Voters face pension-reform decisions

Voters face pension-reform decisions

pension-red-inkIn a series of contests playing out at the state and local levels, Golden State voters will cast votes this November that could reshape the pension landscape for years to come.

Races have attracted attention for offices that exercise direct influence over the institutions that set pension policy. Cities and municipalities, meanwhile, have taken this election year as an opportunity to change laws placing restrictions on their ability to renegotiate certain pension contracts.

Rising GOP star Ashley Swearengin has wound up at the center of the statewide controversy over pension policy. As the mayor of Fresno, she shielded her city from bankruptcy — by braving the kinds of reductions in city staff and services that raise alarms among defenders of unchanged public pension plans. Instead of throwing Fresno into chaos, however, Swearengin’s moves traded short-term pain for longer-term stability, including a balanced budget for the current fiscal year.

The experience lent Swearengin credibility in her candidacy for the state controller’s office. She is running against Democrat Betty Yee, a member of the state Board of Equalization.

Hopes

That has buoyed Republican hopes for a high-profile win this election season. But a Swearengin win could have a substantial impact on policy, not just politics.

Although the controller typically has been seen as an official with oversight over California’s balance sheet, the position includes another responsibility with increased significance: a seat on “dozens of boards that oversee public pensions,” as the Bakersfield Californian recently stressed. “Swearengin says as controller, she would advocate for reducing the state’s long-term liabilities, roughly $300 billion by official estimates, and for improving the business climate with an annual ‘competitiveness audit.'”

The issue of pension oversight was sharpened recently when Gov. Jerry Brown ordered the incumbent controller, John Chiang, to launch an inquiry into how to prevent future instances of “pension spiking.” That’s a practice where union members game the benefits system in order to maximize eligible work hours that count when calculating pension sizes.

Chiang’s office had failed to detect pension spiking earlier in the year, leading the California Public Employees Retirement System to deny it had done anything wrong. Now running for state treasurer, Chiang’s campaign has touted his efforts to bring pensions to heel. His Republican opponent, Greg Conlon, also has outlined a pension-reform plan.

Showdown in San Jose

At the municipal level, voters themselves now have a chance to impact pension policy. On this front, San Jose has emerged as the ground zero of high-stakes initiatives.

Measure G has attracted attention as a model for what a California city can do to renegotiate pension contracts without running afoul of the state’s embattled but stubborn interpretive framework shielding those contracts by law. Supported by outgoing Democratic Mayor Chuck Reed, Measure G would reform San Jose’s two pension boards by enabling them to hire their own executives — presumably cutting down on patronage appointments and insider dealing.

Although Reed has developed a reputation among union supporters as a “nemesis,” the San Jose Mercury News explained Measure G also has the backing of the San Jose City Council.

Meanwhile, re-entering the debate is Measure B, a pension reform city voters passed in 2012. If Reed and his allies fail to ensure that pension-reform candidates secure office in November, Reed’s opponents, including labor-supported mayoral candidate Dave Cortese, likely would settle union suits against Measure B.

Unions alleged Measure B skirted California’s pension-shielding approach in a way that threatened the basic public safety of San Jose. In echoes of the debate that swirled around Ashley Swearengin’s efforts to evade Fresno bankruptcy, unions maintained pension cuts caused San Jose’s cash-strapped police force to plummet from 1,400 street-ready officers to 900.

With the election just three weeks away, pension reform is the issue that, even when not immediately noticed, is the part of the iceberg under the surface of state and municipal finance.

17 comments

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  1. LetitCollapse
    LetitCollapse 14 October, 2014, 21:04

    I don’t think you’ll see real pension reform at the ballot box. The system is way too corrupted for true reform measures to go before the voters. If a measure that proposed to eliminate all public pensions and force public employees into 401-k ever made it to the ballot it would pass 65%-35%. The pols know that. But the corrupted system would prevent such a measure. Otherwise it would have already happened. The pols only put watered down pension reform measures on the ballot that have little or no effect on pension amounts or age requirements.
    You are going to have to wait for a bond market dislocation and market crash to see real public pension reform. Hard to say when that might happen. But it’s inevitable. Anyone who studies the financial markets and is honest would tell you so. As soon as QE comes to a halt (it will be involuntarily) the markets will plummet. The foreign superpowers are planning for a new world reserve currency because they know the dollar is going to crash. China, Russia and some of the ME nations are already selling and buying oil in currencies other than the US dollar. Why do you think Obola is invading all the ME nations without international legal authority? lol. He knows he’s losing control, so out comes the guns and the bombs. Bullyism. 😉

    Reply this comment
    • Bill Gore
      Bill Gore 15 October, 2014, 07:40

      Well, yes and no, about international reserve currency changes. Western central bankers, and their cohort at JPM, GSAX, CITI etc. are nothing if not clever, motivated as they are by boundless greed and demonic intelligence. Notice the damage they have done to the Ruble in foreign exchange, which is still dominated by London/New York, ‘sending a message to Putin’ (duh) that he better not defy the World Master Mafia in DC. The BIS is slowly trying to phase in the use of SDR’s as an alternate global exchange currency, and of course the BIS is packed with the same mafiosi that have gutted this country (and gave californians Mr. Cashcarry to vote for). The chinese and the russian leadership is NOT stupid, believe it or not, even though they did NOT go to Harvard or Yale. They are graduates of a far more prestigeous alma mater, the university of Extreme Hardship, and they are DONE with being managed and manipulated by the USA.

