Gas Tax Senator Recall Clears Legal Hurdle

As reported by the L.A. Times: 

Of the more than 70,600 voters who signed petitions to hold a recall vote on state Sen. Josh Newman of Fullerton, only 849 asked that their signatures be withdrawn by the deadline, clearing a major hurdle for an election on whether to oust the Democratic lawmaker, officials said Tuesday.

Opponents of the recall needed to get more than 7,000 voters to withdraw their signatures to deprive supporters of the 63,593 signatures needed to put the measure on the ballot, under a new system approved recently by the Democratic-controlled Legislature that slows down the process.

“Sen. Josh Newman has spent months lying to his constituents by claiming people were duped into signing the recall petition against him, and with today’s tally, he has been unmasked again as a pathological liar who is unfit to hold office,” said Carl DeMaio, a Republican activist heading the recall drive. “We eagerly look forward to voters having a chance to vote him out for his lies and his decision to increase the gas tax.”

Newman won a close contest last November in a district formerly represented by a Republican. He was targeted for recall by Republican activists for voting in April for a $52-billion transportation plan that raises gas taxes and imposes a new annual vehicle fee. A successful recall would deprive Democrats of a supermajority in the Senate. …

Click here to read the full article from the L.A. Times

Democrats Embrace Banana-Republic Tactics

California’s Democrats control just about everything in the state. They own every statewide constitutional office and have supermajorities in both houses of the Legislature. Heck, a news report this week revealed that Republicans have a majority of voters in only 14 of the state’s 482 cities. In other words, the majority party can pretty much do as it pleases wherever it chooses.

Yet the usually hapless Republican opposition has managed to inspire enough fear in the majority party that Democrats have resorted to the kind of cheating one would expect in some third-world backwater.

As this column has explained, one of the state’s savviest GOP officials, former San Diego councilman Carl DeMaio, is leading a recall campaign against a Democratic senator, Josh Newman, who represents a GOP-leaning district in Orange and Los Angeles counties. The recall has legs because Newman cast a deciding vote on a massive increase in the gasoline tax and the state’s vehicle-license fees — something that will cost many Californians hundreds of dollars a year. (The roads here need help, but state leaders are too busy spending money on other priorities.)

Recall advocates seem likely to succeed at picking off this freshman senator, given widespread anger — even among many Democrats — at the tax hike. Losing Newman will mean that Democrats lose their legislative supermajority. In California, supermajorities are needed to pass every manner of tax increase. Furthermore, DeMaio and company have plans to use the latest tax hike to target other vulnerable legislators in other districts.

Candidate for the US Senate Josh Newman speaks with supporters at his campaign rally Tuesday at Yardhouse in Brea.  - ADDITIONAL INFO/// - ROD VEAL/CONTRIBUTING PHOTOGRAPHER - 110916.Elex.Senate29 - 11/8/16 -  Candidate for the US Senate Josh Newman hangs out at his campaign rally Tuesday at Yardhouse in Brea.

State Senator Josh Newman

So far, we’ve seen the expected pushback — a particularly ugly hit mailer by Newman backers, and a tsunami of support from the majority party and from liberal interest groups. That’s politics as usual, but the latest gambit is particularly outrageous: Legislative leaders are pushing through a bill that would change the rules of the game for recall elections to assure that Newman can survive this challenge.

“The proposed changes, which became public Monday morning, would add months to the existing timeline of certifying a recall election for the ballot,” according to a Sacramento Bee report. “The measure would virtually assure that any recall election would be held at the regularly scheduled June 5, 2018 legislative primary election.”

DeMaio and company are playing by existing rules, which would require the governor to schedule a recall election 60 to 80 days after the secretary of state certifies the number of signatures. They want to strike while the iron — or at least voter anger — is still red hot. They’re planning to hold the election shortly after gas prices go into effect. It’s a great strategy, especially given the large number of signatures recall backers already have submitted for verification.

But few expected Democrats to resort to this strategy. Senate Bill 96 and Assembly Bill 112 have been rammed through the Legislature as trailer bills — last-minute technical measures that are supposed to be reserved for budget issues. It’s a way for them to pass bills without the normal hearing process and legislative vetting.

