Assembly bill would stall local pension reform efforts

May 24, 2013

By Katy Grimes

220px-Road_block

A bill to make it nearly impossible for local ballot initiatives to reform generous labor pensions was passed by the Assembly Thursday by a 50-18 vote.

AB 822 by Assemblyman Isadore Hall, D-Los Angeles, would require all local ballot proposals seeking reforms to public pensions to be analyzed by an independent actuary paid for by the proponents. The bill would require a city to make public, at least two weeks prior to the election, the future costs that will result from the changes to the retirement plan proposed by the measure. The cumulative effect of these requirements is to make it harder to change local pension requirements.

The bill is a response to the passage last year by voters of pension reform initiatives in San Jose and San Diego.

But the initiative process is a fundamental right under the California Constitution. Courts have held that it is among the most precious rights in our democratic process, the veritable “sword of democracy.” The initiative process was specifically adopted by Gov. Hiram Johnson and other reformers a century ago as an alternative to the legislative process.

Bill specifics

AB 822 would also require that any ballot initiative go on general election ballots where turnout is likely to be higher and more liberal. This would delay reform measures by another six months.

Additionally, AB 822 requires proponents to hire an actuary to provide written analysis of the measure of 500 words or less, in order to find fault with the proposal.

Interestingly, the Los Angeles Fire Fighters Association is supporting AB 822. In December, Los Angeles city labor unions cheered when former Los Angeles Mayor Richard Riordan pulled the plug on his ballot measure to roll back pension benefits for city employees. The unions called it an expensive and poorly thought out proposal. With the recent successful pension reform measures in San Jose and San Diego, it is apparent the L.A. Firefighters are taking no chances that another measure make it to the ballot, and is voted on by the people of Los Angeles.

Glossed over in the Assembly floor debate Thursday was the significant cost this bill will incur. The California Constitution requires the state to reimburse local agencies for costs mandated by the state. It is very likely that local governments, including local election officials, would claim reimbursable costs associated with this bill whenever city councils put a reform measure on the ballot. The bill imposes new sample ballot information and requires the actuarial analysis. The exact magnitude of reimbursement costs are unknown, but in this case it is likely to be more than $ 1 million in aggregate statewide.

Roadblocks to reform

To demonstrate the many roadblocks AB 822 would impose upon any city attempting to put a pension reform measure on the ballot, this is the list of requirements:

* “Requires a charter or charter amendment that proposes to alter, replace, or eliminate the retirement benefit plan of employees of the city or city and county to be submitted to voters only at an established statewide general election.

* “Requires the governing body of the local government entity to do all of the following whenever a local measure qualifies for the ballot that proposes to alter, replace, or eliminate the retirement benefit plan of employees of a local government entity, whether by initiative or legislative action:

* “Secure the services of an independent actuary to provide a statement, not to exceed 500 words in length, of the actuarial impact of the proposed measure upon future annual costs of the retirement benefit plan, including normal cost and any additional accrued liability; and,

* “Make public at a public meeting, at least two weeks prior to the election that the measure has qualified for, the future costs that will result from the changes to the retirement plan proposed by the measure.

* “Requires the actuarial statement to be printed on the ballot preceding the arguments for and against the measure, if any.

* “Requires, if the entire text of the measure is not printed on the ballot, nor in the voter information portion of the sample ballot, there to be printed immediately below the independent actuarial analysis, in no less than 10-point bold type, a legend substantially as follows: “The above statement is an independent actuarial analysis of Ordinance or Measure ____.  If you desire a copy of the ordinance or measure, please call the elections official’s office at (insert telephone number) and a copy will be mailed at no cost to you.”

* “Requires, if a measure described in this bill qualifies for the ballot pursuant to an initiative petition described in current law governing county, city or district petitions, the proponents of the measure to pay an additional filing fee to pay for the costs of the actuarial impact statement in an amount to be established by the local governing body, not to exceed five hundred dollars ($500).  If the measure is adopted by the voters, the fee shall be refunded to the proponent.

* “Provides that, if the Commission on State Mandates determines that this bill contains costs mandated by the state, reimbursement to local agencies and school districts for those costs shall be made pursuant to current law governing state mandated local costs.”

“This measure takes us in the wrong direction,” said Assemblyman Don Wagner, R-Irvine. “It undermines the much needed pension reform measures.”

Assemblyman Tim Donnelly, R-Hesperia, also opposed the bill: “We ourselves in this body have not been able to face this issue. Cities should be able to have their voices heard.”



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