The safest bet in Sacramento is that legislative Democrats will pass a package of modest pension changes this week that they will sell as “reform” in an attempt to convince voters to approve a $50 billion tax hike in November.
The problem is that the Governor’s relatively low threshold for reform is much further than the unions will ever allow the legislature to go. But anything short of what Brown has called the “minimum” cannot be characterized as the real reform Brown has demanded.
It is also worth noting that Democrats likely will pass the pension changes legislatively, not constitutionally as the Governor proposed, allowing lawmakers to reverse any changes they make after November’s tax vote. This notion won’t sound far-fetched to anyone who has watched Democrats exercise their absolute power over the past couple of weeks.
Over eight months ago the Governor unveiled his plan, which he said was the “minimum that any plan in California ought to meet.” At the time his Finance Director said the plan would save between $4 billion and $11 billion of what former Democratic Assemblyman and Stanford professor Joe Nation says could be a $500 billion pension debt. That means Brown’s plan solves about 2% of the problem.
In December, Brown testified before a legislative committee and characterized the current system as a “Ponzi scheme.” In his January State of the State address he urged lawmakers to “Examine (his plan), improve it, but please, do something real.”
Democrats controlling the pension reform process very well could be doing “something real,” but the public likely won’t know until after it passes. Although a complete lack of transparency has driven most of their actions in this and most other issues lately, shielding a pension plan from the press and public could cross over a legal barrier.
Government Code Section 7507 requires the legislature to have an actuarial analysis of proposed pension changes before voting on a measure in policy and fiscal committees. Since the plan is being developed in complete secrecy, no analysis has been made public, if it even exists.
Aside from the potential illegality of the Democrats’ secret plan, it’s really bad policy, and is exactly how we ended up in this mess to begin with. In 1999 lawmakers jammed through pension changes that have increased the state’s CalPERS payments from $159 million before the changes to $3.7 billion today.
It still stands as the largest non-voter approved debt issuance in the state’s history, a debt that has now reached $500 billion and taxpayers are on the hook.
Democrats will jam through marginal pension changes this week. The Governor will probably give them cover and sign off on them. But voters, ever more educated about and disgusted by our pension crisis, won’t be fooled.