For instance, the current analysis of S.B. 96 says that “this bill expresses the intent of the Legislature to enact statutory changes relating to the Budget Act of 2017.” But that language has been stripped out and the new, controversial non-budget-related language is inserted.

The bills will delay the signature-gathering process long enough to allow the governor to consolidate the recall election on the June primary ballot. That will give time for voter anger to smolder, and primary elections draw a much larger turnout. In this state, that means that far more Democrats will turn out, and the likelihood of the recall succeeding would be much slimmer.

Here’s the Bee again: “It would give voters who signed the petitions up to 30 days to withdraw their signatures, with county election officials reporting withdrawn signatures every 10 days. If there were still enough signatures to qualify the measure, the Department of Finance would have to issue a cost estimate for the election. Then the Joint Legislative Budget Committee would have 30 days to review and comment on the department’s cost estimate.”

The justifications for this rules-rigging are almost as outrageous as the legislation itself. Legislative leaders are upset that recall supporters tie the recall to a possible rollback in the gas-tax hike. Since when do legislators scuttle a long-established democratic process simply because they might not like the argument the other side may be using?

The idea that voters are being misled and need a chance to withdraw their signatures is condescending. I’d have more respect for the state’s majority party if its officials simply dispensed with these arguments and admitted that they simply are flexing their political muscle.

By the way, it’s a legitimate goal of the recall to get rid of Newman as a way to build political pressure for the Legislature to overturn the gas tax hike. One of the key reasons for recalling Democratic Gov. Gray Davis in 2003 was his support for a tripling of the vehicle-license fee. One of the first acts of his replacement, Arnold Schwarzenegger, was a rollback of the fee hike.

“Recalls are designed to be extraordinary events in response to extraordinary circumstances — and it’s in the public’s overwhelming interest to ensure the security, integrity and legitimacy of the qualification process,” said a spokesman for Senate President Pro Tempore Kevin De Leon, D-Los Angeles, to a Los Angeles Times reporter. So now the official argument is that they don’t like the reason for the recall. And they’re doing this for the public’s interest, of course. DeMaio has threatened legal action, but this whole thing could further delay the election.

This isn’t the first time the state’s Democrats have rigged the rules for crass political purposes. Another Bee article noted that this has become rather common. For instance, it noted that in 2011 they passed a law requiring all voter-backed initiatives (as opposed to the ones put on the ballot by legislators) to appear on the November general-election ballot given that conservative-oriented initiatives have a tougher time on these high-turnout dates.

They also passed in 2012 a bill changing the order in which initiatives appear on the ballot with the obvious goal of making it more likely for the governor’s tax increase to appear first — and thus be more likely to get a “yes” vote.

And I wrote for the Spectator last week about the Assembly speaker’s decision to, apparently, just ignore the clear intent of a recently passed voter initiative that requires a 72-hour notice before a vote on all final versions of every bill. That good-government measure was supposed to stop the Legislature from sneaking through gut-and-amend bills without giving legislators, the media, and the public an opportunity to see what’s in them. The Assembly offered an alternative reading of the measure as a transparent way to get around it.

Meanwhile, I also wrote for the Spectator about how Democratic legislators are rewriting some county redistricting rules as a brazen way to flip some Republican supervisorial districts to the Democrats — something so heavy-handed that even Democratic officials in Los Angeles County objected.

Perhaps, this is what one can expect in a one-party state, but it certainly makes a mockery of the notion of democracy. But the latest ploy is particularly disturbing. If Gov. Jerry Brown signs the anti-recall measure, we can at least dispense with the niceties. At that point, it will be official and California will join the ranks of banana republics.

