“Beleaguered by fundraising doubts and attacks from organized labor, two former California officials said Monday they are backing off plans to place a measure on the November ballot intended to curb public pension benefits,” the Sacramento Bee reported. “Instead, former San Jose Mayor Chuck Reed and former San Diego Councilman Carl DeMaio said in a joint announcement, ‘We have decided to re-file at least one of our pension reform measures later this year for the November 2018 ballot.'”

Staying solvent

The news marked a sharp reversal for critics of the state’s pension spending, which has ballooned apace with California’s freshly flush balance sheet. The price tag for guaranteed health coverage alone has put Sacramento on notice of the size and scale of the problem. “The state has promised an estimated $72 billion in health care benefits for its current and future retirees, an amount that will increase to more than $300 billion over the next three decades, according to the governor’s Department of Finance,” according to the Associated Press.

Gov. Jerry Brown has sought to bring those costs under control in a way that won’t spur a revolt within his own party or hand too much power to Republican legislators. “Brown proposes prefunding benefits similar to the way the state pays for pensions — by paying into a trust fund that accrues investment returns over time, reducing the amount of money that taxpayers must contribute in the future,” the AP noted. “In negotiations with public employee unions, he’s asking state workers to pay into a fund through a deduction on their paychecks. The state would pay an equal amount.”

A firmer approach

The Reed/DeMaio proposals would have tackled unions in a much different way.  “Reed and DeMaio had filed two proposals for the November 2016 ballot, planning to choose one,” as the AP reported separately. “One would have put employees who first join a public pension system on or after January 2019, into 401(k)-style retirement savings plans that guarantee fixed contributions from employers instead of fixed returns. The second measure would have capped how much employers could pay for new hires’ retirement benefits to a certain percentage of their salary.”

Public opinion studies produced conflicting portraits of how much support for the initiatives Reed and DeMaio could count on. “Apparently the measure to force new employees into 401(k) style ballot initiatives did not poll well (even though a 2015 poll by Reason-Rupe showed majority support for such a shift),” as Reason observed. “The measure to cap the amount employers could contribute to pensions fared better in polls, but according to Reed, they weren’t able to raise enough money to collect signatures and prep for an expensive battle with California’s public unions.”

Finding funding

That difficulty struck at the heart of the year’s complex political landscape. “The stark reality is that within the state, there are no deep pockets to finance such a campaign,” Dan Walters noted at the Bee. “However large they may be, fast-growing pension and health care liabilities don’t discomfit any major interest groups, since their greatest impacts are on local governments, especially cities, rather than on state government.” That would have likely pushed the initiative’s supporters into a scramble for cash.

The necessity to look far and wide for money fostered its own kind of political optics problem. “Any reform campaign would be dependent on money from one or more wealthy individuals, probably from out of state, and it hasn’t materialized,” as Walters observed. “Conversely, any broad retiree benefit reform effort would draw implacable, high-dollar opposition from unions.” So even if the reform effort gained an adequate sponsor, Golden State unions would be able to portray their high-dollar spending as more of an in-state groundswell than their opposition — a potentially substantial advantage in a populist election season.

“Sometimes you have to eat the elephant one bite at a time,” Reed told the Contra Costa Taxpayers Association at an Oct. 30 luncheon. “So these are bites out of this elephant that’s $350 billion big.”

Reed and former San Diego City Councilman Carl DeMaio have submitted two initiatives that would limit pension plan benefits for government employees hired after Dec. 31, 2018.

Third Time the Charm?

Reed and DeMaio are hoping the third time is the charm. Previous pension reform efforts last year and in June were canceled due to concerns about ballot descriptions by Attorney General Kamala Harris.

The first initiative, The Voter Empowerment Act of 2016, requires voter approval before governmental agencies can enroll new employees in pension plans and increase their pension benefits. Voters also must approve if an agency wants to pay more than half of the total cost of retirement benefits for new hires.

