Oakland’s serious—but not fatal—budget problems. One reason that a city might declare bankruptcy, for example, is to throw out and force a renegotiation of existing union contracts on terms more favorable to the city. (There is currently no indication, by the way, that City Council is making plans to take that step.)
And that brings us to the second question, was it proper for Mr. Johnson to make the bankruptcy disclosure in his column? For my part, I believe it wasn’t. And according to Oakland City Council rules, it was improper for Councilmember De La Fuente to reveal details of the closed door discussion to Mr. Johnson.
In my opinion, there is only one reason why a media outlet should report on the details of a closed session Council discussion—if the Council uses the cover of closed session to improperly discuss a matter which should properly be discussed in front of the public. In the case of the Council’s brief bankruptcy discussion, there is no indication, so far, that this is what happened, and that there was any improper hiding of the public business from the public.
While I am a strong supporter of public disclosure, I believe that there are specific times and circumstances when public bodies should be able to get together and discuss certain matters without public scrutiny. One of those times, in my opinion, is when contingency plans—like a plan in the event bankruptcy became necessary—are being put together. This is very different from when a public body is taking the first steps to implement such a plan, at which point public disclosure is in order. But from time to time, Councils need to brainstorm behind closed doors, and if Councilmembers are afraid that there is danger of those discussions being reprinted in the local paper or broadcast on television, it will immediately dry up consideration of some of the most innovative—but currently unpopular—ideas.
Finally, there is the interesting backstory of the Johnson bankruptcy column, that Oakland’s finances are broken, and Mr. Perata is the best person to step in and fix them.
Really?
One remembers that Mr. Perata served as president of the California State Senate from 2004 until 2008. During those four years, deliberations over the California state budget were directed by three individuals: Governor Arnold Schwarzenegger, the speaker of the California State Assembly, and Mr. Perata. During those years, the state budget was balanced by siphoning off money from local governments like the City of Oakland and Alameda County, as well as putting off hard choices and problem solutions until the future. The result left both the state and local governments in complete disarray when the economic downturn hit. In addition, over the years, some of Mr. Perata’s advocacies and activities have had specific devastating effects on the budgets and taxpayers of the county and the city. The Raiders deal and the Oakland school takeover—both of which were authored, engineered, and led by Mr. Perata—currently cost local taxpayers millions of dollars a year, with little to show for the cost.
That’s hardly an argument for Mr. Perata to come in as Oakland’s fiscal savior. In fact, one wonders if Oakland’s finances could survive a direct Perata involvement. But in all that bump-dancing and singing by Perata supporters over the dropping of the federal charges, that little consideration has been somewhat, and conveniently, overlooked.
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