This piece was originally published by the American Spectator

CA Pension Reform — A Rigged Game

public employee union pension“Certainly the game is rigged,” science fiction author Robert Heinlein once wrote. “Don’t let that stop you; if you don’t bet you can’t win.” The quip should be the new rallying cry of California’s indefatigable band of pension reformers, who continue to fight to rein in the state’s pension debt. It’s always been a tough battle — but the latest setback shows that the system is rigged at practically every level. Last month, California’s Public Employment Relations Board, the quasi-judicial body that oversees the implementation of the state’s collective-bargaining statutes, invalidated the results of a three-year-old referendum —Proposition B — that passed in November 2012 with 66 percent of the vote and would have reduced pension benefits for most new hires in San Diego and moved them to a 401(k)-style, defined-contribution system. Other reforms have also fallen by the wayside. In June 2012, heavily Democratic San Jose approved with nearly 70 percent of the vote a measure that would have trimmed benefits for current employees. A Santa Clara County judge in 2014 eviscerated the measure, invoking the so-called “California Rule,” a 70-year-old court interpretation of the state constitution that has made it impossible for overburdened cities to trim employee costs.

San Diego’s reform initiative was qualitatively different from San Jose’s. Its authors were careful to craft language that avoided running afoul of the California Rule by focusing on new hires and placing caps on pensionable pay. Prop. B was touted as a model for the rest of the state to follow, and the state needs one. The union-controlled Legislature remains hostile to reform, beyond the expedient passage in 2012 of a pension-reform bill that mainly served as a bait-and-switch to convince voters to hike taxes.

PERB is not an impartial agency. Before the 2012 city vote, PERB had tried to keep the proposition off the ballot altogether. Most of the board’s members have worked for one of two big unions — either the California Teachers Association or the Service Employees International Union. Its administrative law judges aren’t real judges but officials employed by the agency. Nearly two years ago, one of those biased adjudicators issued a lengthy ruling demanding that San Diego return to the 2012 status quo. The full board affirmed the ruling, maintaining that officials were required to bargain the terms of the initiative with the city’s unions before placing the measure on the ballot. But the city didn’t place the measure before voters — voters did it themselves, signing petitions to place it on the ballot. The board elided this vital distinction by pointing to the participation of San Diego’s former mayor, Jerry Sanders, and other officials in the initiative’s campaign. Never mind that Sanders said he was involved as a private citizen.

On Tuesday, the City Council voted unanimously to appeal the measure, even though a leading Democrat said he voted for the appeal simply to get legal clarity. “The people’s right to initiative is guaranteed by the California Constitution,” City Attorney Jan Goldsmith told the Union-Tribune. “This right cannot be bargained away in a back room, or stolen from the people by a government agency.” The appeal will send the matter to the courts.

Goldsmith, a strong backer of Prop. B, wrote in a July 2012 San Diego Union-Tribune column that the issue boiled down to constitutional rights. “[N]ever before has any initiative that qualified for the ballot through petition signatures been deemed a ‘sham’ citizen initiative,” he wrote. “Since 1911, the right to place citizen initiatives on the ballot through voter petitions has been a constitutional right in California reserved by the people to bypass politicians and special interests. This right is not conditioned upon the approval of those special interests and is not something to be bargained over.”

PERB isn’t the only agency to try to kill citizen initiatives. Recently, the union-friendly Agricultural Labor Relations Board invalidated an election by Fresno farm laborers who voted against representation by the United Farm Workers. For more than a year, the board refused even to count the ballots before deciding to destroy them. Former San Diego councilman Carl DeMaio, a leader in the city’s pension reform fight, and Chuck Reed, San Jose’s former mayor and a leader in that city’s pension reform efforts, have been working on a statewide initiative for either the November 2016 or 2018 ballots. They’ve faced lots of resistance from entrenched power, and they’re preparing to meet other legal obstacles from unions and their political backers. Yes, the game is rigged, but reformers soldier on. At least they understand that California’s fiscal future is at stake.

Pension reform initiative abandoned for 2016

Unions pension public sectorThe landmark effort to take public pension reform straight to the people of California has been withdrawn from ballot consideration.

“Beleaguered by fundraising doubts and attacks from organized labor, two former California officials said Monday they are backing off plans to place a measure on the November ballot intended to curb public pension benefits,” the Sacramento Bee reported. “Instead, former San Jose Mayor Chuck Reed and former San Diego Councilman Carl DeMaio said in a joint announcement, ‘We have decided to re-file at least one of our pension reform measures later this year for the November 2018 ballot.’”