In addition, the initiative would prevent retirement boards from imposing fees or other punishments on governments that don’t allow new employees to participate in a pension plan. The California Public Employees Retirement System requires its member agencies to pay three-to-five times the cost of their unfunded liability in order to opt out of the system, according to Reed.

These changes are needed, according to the initiative, because “state and local governments face elimination or reduction of essential services because of costly, unsustainable retirement benefits granted to government employees. Almost all of these benefits were granted without the consent of voters.”

The other initiative, “The Government Pension Cap Act of 2016,” limits government contributions for new employees at 11 percent of base compensation; 13 percent for new safety employees. It also requires voter approval before an agency can pay more than half of the total cost of retirement benefits for new employees.

“We are trying to empower the voters,” said Reed. “Either of these two initiatives would have a significant impact on the cost of new employees.”

Those costs are increasing rapidly, according to Reed. In the next five years, state and local governments will need to increase contributions by 50 percent to CalPERS. This is resulting in less state funding for universities, courts, roads, social services, parks and recreation, Reed said.

Price of Pensions

School districts have it even worse. Their contributions to the California State Teachers Retirement System will more than double in five years.

“Where the money goes determines the priorities of the state,” Reed said. “And we are putting our money, I believe, into the wrong priorities.”

Failure to correct those priorities will result in more jurisdictions going bankrupt like Stockton, Vallejo and San Bernardino, he said.

“The people in those cities suffered; the employees working in those cities suffered,” he said. “And we need to avoid that. And so, giving local governments some things they can do to deal with their problems has been the focus of the initiatives.”

A successful pension reform initiative campaign will require $25 million, in addition to the $2-3 million for signature gathering, Reed said. He anticipates raising much of it from Silicon Valley executives wanting to avoid future tax hikes as well as from pension reform advocates around the country.

If they are successful, California will begin making a dent in its unfunded retirement benefits liability, he said.

“Although we acknowledge this will not solve the $350 billion problem,” he said, “if these initiatives were passed, we could save money on new employees that will allow us to help pay down that $350 billion of unfunded liabilities. This is not a solution to those unfunded liabilities, but it would be helpful.”

Potential Savings

The savings could be significant, according to a state Legislative Analyst’s Office analysis of Reed’s June initiative, which also was called the Voter Empowerment Act of 2016. It’s similar to the current VEA, but also allows voters to decide compensation for current employees.

“It is likely that [pension] benefits would be reduced or eliminated in many jurisdictions,” the LAO said. “These changes would reduce governmental employer costs significantly in the future.”

Critics of Initiatives Speak Out

Naturally, the public employee unions are opposed to benefit reductions for their current and future members. Three people handed out leaflets outside of the luncheon at Back Forty Texas BBQ in Pleasant Hill that were critical of Reed, DeMaio and their initiatives.

“These two former politicians are currently championing a State-wide initiative approach to destroy retirement security for all new employees that would chose [sic] to work in the public sector, including law enforcement, firefighters and teachers,” said Mike DeBord, a committee co-chairman of the California Retired County Employees Association, in an essay titled “Pension Reformers Continue Their Long List of Failures.”

In another piece, “Proponents Still Trying to Undermine Retirement Security,” DeBord said that the “initiatives would amend the state constitution and erode retirement security for public employees, targeting new hires. If any are approved by the voters, they would likely be subject to many costly and lengthy legal challenges.”

Vested Rights

But the luncheon’s other speaker, Contra Costa Times columnist Dan Borenstein, believes Reed’s initiatives don’t take a large enough bite out of the $350 billion elephant. He wants Reed to challenge state judicial rulings specifying that pension benefits for current employees can be increased but not decreased.

“It’s a one-way ratchet,” said Borenstein. “Someone likened it to a mouse trap.”

Pension reforms would not affect benefits that have already been accrued; only accrual rates for future work would be affected, he said. Borenstein said he’s aware of the political headwinds that an initiative challenging vested rights would face, but he asked Reed to take on that more substantial fight.

