November 4, 2010

By Ed Mendel

Voters approved seven ballot measures Tuesday aimed at curbing or reducing local public pension costs. Only the rejection of a measure in labor-friendly San Francisco averted a clean sweep.

Public employee unions opposed the measures, often supported by business groups. Officials who voted to put the measures on the ballot, or led the campaigns, risked the wrath of powerful unions in their own future election campaigns.

The reformer victories came amid national concern that the growing cost of taxpayer-guaranteed public employee retirement benefits is eating up government budgets, threatening funding for other programs.

Retirement costs jumped sharply after the stock market crash two years ago. Big holes were punched in pension investment funds expected to pay most future obligations. Now government employer costs are going up to cover the losses.

A number of unions have agreed to cost-cutting measures. Workers will pay more toward their pensions, and new hires get lower pensions. The courts say pensions promised current workers can’t be cut.

In what may be a first, Bakersfield voters bypassed collective bargaining and approved a lower pension formula for new city hires. Vice Mayor Zack Scrivner led the drive for Measure D after several years of impasse with police and firefighter unions.

A Menlo Park initiative reinforces a lower formula for new hires imposed by the city council, preventing future changes without voter approval. Citizens gathered signatures to place Measure L on the ballot, which does not apply to police.

Measures that authorize elected officials to give new employees lower pensions, without specifying a formula, were among dual pension measures approved by voters in San Jose and Riverside County.

San Jose Mayor Chuck Reed led the drive for Measure W, allowing lower benefits for new hires. He said city general fund revenue increased 21 percent during the last decade, while the average cost per employee went up 87 percent.

Many of the cost-cutting pension measures and agreements rollback a wave of pension increases a decade ago, when investment funds were flush. The California Public Employees Retirement System led the way with SB 400, an increase for state workers.

“They thought the stock market would keep going up forever,” Reed said of CalPERS projections that earnings would pay for the benefit increase. “It’s the greatest financial blunder in the history of California — ten times worse than Enron.”

San Jose voters also approved Measure V, limiting action by arbitrators when contract talks deadlock. San Jose is one of about 20 cities with “binding arbitration” allowing an outsider to pick either the management or labor offer, but no compromise.

Critics say the arbitrator usually picks the labor offer, a tendency that gives labor more clout at the bargaining table. Voters in bankrupt Vallejo went a step beyond the limits in the San Jose measure, eliminating binding arbitration last June.

The heated campaign in San Jose led to a confrontation between Councilman Pierluigi Oliverio and off-duty police and firefighters, who followed him to his home after he was seen removing signs opposing the measures.

Oliverio said the signs were improperly placed in traffic medians. A video on YouTube shows his confrontation with a police captain and the signs being removed from the trunk of his car.

In Riverside County, where all five supervisors were said to support a plan to lower pensions for new hires, deputy sheriffs placed Measure L on the ballot, which requires a vote of the people to lower retirement benefits for safety workers.

The supervisors responded with a counter proposal, Measure M, which allows the supervisors to lower retirement benefits, while requiring a vote of the people to increase benefits.

Both measures were approved by voters. But the measure backed by the supervisors got more votes, so it will be the one that takes effect, the Riverside Press-Enterprise reported.

Dual pension measures placed on the ballot by the Redding city council, non-binding advisories, also were approved by wide margins.

Measure A calls for employees to pay their share of the annual contribution to CalPERS. As is the case in a number of cities, Redding currently pays the employee share, 9 percent of pay for police and firefighters and 7 percent of pay for other workers.

Measure B calls for tying Redding retiree health care to the number of years the employee works for the city, beginning with five years to become eligible for retiree health care.

Voters in Pacific Grove approved Measure R, limiting city contributions to CalPERS to 10 percent of pay. A legal challenge is expected. City officials have talked about leaving CalPERS, but paying off pension debt would be costly.

Carlsbad voters approved Proposition G, requiring a public vote to increase pension benefits. Similar measures have been approved in recent years in San Diego and Orange County, modeled after a century-old law in San Francisco.

Voters in San Francisco rejected Proposition B, an increase in worker pension contributions from 1 to 9 percent of pay, depending on the bargaining unit. Employees would have paid 50 percent of dependent health care costs, up from 25 percent.

San Francisco Public Defender Jeff Adachi, after cuts in his office that provides attorneys for the poor, led the drive for the measure. He argued that city pension and health costs are expected to exceed $1.1 billion in 2012, up from $776 million last year.

The battle among Democrats in the famously liberal city drew national attention. A prominent early backer of Proposition B, financier Warren Helman, withdrew his support before the election, calling for negotiations to solve the pension problem.

In San Diego, voters rejected a half-cent sales tax increase Mayor Jerry Sanders said was needed to avoid deep police and fire cuts. Though not primarily a pension reform, Proposition D was pension related.

Much of the city’s budget problem stems from raising pension benefits while cutting pension contributions not once but twice, causing the national media to dub San Diego “Enron by the sea.”

Proposition D would only have taken effect if 10 conditions were met, seven of them pension related. A leading opponent of the measure, Councilman Carl DeMaio, plans to propose a five-year budget plan that includes pension changes.

Last week, the Los Angeles City Council voted 13-to-0 to put a measure on the ballot March 8 that would give new police and firefighters lower pensions. A business group said the cut would not produce enough savings

The pension cost this year for all Los Angeles employees is $580 billion. Some alarmed officials estimate that the cost could nearly double to $1 billion in the next three years.

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