Staying solvent

The news marked a sharp reversal for critics of the state’s pension spending, which has ballooned apace with California’s freshly flush balance sheet. The price tag for guaranteed health coverage alone has put Sacramento on notice of the size and scale of the problem. “The state has promised an estimated $72 billion in health care benefits for its current and future retirees, an amount that will increase to more than $300 billion over the next three decades, according to the governor’s Department of Finance,” according to the Associated Press.

Gov. Jerry Brown has sought to bring those costs under control in a way that won’t spur a revolt within his own party or hand too much power to Republican legislators. “Brown proposes prefunding benefits similar to the way the state pays for pensions — by paying into a trust fund that accrues investment returns over time, reducing the amount of money that taxpayers must contribute in the future,” the AP noted. “In negotiations with public employee unions, he’s asking state workers to pay into a fund through a deduction on their paychecks. The state would pay an equal amount.”

A firmer approach

The Reed/DeMaio proposals would have tackled unions in a much different way.  “Reed and DeMaio had filed two proposals for the November 2016 ballot, planning to choose one,” as the AP reported separately. “One would have put employees who first join a public pension system on or after January 2019, into 401(k)-style retirement savings plans that guarantee fixed contributions from employers instead of fixed returns. The second measure would have capped how much employers could pay for new hires’ retirement benefits to a certain percentage of their salary.”

Public opinion studies produced conflicting portraits of how much support for the initiatives Reed and DeMaio could count on. “Apparently the measure to force new employees into 401(k) style ballot initiatives did not poll well (even though a 2015 poll by Reason-Rupe showed majority support for such a shift),” as Reason observed. “The measure to cap the amount employers could contribute to pensions fared better in polls, but according to Reed, they weren’t able to raise enough money to collect signatures and prep for an expensive battle with California’s public unions.”

Finding funding

That difficulty struck at the heart of the year’s complex political landscape. “The stark reality is that within the state, there are no deep pockets to finance such a campaign,” Dan Walters noted at the Bee. “However large they may be, fast-growing pension and health care liabilities don’t discomfit any major interest groups, since their greatest impacts are on local governments, especially cities, rather than on state government.” That would have likely pushed the initiative’s supporters into a scramble for cash.

The necessity to look far and wide for money fostered its own kind of political optics problem. “Any reform campaign would be dependent on money from one or more wealthy individuals, probably from out of state, and it hasn’t materialized,” as Walters observed. “Conversely, any broad retiree benefit reform effort would draw implacable, high-dollar opposition from unions.” So even if the reform effort gained an adequate sponsor, Golden State unions would be able to portray their high-dollar spending as more of an in-state groundswell than their opposition — a potentially substantial advantage in a populist election season.

Originally posted on CalWatchdog.com

Stockton’s Pension Struggles Offer Lessons for California

StocktonIt was an official document, circulated by former Republican Assemblyman and Board of Equalization member Dean Andal, who is well respected for his understanding of fiscal matters. The city pooh-poohed the suggestion, and provided its own economic analysis, although it refused to share the detailed data with the media or the public.

The bad news was easy to believe. Stockton’s bankruptcy exit plan didn’t address the fiscal elephant in City Hall (unfunded pension liabilities). The city was following the basic route taken by the Bay Area city of Vallejo, which also went bankrupt and soon again faced deep fiscal problems.

The crux of Stockton’s plan was a voter-approved tax and spending plan. Measure A raised the city’s sales tax by three-quarters of a cent. Measure B was an advisory vote for how the money would be spent. The tax-hike campaign promised significant new spending on popular programs, especially law enforcement in that crime-plagued city. Voters approved the measures.

Now, after collecting the tax for 15 months, the data seems to confirm what Andal had been saying. “After only one full budget year, the city has already broken three fundamental promises and is destined to return to insolvency within four years,” wrote Andal in a letter this month to supporters and opponents of the 2013 ballot measures.