      Reply this comment
      • LetitCollapse
        LetitCollapse 15 October, 2014, 12:05

        Fine analysis, Bill Gore. You are in the top 5% of Americans as far as understanding the world economy and where we stand in the mix.
        The USA is the world’s largest debtor nation, Bill. When the interest rates rise involuntarily (and they must sooner or later) we won’t be able to service the interest costs on the national debt without HUGE repercussions in the American economy. Today we are at about $18T in Federal debt. Most states are also swimming in debt. Oh, and if you combine public and private debt it’s above $350T. You strike me as a smart guy. Get out you pencil and paper. Calculate the debt service on just the Federal debt ($18T) if (when) the interest rates NORMALIZE to 8%. Now, once you have that calculation what percent of the CURRENT national budget would be consumed by the interest payment alone? Is that sustainable? Now, if inflation goes out of control and we experience Jimmmy Carter interest rates (north of 15%) – do that calculation. lol. What happens to our economy, Bill?
        If the boys at JPM, Goldman and Citi were that smart the market wouldn’t have crashed in 2008. Today they are desperately trying to keep the ship afloat, knowing full well the damage 2008 caused to the nation and to the world. IMO they will fail. Printing fiat currency is no solution. The ship will go down. Just a question of when. Right now I see the DJI is down about 300 points AGAIN! Right at the 16,000 level. Hold on tight, Bill. Protect yourself.

        Reply this comment
        • Bill Gore
          Bill Gore 15 October, 2014, 14:27

          Awshucks LIC (blush) I ain’t dat smart….Just an old cowboy kickin rocks up here in central Oregon…
          Yes the calcs are very real, the numbers are very big, far bigger than any ability of the real productive economy to support. The thing we need to understand is that viewed as a superorganism the anglo-USA empire senses its imminent demise. This beast, and the numerous vermin that exist on its hide has hatched a 2 part strategy for survival. Part 1 is to use whatever remaining credibility its debt and currency may have to arm up and build out as much as it can. About the time the money loses value, phase 2 kicks in, and this is to make the demise of the dollar irrelevant by literally taking over the world, under the guise of ‘saving it’. Phase 2 implementation requires war, mega terrorism, economic collapse, horrific epidemics, you name it. What no one wants to face is that the USA is a global terror machine in the service of high finance. Noam Chomsky has written extensively about this. Once they OWN the WORLD in clear title, then all these other variables like debt, inflation, currency, etc. disapear. THEN the real culling will begin….

          Reply this comment
          • T Mind of Ted Your God
            T Mind of Ted Your God 15 October, 2014, 15:59

            LOL– 2 doomers locked in an ignorant death spiral embrace….lmao—-mmmmmmmmmmm——-donuts…….

          • LetitCollapse
            LetitCollapse 15 October, 2014, 23:35

            Bill, good luck trying to get past Russia and China in the quest to own the world. We aren’t the only nation with nuclear ballistic warheads. If push comes to shove and the missile starts flying, nobody wins. The oligarchs know this. And with their riches the last thing they want is nuclear holocaust. In the end, I think we learn to play nice and share the wealth. The risk is that some rogue nation like N Korea let’s a nuke fly and it results in a chain reaction.

          • T Mind of Ted Your God
            T Mind of Ted Your God 16 October, 2014, 09:08

            WOW Collapso! Nobody EVER thought of that before……mmmmmm……you’re so brainy!

  2. Ulysses Uhaul
    Ulysses Uhaul 15 October, 2014, 21:50

    Mindless Teddy…….the doomed are crossing over…..sad….so sad……

    Reply this comment
  3. Bill Gore
    Bill Gore 16 October, 2014, 08:38

    Noam Chomsky was interviewed recently on Pacifica Radio. He is a professor at MIT, and is considered a very blue-chip ‘progressive’ and a real ‘liberal’, not some little authoritarian troll spewing one liners on CWD….

    Reply this comment
  4. a frequen reader
    a frequen reader 16 October, 2014, 09:42

    …that you, TM and UU, are two peas in the same pod. There’s my one liner. 😉

    Reply this comment
  5. a frequent reader
    a frequent reader 16 October, 2014, 09:44

    left out the t in my name. ^^^ two posts in the same thread in one day. On par with teddy and uhaul. Where’s Rex been lately?

    Reply this comment
  6. a frequent reader
    a frequent reader 16 October, 2014, 09:49

    Apparently my first post didn’t stick which was in reference to what was my second posting was about, which became my first, that stated in reply to TM…”And your point is what Bill?”

    My reply was that TM and UU are two peas in the same pod….there’s my one liner. 😉

    If you get this than your doing better the most here.

    Reply this comment
  7. T Mind of Ted Your God
    T Mind of Ted Your God 16 October, 2014, 11:23

    FR–

    GREAT job and good post!

    It’s nice here in the pea pod…damp, green and squishy…..

    Reply this comment
  8. T Mind of Ted Your God
    T Mind of Ted Your God 16 October, 2014, 11:25

    FR— I post many times on some days but only on certain threads– most things don’t arouse my concerns.—-I love this Country!

    Reply this comment

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