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Ruling Class Reactionaries Set Back Pension Reform

Wednesday January 20th, 2016   •   Posted by K. Lloyd Billingsley at 11:00am PST   •  

seal_ca_200X200A major statewide pension reform measure will not, as expected, be on the 2016 ballot. That is bad news for California’s working taxpayers. As Lawrence McQuillan notes, California accounts for $550 billion to $750 billion of the nation’s total unfunded pension liabilities. In his research for California Dreaming: Lessons on How to Resolve America’s Public Pension Crisis, McQuillan discovered that from 2008 through 2012, California’s local governments pension spending increased 17 percent while tax revenue grew only 4 percent. As a result, a larger share of budgets goes to pensions, crowding out spending on core services such as police. In San Jose, the police department budget increased nearly 50 percent from 2002 through 2012, yet staffing fell 20 percent. More money has been consumed by police pensions, leaving less money to hire and retain officers.

Faced with these realities, former San Jose mayor Chuck Reed, a Democrat, backed a pension form measure in 2014. Last year he teamed with former San Diego Councilman Carl DeMaio, a Republican, to place a measure on the 2016 ballot. They had to contend with misleading official descriptions issued by the state Attorney General. Government employee unions attacked the measure as “extremist,” though it was anything but. The reform effort would have put those who join a government pension system after 2019 into 401 (k) pensions, with fixed contributions, instead of more expensive defined benefit pensions from government agencies. Reed and DeMaio will now aim for 2018 but the problems will not go away.

“Swelling pension costs are like tapeworms, starving the public of municipal services,” wrote McQuillan. In Oakland, police refuse to respond to 44 different crimes because of staffing cutbacks. So public safety is at issue. State and local governments need the option of adjusting future pensions for all employees, including a switch to 401(k)-type plans, “which are more affordable and always fully funded.”

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January 2016