“Aside from politics, why not challenge the vested rights question?” Borenstein asked. “And if you don’t, how much are you really accomplishing?”

But given California’s political climate, Reed said the focus has been on getting an easily understandable and supportable initiative on the ballot.

“Something that’s hard to misconstrue,” Reed said. “Although this is a political campaign – truth is never really a limitation of any political campaign in California. So we know they’ll be misconstrued. But we want people to be able to pick it up and decide for themselves.”

The legislative analyst will begin a financial analysis of the initiatives probably on Nov. 9, according to Reed, with the attorney general filing titles and summaries by the end of the month.

After that, “we’ll do some polling, try to decide what to do,” said Reed. “And hopefully we’ll be in a position where we’ll actually have these in front of the voters in November of 2016.”

The news added a fresh twist to the state’s long-running game of political cat and mouse, which has seen state officials labor to cast would-be reforms in a negative light.

Switching gears

Previously, former San Jose Mayor Chuck Reed and former San Diego City Councilman Carl DeMaio had forged ahead with a proposal that would subject all pension increases to voter approval.

But that initiative’s path forward was complicated by Attorney General Kamala Harris, who is legally responsible for summarizing initiatives on the ballots used by Californians statewide. As the Sacramento Bee observed, the language used in the summaries has proven significant “because it appears on petition materials used to qualify them for the ballot, often shaping voters’ first impression of an initiative’s contents. Perhaps even more important, the wording affects potential contributors’ willingness to underwrite a campaign.”

So, since “the state’s constitution protects public employee pensions and benefits from being cut,” Reason noted, “when Harris summarized DeMaio and Reed’s ballot initiative, as the law requires her to do, she declared that it ‘Eliminates constitutional protections for vested pension and retiree healthcare benefits for current public employees, including those working in K-12 schools, higher education, hospitals, and police protection, for future work performed.'”

According to the original language of the withdrawn initiative, the state government “shall not enhance the pension benefits of any employee in a defined benefit pension plan unless the voters of that jurisdiction approve.” Harris’s language, critics said, uses grammatical sleight of hand to make it seem like benefits will be taken away, instead of simply not given in the first place. “It’s clear that ‘shall not enhance’ is not the same as ‘eliminates,'” as the Orange County Register recently editorialized.

Testing Harris

For DeMaio and Reed, however, Harris created a problem and an opportunity. By pulling the initiative in favor of a couple new and slightly altered proposals, the two hoped to show that Harris “used what they consider ‘poison pill’ language to describe the new measures as she has three previous pension change proposals since 2011,” according to the Bee.

“If she does, DeMaio said, ‘we think she’ll be giving us the evidence we need’ to successfully sue Harris for unfairly skewing her description of pension initiatives.”

If DeMaio and Reed wind up dissatisfied with Harris’s summaries of both proposals, Reed said, they’ll challenge her in court. If both pass their scrutiny, however, they would only move forward with one.

Public support

Although pension reform has become a political hot potato in California, public support has gathered for some kind of curbs on its excesses. A recent poll conducted by the Public Policy Institute of California revealed that “72 percent of likely voters say the amount of money spent on public employee pensions is a problem,” pollsters noted, while 70 percent prefer that voters make at least some “decisions about retirement benefits for public employees.” At the same time, only “24 percent say state and local governments should make all the decisions.”

Those numbers roughly reflected the level of concern over pensions measured nationwide. In a Reason-Rupe poll, 72 percent said they were “very” or “somewhat” concerned that state and local governments weren’t able to meet pension promises extended to public employees. “A similar number (74 percent) are concerned that state or local governments will raise taxes in the future in order to meet these pension obligations,” Reason added. “When asked to prioritize dealing with the pension crisis, 35 percent said pension reform should be a top priority, while 41 percent said pension reform should be an important but lower priority.”

Whatever a new initiative might declare would be attacked by public employee unions with criticisms real or imagined. But would the placement of the initiative on the 2018 ballot give the measure a higher probability of success?

