Opportunities for government reform are about as rare and needed in California as rain. So it’s a pity that public unions are trying to block a promising ballot initiative that could end defined-benefit pensions and save taxpayers billions of dollars.
Earlier this summer San Jose’s former Democratic mayor Chuck Reed proposed a referendum for the November 2016 ballot that would require governments to obtain voter approval to continue defined-benefit pensions for new workers after 2019. Voter approval would also be necessary to boost pensions for existing employees or to subsidize more than 50% of the cost for new worker retirement benefits. Notably, the initiative would be California Public Employees’ Retirement System (Calpers) tamper-proof.
In the past Calpers has threatened to impose punitive “termination fees” on local governments that propose modifying worker pensions. The pension shark threatened to bite the bankrupt city of Stockton with a $1.6 billion fee—nearly eight times its $211 million unfunded liability—if it scaled back current workers’ unearned benefits. Calpers has also threatened litigation to head off reforms.
Mr. Reed’s initiative would require retirement boards “to fully and faithfully implement” voter-approved pension reforms, and it bars Calpers from imposing financial penalties on government employers that propose closing their defined-benefit plans.
Not surprisingly, Calpers is pre-emptively campaigning against Mr. Reed’s initiative. Assemblyman Rob Bonta, who chairs a key committee in the California legislature, last month requested a legal analysis of the initiative from Calpers. This invitation for self-dealing would be akin to the Federal Election Commission soliciting Democratic opinion about Republican compliance with campaign-finance laws.
Calpers CEO Anne Stausboll warned in response that the referendum could “threaten the system’s tax exempt status” and “make providing death or disability benefits extremely impracticable.” Ms. Stausboll also suggests that the initiative could allow voters to cut current workers’ future benefits and “it is not clear whether such a retroactive impact would be legal.” Only in the world of public unions is scaling back future benefits considered “retroactive.” The CEO’s claims are particularly incongruent since the measure explicitly states that it would not limit disability or death benefits or alter current workers’ benefits for past work.
The letter appears to be a test-run for the political attacks unions are likely to wage should Mr. Reed’s initiative qualify for the ballot. All the more reason for reformers to make sure it’s presented to voters.
Source: The Wall Street Journal