By Dan Morain, Senior editor
dmorain@sacbee.com The Sacramento Bee
Published: Sunday, Mar. 27, 2011 – 12:00 am | Page 1E
Last Modified: Sunday, Mar. 27, 2011 – 10:09 am

There are many reasons why Gov. Jerry Brown has failed to win Republican support for his plan to close the $26.6 billion budget deficit. But the issue of public employee pensions is fundamental.

To understand Republicans’ view, I sat down with Dan Pellissier, a wonky insider whose e-mail handle is “capitolhack.” He is not one to pass up a good deal.

Pellissier worked 18 years for various state agencies and elected officials, most recently as deputy Cabinet secretary, a post he left in January when Gov. Arnold Schwarzenegger departed. He is halfway through burning up six months of accrued vacation and unused furlough days, with pay courtesy of you and me.

Like many state employees, Pellissier bought “air time,” paying a little to boost his pension by a lot. When he turns 55 in five years, he will start collecting about $5,000 a month – $60,000 a year – half of his highest salary.

“I’m going to get a great pension,” Pellissier said over a plate of ham and eggs. “A great, unsustainable and unfair pension.”

Not that he feels guilty, but Pellissier does have a mission: drastically altering the pension system for all state and local government employees in California, ones hired in the future and ones currently on the job.

Pellissier has been advising Republican legislators as they demand that Brown place pension reform before voters, in exchange for any agreement to a statewide vote on a Brown-backed measure to extend $11 billion in taxes.

Details of the GOP’s concept are not public. But if their plan mirrors Pellissier’s ideas, it’s obvious why Brown refuses. There is no way public employee union leaders, Democrats’ main benefactors, ever would consent. And Republicans don’t see much reason to settle. Public opinion seems to be on their side.

Working with Republican strategist Dave Gilliard, Pellissier hopes to submit a proposed initiative to the attorney general’s office in about a month, a first step toward qualifying a measure for the June 2012 ballot.

If the initiative proceeds, Gilliard said, there’s “no question it is going to be a major reform, along the lines of Proposition 13.”

It’s the sort of campaign that could generate spending into the tens of millions of dollars. Public employee unions could not afford to lose.

“We’re not going to be playing solely defense, I guarantee it,” said Dave Low, of the California School Employees Association and chairman of a campaign committee in place to battle any pension measure. “Whoever decides to fund the attack – they’ll be the ones who are targeted.”

Pellissier’s plan would cap the amount that state and local governments could spend on future pensions at 6 percent of an employee’s compensation. He picked 6 percent because it’s slightly more than what private employers spend on retirement benefits, but significantly less than what government spends now. That ranges from 10 percent of overall compensation to 18 percent or more, he says.

Pellissier’s plan wouldn’t apply to benefits already earned, such as his own, but current employees’ future earnings would be trimmed. He would treat all workers from clerks to cops basically the same. The change is needed, he says, because the billions spent on pensions limit government’s ability to spend on actual services.

If voters approve such a measure, there would be a court challenge. But Pellissier cites federal cases in which judges have ruled that governments can abrogate pension arrangements if costs are too high.

Pellissier has been working for a decade on the issue, dating back to when he worked for the late Assemblyman Keith Richman, a Republican who seized on the escalating costs of pensions.

“Five years ago, I was selling ice in Alaska. Now, I’m selling hand-warmers,” Pellissier said.

New pension outrages are regular occurrences. The former city manager of Vernon faces criminal charges but pulls down a pension of $500,000 a year. A former San Diego librarian has a pension of $227,000, more than she earned when she worked.

A new poll by the nonpartisan Public Policy Institute of California shows 84.5 percent of likely voters view government pensions as posing either a big problem or somewhat of a problem, up from 77.3 percent a year ago. Support is even stronger among Republicans, at 92 percent.

Not that Republican politicians are pure. Take George Runner, a former legislator who was elected last year to represent this region on the State Board of Equalization. He has been exhorting Republican legislators to stymie Brown’s proposal, even though he voted for key legislation over the years that boosted the cost of pensions.

In 2002, for example, Runner voted for legislation that permitted prison guards to retire at age 50 with as much as 90 percent of their pay. The California Correctional Peace Officers Association has been good to Runner.

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