The 2016 presidential election will bring out a greater turnout of voters, many occasional voters who don’t pay as much attention to public affairs. The profile for the 2016 electorate would contain a larger percentage turnout of Democratic voters who are more closely connected to public employees whose union leaders will rail against any pension reform initiative.

Considering which ballot may be more friendly to a particular measure is common practice in the California initiative world.

Tax increase advocates discussing a plethora of possible tax measures for the 2016 ballot consider the profile of the presidential election voter more friendly to their cause. The Proposition 30 tax extension measure has already been filed, more tax measures may follow.

Another factor proponents of the pension reform effort might consider is who will write the title and summary.

Twice Attorney General Kamala Harris has authored titles and summaries that, according to Reed and DeMaio, were biased in a way that would damage the initiative’s chances of passing. The attorney general emphasized that the pension reform would hurt those who serve in jobs that the voters clearly respect such as police officers, firefighters and teachers. Harris’ summary of the current measure states that it eliminates constitutional protections from public workers that the proponents called misleading.

If the initiative is re-filed soon, Harris will have a third shot at writing the title and summary. However, if the initiative is filed for the 2018 ballot it is possible Harris will no longer be the attorney general.

Kamala Harris is the leading candidate to take the United States Senate seat currently held by the retiring Barbara Boxer. Should Harris win next year, Governor Jerry Brown will appoint an attorney general to fill out her term.

That means a new attorney general will be writing ballot titles and summaries for the 2018 ballot. There is no guarantee that Brown would appoint anyone less sympathetic to public employee unions than Harris has been. However, if Brown appoints a caretaker to the post, someone to fill the term but with no ambition to seek that office or another, then the new attorney general would not be as susceptible to union pressure in an upcoming election.

A roll of the dice, perhaps, for pension reform proponents, but something to consider if they want to take another bite at getting a title and summary they consider fair.

Striking a deal

Losing police to other jurisdictions, Mayor Sam Liccardo faced “enormous pressure to reach a settlement,” according to Scott Herald at the San Jose Mercury News. In fact, wrote Herald, Liccardo “could legitimately argue that the city had achieved concessions in negotiations, obtaining savings he estimated at $1.7 billion over 30 years. San Jose was able to save millions by foregoing the so-called ‘bonus checks’ to employees. And the city and its public safety unions agreed on a cheaper health plan.”

In an unusual move, the City Council successfully petitioned the courts to invalidate the measure, paving the way for a renegotiated deal with law enforcement. Under the terms of the new wage agreement, the Mercury News reported, police officers will receive “8 percent in ongoing raises and 5 percent one-time bonuses.” But the fate of the deal remained in the hands of voters, who would have to approve the Measure B replacement at the ballot box in 2016.

For now, however, the city has at least managed to settle its three-year court battle with police and firefighter unions, as San Jose Inside observed. And it stanches its law enforcement losses, which were approaching crisis proportions. “Since 2012, SJPD has had 265 officers resign and 167 retire,” according to San Jose Inside. “This year alone, the department has seen 41 resignations and 54 retirements, leaving the agency with 943 sworn officers out of a budgeted 1,109 positions.”

Taking it statewide

But former Democratic Mayor Chuck Reed, along with former Republican San Diego City Councilman Carl DeMaio, continue to back a controversial ballot initiative that threatens to complicate the issue of pension costs by offering California voters a new statewide approach.

According to its authors, the matter is cut and dry: “This simple initiative gives voters the ability to stop sweetheart and unsustainable pension deals that politicians concoct behind closed doors with government union bosses,” the two said in a joint statement, according to the Sacramento Bee. “That’s why the politicians and union bosses oppose this initiative – and why they continue to try to mislead the public on what the initiative does.”

But Attorney General Kamala Harris, one of the targets of their criticism, emphasized its potentially destabilizing consequences in her office’s title and description of the initiative. According to that language, the initiative “eliminates constitutional protections” for collective bargaining, bringing “significant” savings, but also costs, for state and local government.

