Mostly Good News On CA Pensions

NOV. 5, 2010

By STEVEN GREENHUT

Those of us who applauded the national backlash against the Obama administration’s big-government overreach have been straining to find good news in California, which defied the national trends by electing a slate of liberal Democrats and approving an initiative that makes it easier for the state’s Democrats to raise taxes and pass budgets without Republican help.

 To make matters more depressing, a much-celebrated city initiative in San Francisco to rein in the crushing costs of pensions was handily defeated on Tuesday. The city’s progressive Democratic public defender, Jeff Adachi, sponsored Proposition B because public employee pensions were sapping the life out of other programs. I saw a grand opportunity to build a coalition between conservatives/libertarians and old-fashioned liberals who understand that lush and underfunded pensions threaten their values, too.

It must have been wishful thinking to believe that San Franciscans would approve of such a sensible solution especially in the face of massive union funding on the “no” side. As one lefty blogger put it, “While Prop B’s victory would have been a national news story, its defeat deprives the media of the ‘even liberal San Francisco is cracking down on public employees’ narrative that it sought.” Yes, many of us sought that narrative, which would bode well for a state with an unfunded pension liability estimated at between $326 billion and $500 billion.

Nationwide, some figures put the liability at around $3 trillion. “When the city of San Francisco starts closing public pools because it has to fund the pensions of retired workers, then city residents will start to realize that Jeff Adachi wasn’t crazy” and that pensions need to be reformed, said Jack Dean, the Fullerton-based publisher of www.pensiontsunami.com and a board member of Californians for Fiscal Responsibility. But Dean notes that despite the setback in San Francisco – always a long shot because of the city’s voting dynamics – the pension-reform news from California on Election Day was overwhelmingly on the good side.

In Redding, “voters retained the fiscal conservative majority Tuesday after one of the most polarizing City Council races in recent memory,” reported the Record Searchlight. “Voters strongly supported Measures A and B, non-binding initiatives expressing popular approval for curtailing employee benefits.” I gave a speech about public employees in Redding last year and was glad to see voters reward the courageous council members there.

In Bakersfield, residents passed Measure D, which would significantly scale back retirement formulas for new public safety employees. Currently, police and fire receive the “3 percent at 50” benefit, meaning they can retire after 30 years of employment at 90 percent of their final year’s pay as early as age 50. Under the new “2 percent at 50” deal, they can retire at age 50 with 60 percent of an average of their final three years’ pay. It also requires increased employee contributions to retirements. Supporters overcame fierce union opposition.

In Carlsbad, voters overwhelmingly approved Proposition G, which requires the public to vote on any increases for pensions for public safety officials. The city recently implemented a lower second-tier pension benefit for new hires. As the San Diego Union-Tribune reported, “San Diego voters gave a stiff rebuke to city leaders Tuesday by roundly rejecting a proposed sales tax increase, setting up a difficult choice for Mayor Jerry Sanders on whether to follow through on his threat of devastating cuts to public safety if Proposition D failed.” Officials wanted the increase so that they would not have to change the pension system and trim other employee costs to reduce the city’s $70 million deficit.

“Menlo Park voters took the city’s fiscal matters into their own hands Tuesday night by voting overwhelmingly in favor of a measure that will reduce pension benefits for all new employees except police,” reported the San Jose Mercury News. It passed with 72 percent “yes” votes, which is an astoundingly large victory. In San Jose, the unions fared well in City Council races, but voters approved Measure V, “which limits how much outside arbitrators can award in pay and benefit increases to police and firefighters,” according to the Mercury News. That measure won by a 2-1 margin.

Another measure backed by the city’s pension-reforming mayor, Chuck Reed, was approved. Measure W allows the city to offer lower retirement benefits to future city employees. In Riverside, voters faced competing pension-related initiatives – one sponsored by the sheriff deputies’ union to limit the ability of the board of supervisors to limit pension benefits and a board-sponsored measure approving of the board’s ability to adjust pension benefits. They both passed, according to the Valley News, but the one backed by supervisors gained more votes and will be the one that goes into effect.

In Orange County, a pension-reform advocate won a seat on the county Board of Supervisors and an outspoken pension reformer won a Fullerton City Council race.  There were many bad results in California, especially the state level, where voters elected a governor who gave public employees collective bargaining rights in a previous era and who won this time by relying on the political help of the public sector unions, who spent record amounts on indepedent expenditures on his behalf. Nevertheless, there is encouraging news at the local level, where Californians are in a mood for pension reform. As the state’s finances get worse, I expect this movement to gain steam. Perhaps local voters will have to force the issue on a state government that is less likely to tackle it than before.