First, the city promised to hire 120 net new police officers over three years, with 40 new officers hired by last July. The city hired only 13 new officers so far. Second, the city promised the new sales-tax measure would raise $29.5 million by July, but fell $1.4 million short. Third, the “plan of adjustment” expected its pension payments to the California Public Employees’ Retirement System to be nearly $23 million – but the actual costs were $23.7 million higher.

The Stockton situation is of statewide importance because it’s clear the state’s unfunded pension liability crisis has not gone away even in relatively good economic times. “All these budget problems show up at the service level,” Andal told me. He says Stockton faces “service insolvency,”  i.e., a budget so troubled the city cannot provide adequate levels of public services.

Stockton spent $38 million in legal fees in a nationally watched bankruptcy proceeding. Judge Christopher Klein ruled that cities could cut pension benefits in bankruptcy. Stockton officials chose not to do so, relying instead on other cuts and sales-tax increase. Now that their numbers might not be adding up, it puts the city in a difficult position, Andal argues, given it already has the highest sales tax allowed by law, the highest utility tax in the Central Valley and some of the highest developer fees.

Other cities will likewise find limited ability to raise new revenues as CalPERS continues its plan to ramp up its bill for cities that participate in its pension plan. Yet Sacramento officials act as if the pension problem is gone. There’s hardly an issue legislators didn’t try to address in the recently concluded legislative session, yet nothing of substance to deal with growing pension debts. The good-government group California Common Sense confirms that the state’s unfunded pension liabilities continue to show a pattern of steady increases.

Pension reformers led by former San Jose Mayor Chuck Reed and former San Diego city councilman Carl DeMaio have proposed a statewide measure that would subject most local pension increases to voter approval. They say the title and summary Attorney General Kamala Harris offered for that measure includes the same union-backed poison pill (claiming the initiative undermines constitutional benefit protections) she used for previous pension reform measures. They plan take the matter to court.

So nothing much has changed at the statewide level, with the state political establishment squelching reform. Sadly, it might take another economic downturn to get Sacramento officials to check out the problems in a city just 50 miles from the Capitol.

Originally published by Reason.com

Steven Greenhut is the California columnist for U-T San Diego.

More Consider the Gov. Race in 2018, but Not the Senate in 2016

The story last week that state Treasurer John Chiang is “contemplating” a run for governor in 2018 potentially expands the field in what could prove to be a very interesting and competitive race. Already announced for the seat is Lt. Gov. Gavin Newsom. Former state controller, Steve Westly is said to be considering another run for the corner office. Other well-known names have been floated as well, including both the current and former mayors of Los Angeles, Eric Garcetti and Antonio Villaraigosa and environmentalist Tom Steyer.

Democrats all.

But don’t count out a credible Republican candidate. As noted here previously, one Republican consultant said he expects a strong contender backed by influential Republican donor Charles Munger. Who might that contender be? Already discussions have focused on San Diego mayor Kevin Faulconer or Fresno mayor Ashley Swearengin as possible candidates. Other possibilities include Assembly Minority leader Kristin Olsen or Pete Peterson who ran a credible race for Secretary of State. There is the perennial talk about a Condoleezza Rice candidacy.

With all this attention on a governor’s race years away, it makes you wonder why there are not more candidates with strong name identification willing to challenge for the United States Senate seat that is opening up next year.

Attorney General Kamala Harris seems to have the field nearly to herself with congresswoman Loretta Sanchez making an effort to challenge. There are some Republican challengers as well, but none that have the name ID or well-established positions from which to launch their campaigns.

Who knows — considering Harris’s official title and summary on the pension reform initiative released this week — once again blasted by the measure’s authors — maybe instead of taking the issue to court the proponents will seek some sort of retribution by taking on the AG herself. Chuck Reed or Carl DeMaio for Senate anyone?

Ballot Title Won’t Deter Pension Reform

pensionCostly government pension deals are devastating our public services – and this simple initiative gives voters the ability to stop sweetheart and unsustainable pension deals that politicians concoct behind closed doors with government union bosses. That’s why the politicians and union bosses oppose this initiative – and why they continue to try to mislead the public on what the initiative does. Despite their attempts to mislead, we are very confident the voters will understand the plain English requirements of this measure and overwhelmingly pass it in November 2016.