“In addition to allowing voters to weigh in on public employee compensation,” the Bee summarized, “the initiative would mandate that voters approve any increases in pension benefits, sign off on new state and local employees being enrolled in the ‘defined-benefit’ plans that are now commonplace, and OK governments covering more than half of retirement costs.”

Trusting the voters

For activist opponents of the Reed-DeMaio plan, however, Harris should have portrayed the measure in an even less flattering light. By any measure, the scheme raises the prospect of fewer pension programs. “Requiring a vote by each government body to continue letting new employees into pension programs could very likely fail,” Reason noted, “requiring the state and municipalities to switch to 401(k)-style defined contribution retirement funds instead (which don’t require a vote).”

“This switch is important for spending reform because it takes governments (and taxpayers) off the hook for a guaranteed return. Governments would be providing all their contributions at the front end and would not be obligated to make up for any below-expected returns from these funds like they would with a pension.”

Analysts have not yet determined how great a departure from the status quo future votes might entail. “The effects on collective bargaining could be dramatic,” wrote Orange County columnist Teri Sforza. “And due to the less-generous retirement benefits that would likely emerge, governments would face pressure to increase other elements of compensation to attract and retain workers.” Like other measures that have passed through California’s initiative process, this one would put Golden Staters’ appreciation for direct democracy to the test.

A long road

“Reformers have backed statewide initiatives before,” as U-T San Diego columnist Steven Greenhut noted. “But titles and summaries issued by the attorney general have been criticized as biased. Voters who sign petitions tend only to read those short descriptions, so biased ones can be the death knell. Reformers even attempted a county-by-county approach, but the first test case, in Ventura County, was kept off the ballot by a judge.”

As the San Jose Mercury News noted, Reed and DeMaio both “led 2012 campaigns for local measures to trim city retirement plans whose soaring costs were devouring funds for city programs and services. Voters overwhelmingly approved San Jose’s Measure B and San Diego’s Proposition B that year. But government employee unions have leveled legal challenges to overturn them.” The experience inspired the team to introduce a measure that would simply “subject many pension enhancements to a vote of the people,” according to Greenhut. “It applies mostly to new hires — and to every local, regional or state government entity.”

Dramatic changes envisioned

But the simplicity of the approach would lead to potentially dramatic changes in the way California handles the existence of pensions, not just the creeping increases that have long been associated with them. “If the proposed ‘Voter Empowerment Act’ qualifies for the ballot and voters approve it in November 2016, cities across California would need voter approval to continue offering pensions beyond 2019. Otherwise, they would have to offer new employees 401(k)-style plans like those available from private employers,” according to the Mercury News.

Dueling trend lines

Although local government employment rolls have taken a substantial dip, in the high five figures, pension agreements have ensured that the cost of those employees has continued to rise. “Today, the main pension plans for state workers and teachers in California are about $190 billion short of what workers have been promised in benefits, despite the Dow Jones Industrial Average having nearly tripled in value since its March 2009 nadir,” the Weekly Standard observed.

“The cost of government has not declined, nor have continuing budget imbalances made cities, counties, and school districts any more efficient. Rising pension expenditures have left taxpayers in the position of having to, in effect, pay more for past government services while getting less and less in the way of current services.”

Especially in recent years, the tab has grown daunting for many cities. “Pension contributions are among the heaviest costs shouldered by California municipalities,” the Wall Street Journal reported. “California cities are expected to make a total of $5.1 billion in contributions during fiscal 2015, accounting for nearly 7 percent of total revenue, according to the California Policy Center, which analyzed 459 municipalities. Higher contributions often mean cash-strapped cities are forced to cut services or raise taxes to cover the bill.”

The fiscal problems created by pensions have focused national attention around the Voter Empowerment Act, which poses a particularly sharp challenge to certain California unions. “CalPERS relies on contributions from governments to fund worker pensions, and it has argued those retirement benefits are guaranteed by California law and can’t be cut,” the Journal noted.

