The politics and perils of public pensions
The dispute over California public employee payouts is growing. Republicans
blame Democrats, who see the problem but fear alienating labor.
George Skelton
Capitol Journal
April 29, 2010
No question: California public employee pensions are a big problem —
especially for Democratic politicians.
Republicans pound them on the
issue, claiming it's emblematic of the majority party's extravagant spending and
subservience to patron labor unions.
Voters lean toward the Republican
side. A Field Poll in October found strong sentiment for reducing retirement
benefits for future state and local government employees.
In fact, 56%
believed the pension system should be scrapped entirely and replaced with a
401(k)-type retirement savings plan for new hires. That's also favored by both
Republican candidates for governor, Meg Whitman and Insurance Commissioner Steve
Poizner, although they'd allow public-safety employees to keep their
pensions.
Field Poll Director Mark DiCamillo says that public retirement
benefits are "becoming a bigger deal" for voters as the state budget deficit
seems to get more intractable.
"Most voters think they can have their
cake and eat it too," DiCamillo says. "They think cuts in basic services can be
avoided if there are eliminations of waste and inefficiencies. And under that
umbrella, in voters' minds, are some of the higher end public
pensions."
Even Democrats who agree that pension "reforms" are needed —
and many do — are skittish about losing labor support, particularly in an
election year.
State Atty. Gen. Jerry Brown is one Democrat in a
particular dilemma.
The gubernatorial candidate is in a unique position
to lead the way toward less generous state retirement benefits, if elected.
That's because as governor in the 1970s, Brown empowered public employees in the
first place with collective bargaining rights. So he could pull off a "Nixon
goes to China" move on pensions.
To signal that intention during the
gubernatorial campaign would cast him as "fiscally prudent" and shroud the image
of a "tax and spend liberal" that Republicans already are drawing. Brown,
however, is heavily dependent on unions, not merely for campaign money but for
thousands of volunteer ground troops. He can't afford for labor to turn cold on
him as he runs against a mega-rich, self-financing GOP opponent, most likely
former EBay chief Whitman.
That's probably why Brown seems to be saying
less and less about the volatile issue.
A year ago he was fairly candid.
"One cannot be a Democratic candidate without having good relationships with
public-sector unions," Brown said in an interview. "That's a fact."
But
he added that the unions "are going to have to come around" and help solve the
budget crises of state and local governments. They've "been asking more of
government than the voters can be convinced to finance," he said. "That's a
fundamental problem. They're going to have to start contributing more" to their
pensions.
Two months ago, as he formally announced his candidacy, Brown
told me that "the unions will have to rise to the occasion like everyone else."
Wages and benefits, he said, "have to be adjusted to fit economic times. We're
going to have to look at every aspect of state spending."
But recently,
as both the issue and the campaign have heated up, Brown merely has been saying
that government has to make sure public retirement benefits "are actuarially
sound."
Of course, that's truly the pertinent policy question.
Republicans contend that the benefits are "unsustainable." Democrats say: "Not
so fast. We're not sure." And the big California Public Employees' Retirement
System flatly denies it's in trouble.
But CalPERS has been infamously
wrong before. Back in 1999, when then-Gov. Gray Davis negotiated an overly
generous retirement boost for public employees and the Democratic Legislature
signed off, CalPERS contended that state costs would not increase for "at least
the next decade."
Depending on whose figures you use, costs have
ballooned 2,000% or merely doubled.
The 2,000% is in actual dollars but
starts from an extremely low base: when the stock market was booming and the
pension fund didn't need state contributions. The doubling represents the state
contribution per average worker salary, starting from the fiscal year that
CalPERS was referring to: 1998-99.
Whatever. Gov. Arnold Schwarzenegger
calls it "the single biggest threat to the fiscal health and to California's
future." He advocates returning the pension system to its pre-1999 structure for
new employees.
The governor supports a similar, but slightly different
proposal by state Senate Republican leader Dennis Hollingsworth of
Murrieta.
It would raise the full retirement age for most state workers
to 65. It's now 62. CHP officers, firefighters and prison guards would have to
wait until 57 instead of only 50.
Everyone's retirement pay would be
reduced.
"This will require some fortitude," Hollingsworth says of his
legislation. "It will require legislators to tell people eNo.' "
But
Democrats say this is an issue for collective bargaining between the governor
and the unions. The governor's negotiators respond that they're trying, but the
unions are inclined to sit back and depend on Democratic
protection.
"It's like trying to date somebody who doesn't want to go out
with you," says Lynelle Jolley, spokesperson for the Department of Personnel
Administration, the negotiating agency. "You can send them chocolates and
flowers, but if they don't want to date you, it doesn't
matter."
Democrats also contend this is mostly about politics.
But
even if the pensions are sustainable fiscally — a doubtful premise — they're
certainly not politically. There's too much pension envy out there in the
private sector. And it's a political problem Democrats should remedy.
george.skelton@latimes.com
Copyright © 2010, The Los Angeles Times