Is 2014 the best year for pension reform?

Is 2014 the best year for pension reform?

DeadParrotI politics, timing is everything. In 1973, Gov. Ronald Reagan pushed Proposition 1 to cut state income taxes 7.5 percent. It lost, 54 percent to 46 percent. Even the Great Communicator couldn’t push it over the top.

November that year was the high tide of the 1946-73 economic boom in the United States. It seemed to be Morning in California. No reason to deprive government of funds for all the wonderful things it does.

In 1974, a severe recession struck the country, intensifying battles over budgets ever since.

In 1978, California passed Proposition 13 overwhelmingly, 63 percent to 37 percent. It sharply cut property taxes and has been controversial ever since. By that year, grandmas were being expelled from their homes by property tax collectors. People were ready for a tax revolt.

Pension reform

So it is with pension reform in California. In 2012, city reforms passed in San Jose with 69 percent and San Diego with 66 percent.

Now San Jose Mayor Chuck Reed, a Democrat who successfully passed his city’s reform, is pushing a statewide reform for next November’s ballot. It “would give California cities and other public agencies power to negotiate changes to existing employees’ retirement benefits. Employees would keep the benefits they had earned up until their contract changes but could see reduced benefits going forward,” according to the Mercury News summary.

Is the timing right? It might not be.

It’s coming in the midst of Gov. Jerry Brown’s “California Is Back” re-election theme, modeled on Ronald Reagan’s 1984 “Morning in Ameica” campaign, which will be taken up by every Democrat in the state. Nothing but happy faces here.

A minor pension reform was passed in Sept. 2012 to preclude criticism that the Proposition 30 tax increases on the Nov. 2012 ballot would go to pensions instead of to K-12 schools. Same thing next year. No doubt Democrats will pass a “reform” in Sept. 2014 in the run-up to the Nov. 2014 election.

Already, 19 California mayors have lined up against Reed’s initiative.

Maviglio

And writing on Fox & Hounds, Democratic operative Steve Maviglio cites polls showing the initiative not doing well:

“For all the political chatter about pensions, California voters remain strongly opposed to gutting the retirement benefits of teachers, firefighters, police officers, and other public employees.”

Actually, Reed’s initiative wouldn’t be “gutting” the pensions. It only would make the pensions reasonable so they don’t bankrupt cities; and more in line with the pensions received by the tax slaves in the private sector paying for everything.

“According to a new statewide poll conducted by the Washington, D.C.-based GarinHartYoung Research Group, San Jose Mayor Chuck Reed’s proposed ballot measure that gives cities the ability to slash the retirement benefits of existing public employees has the support of only 36 percent of California voters.”

And that’s before the CTA, CFT, SEIU, cop unions, fire unions, etc. start their propaganda efforts that easily will top $100 million against.

2016?

If Nov. 2014 isn’t a good time, when is? When the economy turns sour, we start getting more municipal bankruptcies and the pension situation gets worse. Post World War II economic recoveries have lasted an average of 4.5 years. The current one began in 2009, so we soon could be due.

The Chapman University economic forecast, which is one of the most accurate, expects about 2 percent growth to continue in 2014. But after that, a recession is possible.

The next recession finally could tip giant Los Angeles into bankruptcy, making Detroit’s recent bankruptcy look like a picnic on a Lake Erie beach.

Meanwhile, Treasurer Bill Lockyer, who looks at the numbers every day, has been warning that the California State Teachers Retirement System is running out of money. In a speech last week in Thousand Oaks, he said:

“California is a ticking time bomb of issues that must be resolved in order to secure the economic and social future of the state…. The teacher retirement system, in 30 years, implodes. If it doesn’t get fixed, there won’t be a teacher retirement system in 30 years. We are currently $5 billion a year short of what we have to do just to keep it solvent.”

Meanwhile, in the Motor City, a federal judge ruled pension reductions for existing and retired workers can be included in settlements. The ruling is being appealed. And the California Public Employees Retirement System insists the parrot isn’t dead, it’s only “pining for the fjords” (see YouTube below).

What all this means for Reed’s initiative is that Nov. 2016 might be a better time for putting the initiative before voters. By then we could be in a recession. Los Angeles could be leading a cascade of California cities into bankruptcy. And a Republican tide could be sweeping into office President Rand Paul.


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