Sunday, June 27, 2010
By BARRY M. HORSTMAN
Cincinnati Enquirer
Three decades after California’s landmark Proposition 13 triggered a tax revolt across America, the state may again be on the leading edge of a wave of simmering voter discontent over how skyrocketing costs for generous public pensions are battering city, county and state budgets.
In San Francisco, Bakersfield and a handful of other cities, voters this fall will decide on ballot measures that could significantly cut public pension benefits and the amount of taxpayer dollars that fund them.
Just as Proposition 13 launched a nationwide ground swell of anti-tax sentiment 32 years ago, this fall’s issues are widely seen as a template for measures that could start showing up on ballots in Ohio and other states and cities also caught in public pensions’ tightening fiscal vise.
“California’s the first out of the gate – we’re definitely watching what happens there,” said Matt Mayer, president of the Buckeye Institute for Public Policy Solutions in Columbus.
“If the Legislature and the governor fail to tackle this, we don’t care who it is, there will be people like me working the next two, four, six years to give voters a chance to address it.”
Perhaps the most closely watched pension issue on the ballot in California this fall will be a proposed charter amendment that would force San Francisco’s 26,000 public workers to contribute a larger percentage of their salaries toward pensions and also pay more for health coverage.
“Among elected officials, pension reform is the third rail of politics,” said San Francisco Public Defender Jeff Adachi, the measure’s point man. “So the serious changes needed to bring pension costs under control probably are going to have to come on the ballot, not through legislative action.”
The other proposed ballot measures in California include:
Two plans asking voters in the northern California city of Redding whether officials should pursue contract changes that would require workers to pay a share of their state pension contributions, now covered by the city, and establish minimum service lengths for retirees’ health coverage.
A proposal in Bakersfield that would reduce pension benefits for future police officers and firefighters, downgrading the current plan – under which retirees are eligible for 3 percent of their final salary for every year worked starting at age 50.
An initiative in Menlo Park that would shrink pension costs by creating a two-tier benefits system for future non-police city workers.
An unusual approach in the suburban Los Angeles community of Monrovia to cut off a major source of funding for pensions, now fully paid for by the city without any worker contributions, by abolishing a 60-year-old property tax. Because the city still would be responsible for pension benefits, officials warn that the initiative could force service cuts to pay for retirement costs.
Although municipalities’ retirement costs increasingly are cutting into basic services, officeholders often are reluctant to take on politically potent unions in curtailing benefits that usually far exceed those in the private sector. As a result, the ballot is seen as the most direct path to change.
“People everywhere are looking at public pensions and starting to catch on,” said San Francisco Supervisor Sean Elsbernd. “If unions remain obstinate with this we’re-not-giving-in attitude, the voting public will put two and two together and begin to see why potholes aren’t being filled, why rec centers are closed two days a week, why libraries aren’t open.”
Since 2005, San Francisco’s annual cost for current and retired workers’ pensions and health care has soared from $419 million to an estimated $1.2 billion in fiscal 2010-11. Without changes, that figure could double within five years, according to city projections.
This month, San Francisco voters took a step to rein in future costs, overwhelmingly approving Proposition D, an Elsbernd-sponsored measure that will increase pension contributions for newly hired public safety workers from 7.5 percent to 9 percent of their salaries. It also creates a new formula under which benefits, now based on an employee’s highest annual salary, will be determined from the two top years’ average, an effort to minimize end-of-career pension “spiking” through overtime and other means.
“It doesn’t solve the problem, but it’s a baby step in the right direction,” Elsbernd said, noting that Proposition D will affect only future employees.
In contrast, Adachi’s proposal, Elsbernd said, “is an adult step” that would raise current workers’ yearly pension contribution, now capped for most at 7.5 percent, to 9 to 10 percent, and increase their health-insurance payments from the present 25 percent of cost to 50 percent. The plan, supporters say, would save taxpayers $170 million a year.
Adachi argues that his proposed “Sustainable City Employee Benefits Reform Act” is a good deal not just for taxpayers, but for city employees as well. “Our current pension payments clearly aren’t sustainable,” he said. “If we don’t take action, there will be more layoffs … and more budget cuts, ending in the train wreck we’re already seeing.”
In Bakersfield, City Councilman Zack Scrivner offers a similar sell for his proposed reduction in future police and fire pensions.
“Even if this is approved, the benefits still will be incredibly generous,” Scrivner said. “Besides, we shouldn’t be arguing about which group deserves what level of benefits. The discussion should be about what we can afford.”
The local police and fire unions, though, don’t see it that way. Both view the ballot measure as an attempt to circumvent collective bargaining procedures that would leave Bakersfield at a competitive disadvantage in attracting and retaining quality employees.
“I don’t know that I buy into this non-sustainable argument you always hear,” said Todd Dickson, president of the Bakersfield Police Officers Association. “You could say that about any number of programs. We’ve already made concessions on pay and our health plan. All we have left is this decent retirement program.”
Though backers of most of the ballot measures believe voters will be in a mood to bring cushy public retirement plans more in line with private pensions, law enforcement officials in Riverside County hope voters will help them protect existing benefits.
Under an initiative backed by the Riverside Sheriff’s Association, the county, which includes Palm Springs and other desert communities, could not change the current plan for public-safety workers without voters’ approval.
Supervisors, who complain that the initiative would restrict the county’s fiscal flexibility, plan to combat it in a typically California fashion – with a ballot measure of their own.