A bipartisan group of pension reform advocates, led by former San Jose Mayor Chuck Reed and former San Diego Councilman Carl DeMaio, recently filed a statewide initiative for the 2016 ballot that would give voters a direct say on pension benefits. Dubbed the “Voter Empowerment Act of 2016,” the initiative would amend the state constitution to require voter approval of any new defined benefit retirement plans and place a 50 percent cap on government subsidies of retirement benefits provided to government employees.

“California’s politicians have chosen tax hikes and draconian service cuts to divert taxpayer money for unsustainable and indefensible government pension payouts, which is exactly why we must empower voters with this initiative to get reform done,” DeMaio said in a press release announcing the measure.

Voter Empowerment Act of 2016

In recent years, pension reform measures at the local level have been repeatedly stymied by the courts. After San Jose voters overwhelmingly approved a pension reform plan authored by Reed, a judge overturned the measure for violating the “vested rights” of public employees.

Under what’s been called the “California rule,” public employees have a constitutional right “not only to the amount of public employees’ pensions that has been earned by past service, but also to employees’ right to keep earning a pension based on rules that are at least as generous for as long as they stay employed.”

Last year, Ventura County taxpayers gathered thousands of signatures for a pension reform measure to have the county opt-out of the current defined-benefit system and replace it with a new 401k style plan. However, Ventura County District Court Judge Kent Kellegrew ruled that voters couldn’t vote to leave a pension system created by the state.

“This court concludes that the initiative process cannot be used for such a process,” the Ventura County decision stated.

That decision spurred Reed and DeMaio’s measure, which explicitly grants voters the power to decide pensions.

“State and local politicians, government agencies, and courts have blocked common-sense efforts to address this financial crisis,” the measure states. “Consequently, the need to empower voters and clarify their rights with respect to compensation and retirement benefits for government employees is a matter of statewide concern.”

The four major provisions of the proposed state constitutional amendment, which would take effect in 2019, include:

1. Requiring voter approval of any defined benefit pensions for new government employees;
2. Requiring voter approval of any increase in pensions for existing government employees;
3. Prohibiting any taxpayer subsidy of government retirement benefits in excess of 50 percent of the cost – unless voters expressly approve a higher contribution;
4. Prohibiting  politicians and government agencies from delaying, impeding, or challenging any voter-approved state and local ballot measures regarding compensation and retirement benefits.

With those provisions, governments would default to 401k style plans that would not require voter approval.

Rising Pension Obligations

By engaging voters in the pension decision-making process, the group hopes to contain the state’s growing pension liability. Proponents of the “Voter Empowerment Act of 2016” point to independent numbers which show the state’s pension liabilities have increased 3,000 percent in a decade. Last November, then-State Controller John Chiang (now state treasurer) pegged the state’s total unfunded pension liability from 130 public pension systems at $198 billion, a dramatic increase from just $6.3 billion in 2003.

“The cost of public employee pension benefits continues to skyrocket across California, crowding out funding for important services such as police, fire, schools and road repairs,” Reed said.

Other local leaders that will help Reed and DeMaio collect 585,407 valid signatures include, former San Bernardino Mayor Pat Morris, Anaheim Mayor Tom Tait, former Vallejo Vice Mayor Stephanie Gomes, and Pacific Grove Mayor Bill Kampe.

Ballot title and summary obstacles

Before the measure can make the ballot, it must clear the ballot title and summary phase. Last year, while DeMaio was preoccupied with his campaign for Congress against Rep. Scott Peters, Reed unsuccessfully tried to qualify a similar statewide pension reform measure. However, that effort stalled during the qualification stage over a dispute with Attorney General Kamala Harris over wording for the title and summary.

In addition to clearing the title summary hurdle, the proposed constitutional amendment will face intense opposition from hundreds of thousands of public employees affected by the measure. The law would apply to all state and local government agencies, including special districts, counties, cities, school districts and both state university systems. Employees are prepared for a fight.