The next step in the campaign will be to commission a legal review the ballot measure “Title and Summary” concocted by state politicians. Once that review is completed, we will kick-off their signature drive to qualify the measure. 

The “Plain English” Requirements of the Pension Reform Initiative: 

1) Require voter approval of any defined benefit pensions for new government employees

2) Require voter approval of any increase in pensions for existing government employees

3) Prohibit any taxpayer subsidy of government retirement benefits in excess of 50% of the cost – unless voters expressly approve a higher contribution

4) Prohibit politicians and government agencies from delaying, impeding, or challenging any voter-approved state and local ballot measures regarding government compensation and benefits.

Chuck Reed, a former Mayor of San Jose, is a Democrat. Carl DeMaio, a former Councilmember of San Diego, is a Republican

Originally published by Fox and Hounds Daily

Why is California voter participation so demonstrably low?

VotedSure, it’s been more than half a year since California’s last statewide election. But Californians’ remarkable failure to participate still deserves some attention today as we start focusing on the 2016 elections. In last November’s midterm Congressional election, the largest state in the nation had about the lowest voter participation of any state in the country. Hardly more than 42 percent of California’s registered voters bothered to mail-in their ballots in the conveniently provided pre-addressed envelopes, or even show up at the polls. This dismal voter participation was even worse than voter disinterest in one of the state’s other previous bad showings in 2002 when just over 50 percent of participants elected Gray Davis, the Democrat, over the GOP’s Bill Simon. In neighboring Oregon, voter participation in the November 2014 election at 69.5 percent was more than half again by percentage the level of participation of California voters in the same election.

Why is California voter participation so demonstrably low? Some pundits have offered that last year’s election was not a presidential election when voter interest would be higher and that popular Governor Jerry Brown, who was on the ballot, was destined to cruise to a big victory over feeble Republican opponent Neel Kashkari anyway, thus lessening voter interest. Democrats have a big political registration edge in the state, control every statewide elective office, and have near two-thirds control of both Houses of the state Legislature. And even with low voter turnout, the state bucked the national trend in which the GOP picked up seats in Congress, and Californians who did vote actually expanded the number of Democratic Congressional seats in Washington, D.C., from California by two (though improving GOP representation in the state Legislature just above the critical 33 percent needed to thwart tax-increases).

Yet a recent Public Policy Institute of California (PPIC) poll reveals that more Californians, by 46 percent to 45 percent, think their state is headed in the the wrong direction rather than the right direction.

One reason for low voter turnout, and even for failures of the GOP to have made more gains in California in the November 2014 election, could be a failure to give voters a really good reason to turnout and feel their vote will be counted and make a difference. There are after all plenty of GOP and middle-of-the-road, independent voters in the state, as the same PPIC poll says 65 percent of CA voters are center/right, with conservatives, at 35 percent, having the plurality. An earnest young political consultant might conclude these voters just need to be contacted and given a good reason to get fired-up to change the results of many elections in the state.

One election where better voter turnout, perhaps by more focus on core GOP voters who sat on the sidelines and who didn’t get inspired enough to vote might have made a difference was the 52nd Congressional District race in conservative San Diego County. Just four years ago this seat was represented in Congress by Republican Brian Bilbray. But a Democrat won the seat in 2012 and the Republican challenger in 2014 was Carl DeMaio, a former member of the San Diego city council who had lost a close race for Mayor of San Diego. Unfortunately, DeMaio’s campaign became embroiled in a sexual harassment scandal, some key aspects of which were found to have been manufactured against him. Scott Peters, the incumbent Democrat who was thought to be vulnerable in the GOP sweep in other states, ended up winning the election with 51.6 percent, to DeMaio’s 48.4 percent.

