Pension Reform and the Not So Progressive Kamala Harris

LA WATCHDOG--“You can’t be a progressive and be opposed to pension reform,” Gina Raimondo told Rhode Island voters in 2010 when she was running for State Treasurer.  

Raimondo is now the Governor of the very blue state of Rhode Island despite the vehement opposition of the leadership of the public sector unions who opposed her successful reform of the state’s seriously underfunded pension plan.   

Unfortunately, State Attorney General Kamala Harris did not receive that message as she has written a biased summary of the “Voter Empowerment Act of 2016,” a proposed ballot to overhaul the State’s underfunded public pension plans. 

Under the proposed bipartisan ballot measure sponsored by Chuck Reed, the Democratic Mayor of San Jose, and Carl DeMaio, a former Republican city councilman in San Diego, voters would be required to approve any enhancements in a defined benefit pension plan and the admission of any new government employees into a defined benefit plan.  Furthermore, government employers would not be able to pay more than half of the retirement costs (including those for unfunded liabilities) unless the voters approve higher contributions.  

But Harris’ opening sentence of her summary of the ballot measure is hardly impartial as it does not propose to eliminate retirement benefits for existing public sector employees whose contracted rights are protected by numerous court decisions. 

“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.”

The Legislative Analyst’s Office (“LAO”) report on the “Voter Empowerment Act of 2016” that was filed in June fails to detail the financial issues associated with the State’s pension and post-retirement medical plans. While the LAO mentions that the unfunded pension liabilities are in the range of “hundreds of billions of dollars,” there are no supporting details.  Nor does the LAO discuss how contributions have almost tripled over the last ten years, from $6.4 billion to $17.5 billion in 2013, “crowding out” necessary services.   

For example, if pension contributions had remained at a reasonable level instead of ballooning 10% per year, our roads could have been maintained and repaired, eliminating the need for a multibillion dollar bump in our gasoline tax. 

The “nonpartisan” LAO also failed to outline some of the draconian impacts of the more than $300 billion in unfunded pension liabilities.  CalSTRS (the California State Teachers’ Retirement System) will require an additional $170 billion over the next 30 years.  CalPERS (the California Public Employees’ Retirement System) is anticipating raising its annual contribution rates by 50% over the next five years.  And the University of California proposed increasing tuition by 25% to cover its pension and other retirement obligations. 

While we are numb to the billions in pension obligations being tossed around, each of the 4 million citizens of the City Los Angeles is on the hook for over $16,000 in retirement liabilities for the State ($8,000), County ($5,000), and City ($3,000). Or for a family of four, over $65,000.  

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Critics of this pension reform claim that the proposed ballot measure will eviscerate collective bargaining.  But Californians know that labor negotiations are riddled with conflicts of interest as the public unions are across the table from politicians whose campaigns were financed by the very same unions. 

Rather than litigate Harris’ wording for the title and summary of the “Voter Empowerment Act of 2016,” Reed and DeMaio filed two new, simplified ballot measures earlier this week.  

The revised “Voter Empowerment Act of 2016” would “require voter approval to provide defined benefits pensions to new government employees, enhance pension benefits for any government employee in a defined benefit plan, and provide a subsidiary of more than 50% of the total cost of retirement benefits for new employees.”  

The Government Pension Cap Act of 2016 would “cap the amount of government costs for new employee retirement benefits at 11% of pay (13% for public safety employees), regardless of the type of plan.  New employees would bear the responsibility for costs above the cap.”

Harris, a candidate to replace US Senator Barbara Boxer, will no doubt slant the official title and summary in order to gain union support. But given the simplicity of these two ballot measures, her title and summary may be revised by the courts. 

Pension reform by the ballot box will be a blood bath as the public sector unions are adamantly opposed to pension reform.  They will wage an unrelenting and expensive campaign to defeat these measures, including trying to sabotage the signature gathering process that is necessary to place reform on the ballot.  

Like the 70% of the voters in San Jose and San Diego that voted for pension reform, Californians will realize that overhauling the State’s retirement systems is in their best interest.

 

(Jack Humphreville writes LA Watchdog for CityWatch. He is the President of the DWP Advocacy Committee and a member of the Greater Wilshire Neighborhood Council.  Humphreville is the publisher of the Recycler Classifieds -- www.recycler.com. He can be reached at:  [email protected])

 

 

CityWatch

Vol 13 Issue 82

Pub: Oct 9, 2015