“It’s exactly what we expected,” Steve Maviglio, a prominent Democratic consultant said, according to CalPensions.com. “It’s fraught with flaws, potential major implications for both existing and future employees and will likely result in years of litigation.”

The full initiative is available here.

Former San Diego City Councilman Carl DeMaio and former San Jose Mayor Chuck Reed, both of whom successfully passed pension reform in their respective cities during their time in office, announced Wednesday their plans to work together on a statewide pension reform measure for the 2016 ballot. Reformers hope to take advantage of easier ballot measure qualifying rules that require the lowest number of signatures in decades.

“Without serious pension reform in California, we face a future of cuts to important services and more tax revenues diverted to unsustainable pension payments,” Reed, a Democrat, said in a press release announcing the effort.

The group points to independent numbers which show the state’s pension liabilities have increased 3,000 percent in a decade. Last November, then-State Controller John Chiang (now state treasurer) pegged the state’s total unfunded pension liability from 130 public pension systems at $198 billion, a dramatic increase from just $6.3 billion in 2003.

Redux of San Diego pension reform fight

Last year, while DeMaio was preoccupied with his campaign for Congress against Rep. Scott Peters, Reed unsuccessfully tried to qualify a similar statewide pension reform measure. However, that effort stalled during the qualification stage over a dispute with Attorney General Kamala Harris over wording for the title and summary. This time around, he’ll benefit from DeMaio’s experience as a grizzled veteran of ballot-measure shenanigans.

“We have done a lot of legal work to make sure this initiative is bulletproof,” DeMaio, a Republican, told Reuters. “Because the unions are going to throw the kitchen sink at us.”

DeMaio knows full well the extent to which organized labor will go to thwart pension reform. In 2011, he led the effort to qualify San Diego’s Comprehensive Pension Reform measure for the 2012 ballot. The CPR measure forced all new employees into a 401(k)-style plan and capped contribution levels for current employees.

Labor organizers deployed activists to block signature gatherers and frighten potential signatories with misleading claims that signing would put them at risk of identity theft. At the time, longtime San Diego political operative T.J. Zane, who now serves as executive director of the San Diego Republican Party, described the San Diego-Imperial Counties Labor Council’s signature-blocking efforts as “unprecedented in its scope and ferocity.”

After the measure qualified for the ballot, San Diego voters overwhelmingly passed Proposition B in June 2012 by a two-to-one margin.

Chuck Reed: Pension reform in San Jose

At the same time DeMaio was reforming pensions in San Diego, Reed, then-mayor of San Jose, was leading a similar effort in Silicon Valley. Reed’s Measure B passed by an even larger margin: 70 percent to 30 percent. The Wall Street Journal praised Reed’s efforts and described him as “that rare creature, a Democrat in a liberal bastion who is nonetheless focused on salvaging government finances while inviting the wrath of public unions and their political allies.”

Ultimately, courts effectively gutted the most important provisions of Reed’s measure.

“San Jose’s was the most far-reaching, in that it challenged the core obstacle to serious pension reform in California,” Steven Greenhut, one of the state’s leading experts on pension reform, wrote at City Journal. “But a Santa Clara County Superior Court judge gutted the reform measure, saying San Jose could cut its employees’ pay, but not their pension benefits.”

Even after the negative court rulings, Reed’s successor has begun to further distance the city from Measure B in a bid to make “peace in the city’s pension wars.”

Broad-based coalition for reform

The proposed statewide pension measure for 2016 already has received some harsh criticism as the work of two washed-up politicians.

“2 out-of-work pols @carldemaio & Chuck Reed plan to attack @CalPERS, retirees with #pension measure in 2016,” tweeted Democratic political consultant Steven Maviglio. CalPERS is the California Public Employees’ Retirement System, America’s largest public-pension system.

