By Joel Fox | Pension reform is headed to the voters via initiative, and if successful, any future pension decisions will remain in the voters’ hands.
The bi-partisan initiative filed by former Democratic San Jose Mayor Chuck Reed and former Republican San Diego City Councilman Carl DeMaio proposes that voters have a say on any changes or increases to public employee pension plans. The proponents hope to mirror the success both had while in office when they each successfully promoted pension reforms in their cities. In both cases, public employee unions sued after the measures passed.
Trusting the voters to make decisions on complicated pension plans carries a risk. If the decision on any reform proposal is made at the ballot box that means political campaigns will emerge to support or defeat the proposals. Those fights could be decidedly one-sided. Public employee unions maintain a war chest for these sorts of fights. Raising money to pass a reform will not be easy when individuals and businesses are faced with opposition from organized groups carrying the banners of police, firefighters and teachers.
However, DeMaio and Reed are counting on the fact that they have been successful in rallying the voters to their cause in their own cities despite the opposition from powerful unions.
Can they repeat that success statewide?
The opposition will be fierce. But voters looking at the numbers could be swayed. Reed makes the argument that, “The cost of public employee pension benefits continues to skyrocket across California, crowding out funding for important services such as police, fire, schools, and road repairs.”
The initiative proponents cite the growth of pension debt from $6.3 billion in 2003 to $198 billion in 2013.
To name a couple of examples, a decade ago the City of Los Angeles set aside 3-percent of its budget to take care of pensions. Today, the figure is closer to 20-percent. That pension liability does put a squeeze on city services.
Part of the recent deal between Gov. Jerry Brown and UC President Janet Napolitano to prevent university tuition increases was for the state to help cover the university’s pension cost with a three-year infusion of over $400-million.
If no fixes are found for exploding pension costs, taxpayers will be on the hook. Given the results of the PPIC poll released yesterday, taxpayers seem in no mood to raise taxes.
The squeeze on services because of pension liabilities is real. Is that issue powerful enough to override the fierce opposition and revenue reserves of those who would fight this initiative reform?
Joel Fox is editor of Fox & Hounds and president of the Small Business Action Committee.