Yet a key factor in DeMaio’s loss was low voter turnout. At 49 percent, according to the California Target Book, some observers believe that if DeMaio’s campaign could have brought out the same level of base voter participation as even the lopsided victory of fellow Republican, Majority Leader Kevin McCarthy of Bakersfield, (about 56 percent), if the campaign not seen the scandal in the press, and had the campaign perhaps redirected resources to simply inspire baseline Republicans to do their public duty and come out to vote in larger numbers, the result could have been quite different, a GOP victory. According to the Target Book’s analysis, voter turnout in the 49th Congressional District where Darrell Issa cruised to a lop-sided 60 percent victory was 47 percent. One need not have a political science degree to understand that voter turnout in the 52nd race was not remarkably different given all the political spending and emphasis of Republicans to win the race; and that many GOP voters had to just pass on making a vote in the race. This observer believes that the problem was a failure to give more focus on peer-to-peer direct-voter contact with core Republicans, and this issue might have repeated itself in several of the other close Congressional races the GOP lost in California in 2014. Hard-core Republican voters were just not given a compelling or convincing reason to vote in the numbers needed to win the races, and especially in the 52nd, which was a winable seat.

Even with comparatively lower registrations in California for Republicans than Democrats, the GOP has great opportunity to win elections in the state and bring reform in the current generally apathetic low voter turn-out environment. A few victories could help Republicans grow in numbers. Voters are truly unhappy with the direction liberal Democratic leaders are taking the state, and if the GOP can better seize on ideas, candidates, strategies and tactics that really motivate conservative and middle-of-the-road voters to return their millions of empty ballot, they can win. Will they?

This article is cross-posted by the Flash Report

Pension initiative may empower local reforms

The leaders of two local pension reforms, former San Jose Mayor Chuck Reed and former San Diego Councilman Carl DeMaio, are working with a coalition on a statewide initiative to help local governments make cost-cutting pension reforms.

DeMaio called the proposal a “tool kit” for local officials to “fix the problems in a manner that reflects their community’s ability.” Reed said the proposal would enable “measures that people can do to make their own decisions in their own communities.”

During a break at the Reason Foundation’s third annual Pension Summit in Sacramento last week, the two men said they are “on the same page” and working with a coalition on the details of a proposed initiative for the November 2016 state ballot.

DeMaio said the state constitutional amendment would apply to the state, cities, counties, other local governments, and the University of California — all the “instrumentalities” of California government.

DeMaio
“I’m very big on making certain that when we move ahead on reform that it’s unassailable in the courts,” said DeMaio.

The California Public Employees Retirement System, which opposed pension cuts in three recent city bankruptcies, and the state Public Employment Relations, which tried to block the San Diego and San Jose reforms, would be covered by the initiative.

“They will have no ability but to implement faithfully the voter’s initiative,” De Maio said.

A case in point for local empowerment: A drive led by David Grau and others gathered enough signatures to place an initiative on the ballot last fall to switch new Ventura County employees to a 401(k)-style plan.

But a superior court judge removed the initiative from the ballot, ruling that nothing in the 1937 act covering 20 county pension systems allows them to “opt out or terminate” through a countywide initiative or a vote of the county supervisors.

Empowering the reform process is a big change from past statewide proposals for a specific plan, such as former Gov. Arnold Schwarzenegger’s briefly backed 401(k)-style plan in 2005 or Reed’s lower-cost pension option in 2013. None made the ballot.

“One size doesn’t fit all,” said De Maio.

Reed
Reed said a statewide initiative should be “simple and easy to explain.” He said a “big omnibus” pension proposal is difficult to explain and easy for opponents to mischaracterize.

A structural initiative is common ground for a Democrat (Reed) and a Republican (DeMaio) who led the campaigns for two very different local pension reforms overwhelmingly approved by voters in June 2012.

The San Diego initiative, overcoming a PERB lawsuit to keep it off the ballot, switched all new hires except police from pensions to 401(k)-style individual investment plans now common in the private sector.

In San Jose, the reform gave current workers the option, for pensions earned in the future, of paying more or receiving a lower pension. A superior court blocked the option. Reed said other parts of the initiative have saved $80 million to $100 million so far.

Another thing the two battle-tested reformers have in common is experience in laying the groundwork, moving in steps, and not trying to do everything at once, which seems to be the current strategy of the statewide initiative.