In anticipation of push-back from local governments, state pension funds and organized labor, Reed and DeMaio have made it a point to build a broad-based coalition that sets aside their different political parties.  The coalition also will include David Grau of the Ventura County Taxpayers Association. Last year, after collecting thousands of signatures, Ventura County’s pension reform proposal was removed from the ballot, according to CalPensions.com.

“CalPERS has dedicated itself to preserving the status quo and making it difficult for anybody to reform pensions,” Reed recently said of the effort. “This is one way to take on CalPERS, and yes, CalPERS will push back.”

It’s unclear whether the proposed ballot measure will be drafted as a statute, which requires 365,880 valid signatures, or a constitutional amendment, which requires 585,407 valid signatures.

For most Americans, it’s tempting to live in denial or outright fantasyland when it comes to paying for retirement.

That’s because doing the math evokes less-pleasant emotions like fear, anger or hopelessness.

Social Security, which replaces just 40 percent of the average earner’s paycheck upon retirement, is running out of money. The median household savings rate is zero. And half of workers have no pension or 401(k) account.

There’s just no way around the math. As a group, Americans have three choices: Spend less, work longer, or accept being poorer in retirement.

He’s not talking, yet, of government pensions, but what the rest of us will have to put up with. Years of slow or no economic growth, combined with the retirement of the massive Baby Boom generation — which didn’t have enough kids to replace itself — make all the actuarial tables look bad.

Combine that with the Federal Reserve Board keeping interest rates at zero percent (so federal debt is cheap; and money is forced into stocks), meaning it’s pointless to save in a bank passbook account as most people used to — and you have the makings of retirement disaster.

Public pensions

Then there are the government-worker pensions:

Yet this dire tableau is worse than it looks, because most public pensions are in the same shape as the average worker — under-saved and overcommitted.

The difference is that pensions are guaranteed by taxpayers under California’s constitution (and those of 11 other states).

Thus a poverty spiral looms: As workers fail to stash enough cash for their own retirements, they face growing claims on income from local governments.

To see how this works, consider the plight of a San Diego household.

Officially, the pension system for city workers and retirees was underfunded by $1.54 billion as of June 30, while the county’s unfunded liability was $2.32 billion.

When you carve out city residents’ share of the county total, this combined shortfall equates to $5,400 per household.

Paycheck deductions from public workers will help, but the bulk of this responsibility falls on taxpayers.

Right. As outgoing San Jose Mayor Chuck Reed has quipped, eventually the pension payments will loom so large that all current city employees will be cut in his city but one: a person who sends out the pension checks.

BK

I think, eventually, this situation will reach a boiling point. The services will be cut so much, and taxes raised so high, people just won’t take it.

So far bankrupt cities have worked out pension deals with CalPERS to keep the contributions going — with the cuts coming to city services. But that can’t last forever. Indeed, Vallejo, which went BK in 2008, already is at risk again for another BK because of its “pricey pensions.”

Whether the state constitution says the pensions must be paid, or not, eventually there will be no money to pay them in full.

Instead it has flirted with bankruptcy because of its burgeoning pension problem — a problem that already was the major cause of the bankruptcies of Vallejo, San Bernardino and Stockton. The pension problem, as everywhere, was caused by the irresponsible pension spiking of 1999-01.

Enter Mayor Chuck Reed. A Democrat, he valiantly struggled with the problem, passing the Measure B in 2012 with 69 percent of the vote. It is being challenged in court by grasping unions.

Term limits are forcing Reed to leave. But Sam Liccardo, who backs Reed’s reforms, just was elected to succeed him — in the teeth of vicious union opposition.

Reed failed to place a pension reform initiative on the statewide ballot this November after Attorney General Kamala Harris forced on the initiative an incredibly biased title and summary. He says he’s going to keep pushing reform, including a possible 2016 initiative.

It wouldn’t surprise me if he ran for governor in 2018. After all, the problem only is going to get worse. And Harris’ anti-reform stance could come back to haunt her in her own bid for the higher office.