City Pension Votes Should Boost Jerry Brown’s Plan
Posted Jun. 23, 2012, 1:47 am
Tom Elias / Mirror Columnist
If there was one message that went out strongly from the early June votes on local pension changes in San Jose and San Diego, it was this: Private sector workers are tired of seeing six-figure pensions go to some public employees while their own pensions are steadily cut or become increasingly uncertain.
Some might call this envy, and in a way it is. But the more realistic way to look at those votes is that they are a logical reaction to the reversal of some traditional assumptions.
They should also be a boost for Gov. Jerry Brown’s pension proposals for state employees, even if some conservatives have chosen to interpret the results differently.
The presumption for many decades was that civil servants and other workers on the public payroll enjoy more job security than most persons who work for private companies. There was little risk of them ever getting fired or laid off because unlike private businesses, governments could never go broke so long as they had the power to tax. The tradeoff for that was lower salaries for public employees than those in private companies, and lower pensions, too.
Much of this equation has gone by the boards. State and local governments have little power to tax anymore, because the 1978 Proposition 13 demands a two-thirds popular vote to approve almost all new local levies and a two-thirds legislative vote for new state taxes. Government workers have been laid off in droves over the last few years. Hundreds of thousands in California alone.
Meanwhile, the rich pensions and higher pay private industry offered through much of the 20th Century began eroding significantly even before the 21st century began. Most definitive pension plans have disappeared for new private hires. Workers who used to get them now usually receive 401(k) plans that make retirement benefits subject to the vagaries of the stock market. But private sector jobs overall remain less secure than government work and public employees now often draw better pay and benefits.
This was the background to the public employee pension votes held in usually conservative San Diego and generally liberal San Jose.
In San Jose, where pensions made up more than 20 percent of the latest budget, almost 70 percent of voters approved a plan imposing on public workers the choice between boosting their own contributions to pensions up to 13 percent of their pay, a jump from the current range of 5 percent to 11 percent, or switching to a lower-cost plan with reduced eventual benefits. To bowdlerize the old oil filter ad, public workers have been told they can pay more now or get less later.
In San Diego, voters eliminated definitive pensions for all new city workers except police, substituting a 401(k)-style program. San Diego also froze “pensionable” pay levels for five years.
Voters, said Democratic San Jose Mayor Chuck Reed, “understand the connection between skyrocketing pensions and the cuts in services we’ve suffered.”
All this was taken by some as a shot across Brown’s bow, since public employee bargaining rights increased considerably when he was governor in the 1970s.
That’s a skewed view. For Brown, as often, was way out in front on this issue. As early as last January, he issued a 12-point program of proposed pension changes that would put new state employees into partial 401(k)-style plans involving some market risk, while also asking state workers to increase contributions to their pensions. Republican state legislators have accepted that plan, but not Brown's fellow Democrats.
After the June vote, though, there were no I-told-you-so’s from Brown, much of whose electoral support in 2010 came from public employee unions. “The pension vote in San Jose, which is a more liberal city than the state as a whole, is a very powerful signal that pension reform is an imperative,” he said in a video interview. “…people should have confidence that pensions and their reform are on the agenda, right at the top.”
We will shortly know about that. The Legislature has only until the end of the month to place a measure on the November ballot to make at least some of the changes Brown’s seeks.
But Democratic legislators who control both the state Assembly and Senate so far evince none of the urgency Brown conveys, nor have they acknowledged that the San Jose and San Diego votes, not to mention the failure of the recall vote against Wisconsin’s governor, have wider implications.
That’s an ostrich approach. Yes, some lawmakers say they plan to get pension reform done by the end of the current legislative session. That’s not soon enough. The magnitude of the margins in the two big cities demonstrated that voters feel great urgency about restoring equity between public and private sector workers. And legislators had better listen, or those in competitive contests this fall could feel heavy consequences.