A week of further examination of A.B. 340 — the pension reform package passed by the State Legislature — shows gaping holes that should leave Californians disappointed with their leaders in Sacramento.
Last week, this page said it was a step toward reform, though it left out a key element of Brown’s original 12-point proposal, the provision to replace part of retirees’ traditional pensions with a 401(k)-style plan.
But it has become clear that, in the minds of state leaders, this is not just a step.
Lawmakers seem to think they are finished with pension reform, though they have done nothing to change the pension system for current employees. They have done nothing to address the spiraling cost of retirees’ health-care benefits. They have done nothing to address potential conflicts of interest in the retirement system’s governing board — some members of which are beneficiaries of the system.
But what should make Californians most unhappy is that the whole thing is not protected against the possibility that, even after Brown signs it into law, it could be repealed at some future date.
On further reflection, this plan smells bad.
Not only did state lawmakers pass a package of meager changes in the public- employee retirement system. They tried to pass it off as a true overhaul, a sign of responsible fiscal stewardship, and a reason to entrust them with more money by voting for the Proposition 30 tax hikes.
It is virtually nothing of the sort. We say “virtually” because the bill negotiated in the final week of the legislative session by Democratic legislators and Brown did get a few things right.
Assembly Bill 340, introduced by Assemblyman Warren Furutani of Long Beach, increases the retirement age for new employees, raises the amount some employees must contribute, puts limits on annual payments and prevents maddening abuses like pension spiking.
Announcing the package early last week, leaders touted the tens of billions of dollars these changes could save the state in the next few decades.
What they didn’t emphasize was that pensions are a hundreds-of-billions-of-dollars kind of problem, and these fixes represent a drop in the bucket.
The bill was negotiated in a fog of politics.
Looking back at their history, Democrats probably never should have been expected to pass pension reforms serious enough to take big money out of the pockets of their backers in the labor unions.
And looking forward to the November election, Democrats probably should have been expected to act as if a good start toward pension reform constituted a finished product.
Many voters have been ready to make a trade-off: They would be willing to vote for Brown’s Proposition 30, temporarily raising taxes on high incomes and the sales tax for all in order to bring in $6.8 billion to $9 billion a year to help balance the state budget. But only if elected officials demonstrated fiscal responsibility by passing meaningful pension reform.
Assuming Brown signs A.B. 340 — it’s unrealistic to expect him not to — he and other Democrats must explain why this is not woefully short of real reform and why voters should expect anything better from the next Legislature.
They will face harsh reaction from officials of many cities. The bill does not apply to charter cities that have their own retirement systems, such as Los Angeles. But it does affect the retirement plans of charter cities that are members of the California Public Employees’ Retirement System, of which Pasadena is one.
Are voters going to have to do this themselves all over the state? As voters in San Diego and San Jose demonstrated in June, the will is there.
If only that will extended to the state Capitol in Sacramento. What the governor and lawmakers produced last week was pension reform in name only.
