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The pension clock is ticking
Brown wants 'something real' in the way of reform, but he isn't conveying a sense of urgency in resolving the complex issues.
George Skelton
Capitol Journal
January 23, 2012
It's the norm in January: After the governor proposes a new budget and
delivers his State of the State address, legislators slide into hibernation
until spring.
Oh, there's some rustling around in the dens — a few committee hearings,
brief floor sessions — but no strenuous activity, no risk taking until May, when
deadlines sprout and the governor revises his budget proposal.
Not every year follows that pattern — last March, the governor and the
Legislature made sharp spending cuts — but winter 2012 has all the signs of the
rhythmic long nap.
So it's not surprising that there seems to be a look of lethargy among
legislators concerning the sensitive issue of public employee pensions.
We're being told to be patient. Pension reform will happen. This year.
"It has to," says Senate President Pro Tem Darrell Steinberg (D-Sacramento).
"And it will. The public expects it, first of all."
And, the Democratic leader adds, "it's going to be an important part of
convincing the voters that we've done everything reasonable we can to help deal
with costs.
"Sometimes an issue is used as a wedge for political purposes, but it's a
legitimate issue nevertheless. It's amazing how political the issue of public
pensions has become."
Not really.
Over the last decade or two, companies butchered pension plans while many
governments boosted theirs outrageously. That led to inevitable outcries of
unfairness by private-sector taxpayers. Also, government pension plans face
unfunded liabilities reaching into the hundreds of billions, depending on the
study. So that's a time bomb ticking for taxpayers.
The nonpartisan Field Poll reported last month that an increasing number of
California voters are viewing state and local government pensions as "too
generous" — 41%, compared with 32% two years ago.
Another nonpartisan poll, by the Public Policy Institute of California, found
that even government workers — nearly two-thirds of them — think that they
should contribute more to their pension systems and that new hires should be
provided only 401(k)-type plans.
Actually, through collective bargaining, state and local pension plans are
starting to be rolled back for future hires, and current employees are
contributing more to their retirements.
But practically everyone in the Capitol knows a major overhaul is needed
because the current system is not sustainable fiscally or politically.
"There's a desire to do it and get it over with," Steinberg says. "But it's
going to take several months of sustained work to drill down below the ideology
and easy sound bites and to actually analyze what the various options meanc. I'd
like to get this done before the budget."
The constitutional deadline for the Legislature to pass a balanced budget is
June 15.
Gov. Jerry Brown has proposed a 12-point pension overhaul, but seems to be
telling legislators to take their time — a dangerous suggestion in
Sacramento.
"When we're dealing with a 40-year matter," the governor told a legislative
hearing on pensions last month, "you don't have to deal with it in 40 minutes or
40 days or even 40 months. We have time here."
Not much. And certainly not 40 months if Brown wants to showcase pension
reform as he urges voters in November to approve his proposed tax increases.
Brown said as much at the same committee hearing. "We have a lot of things
coming up in November," he reminded Democrats. "We've got to win the confidence
of the people."
He called the current pension system a Ponzi scheme.
Brown's plan would force most current public employees — state and local — to
pay more toward their pensions. It would trim retirement benefits for future
employees. They'd receive a hybrid mix — a reduced pension plus a 401(k) — and
their retirement ages would be raised.
Trying to change pension plans for current workers would be challenged in
court. State and local government employees have constitutional protections not
available to private sector workers.
A conservative group hopes to qualify a more sweeping pension overhaul for
the November ballot. But it hasn't decided yet between two possible proposals.
And it isn't close to raising enough money to collect the needed voter
signatures.
So that outfit isn't putting any pressure on the Legislature.
Brown didn't apply much, either, in his State of the State address,
mentioning pensions only briefly toward the end.
"Examine it. Improve it," he said of his plan. "But please take up the issue
and do something real. I am committed to pension reform because I believe there
is a real problem. Three times as many people are retiring as are entering the
workforce. The arithmetic doesn't add upc.
"Benefits, contributions and the age of retirement all have to balance. I
don't believe they do todayc. So we have to take action. And we should do it
this year."
A joint Senate-Assembly committee will meet Wednesday to discuss various
hybrid ideas. Then the committee will meet in another month to write a report —
maybe some actual bills — according to the co-chairman, Assemblyman Warren
Furutani (D-Gardena).
"Until we have some sort of [bill] language, we don't have anything," asserts
a Republican vice chairwoman, state Sen. Mimi Walters of Laguna Niguel. She
introduced a bill similar to Brown's proposal last year and it wasn't even
granted a hearing.
"I don't think Democrats are willing to do much of anything" because of union
resistance, she says. "They may do a couple of tweaks."
Furutani says the Legislature should "make small surgical fixes now with a
scalpel rather than waiting until it becomes a big political brouhaha and people
come at it with meat cleavers and sledge hammers."
It's a big brouhaha right now. And slumbering through it would look very ugly
to already angry voters.
george.skelton@latimes.com
Copyright © 2012, Los Angeles Times