Before the big reform in 2012, Reed changed the San Jose pension boards, adding independence and expertise. He backed two successful ballot measures in 2010 limiting police and firefighter arbitration and allowing switches to lower pension plans.

DeMaio backed a ballot measure in 2006 requiring voter approval of pension increases, city council approval in 2008 of a “hybrid” combining a lower pension and 401(k)-style plan, and a 50-50 employer and employee split of pension costs in 2009.

Union1

Dozens of government employees picketed the appearance of Reed and DeMaio at the Reason pension summit, an early warning from a coalition of public employee unions that a pension initiative may be opposed at every step, including the first one.

Schwarzenegger dropped his 401(k)-style plan in April 2005 after emotional union television ads contended death and disability would be eliminated for police and firefighters and their families, a claim the governor disputed.

After former Assemblyman Roger Niello, D-Sacramento, filed a pension reform initiative in 2011, the union coalition picketed a luxury auto dealership he partly owned, with one sign saying, “Pensions not Porsches.”

Major donors to a new initiative might face the same campaign tactics. The number of voter signatures needed to place a constitutional amendment on the ballot next year is 585,407, down sharply from 807,615 last year due to low voter turnout in November.

But several million dollars probably would be needed for a signature drive, particularly to screen for false signatures (opponents are sometimes accused of providing) and to gather a surplus as a safety cushion.

A news release from the union coalition, Californians for Retirement Security, said the new initiative is expected to be financed by “Texas billionaire John Arnold, a former Enron executive” who contributed to the Reed and Ventura County initiatives.

In San Diego, paid signature gatherers for the pension reform initiative posted at retail stores were often joined by “blockers,” union members and others who urged shoppers not to sign the petition.

Time and money may be needed for court battles after an initiative is filed. Reed dropped his initiative last year contending that Attorney General Kamala Harris gave the measure an “inaccurate and misleading” summary that made voter approval unlikely.

Dan Pellissier of California Pension Reform suspended a pension initiative drive in 2012 “after determining the attorney general’s false and misleading title and summary makes it nearly impossible to pass.”

Pension reform had strong support in a Public Policy Institute of California poll in January last year. Public pensions were “at least somewhat of a problem” for 85 percent of likely voters, and 73 percent supported switching new hires to 401(k)-style plans.

“Without serious pension reform in California, we face a future of cuts to important services and more tax revenues diverted to unsustainable pension payments,” Reed said in a news release last month.

“It is clear that politicians in Sacramento are not serious about reforming unsustainable pension benefits for government employees, so voters must take the matter into their own hands and impose reform at the ballot box,” DeMaio said.

Dave Low, chairman of Californians for Retirement Security, had a different view in a news release issued by the union coalition last week.

“This new effort is likely to eliminate retirement security for millions of more Californians, worsen economic inequality in our state, and undermine the ability to attract and retain quality firefighters, teachers, police and other public servants,” Low said. “We are confident we can defeat it.”

Originally published by Calpensions.com

Reporter Ed Mendel covered the Capitol in Sacramento for nearly three decades, most recently for the San Diego Union-Tribune. More stories are at Calpensions.com.

Pension Reform Duo Sets Target on 2016

The dynamic duo of California pension reform are teaming up in 2016.

Former San Diego City Councilman Carl DeMaio and former San Jose Mayor Chuck Reed, both of whom successfully passed pension reform in their respective cities during their time in office, announced Wednesday their plans to work together on a statewide pension reform measure for the 2016 ballot. Reformers hope to take advantage of easier ballot measure qualifying rules that require the lowest number of signatures in decades.

“Without serious pension reform in California, we face a future of cuts to important services and more tax revenues diverted to unsustainable pension payments,” Reed, a Democrat, said in a press release announcing the effort.

The group points to independent numbers which show the state’s pension liabilities have increased 3,000 percent in a decade. Last November, then-State Controller John Chiang (now state treasurer) pegged the state’s total unfunded pension liability from 130 public pension systems at $198 billion, a dramatic increase from just $6.3 billion in 2003.

Redux of San Diego pension reform fight

Last year, while DeMaio was preoccupied with his campaign for Congress against Rep. Scott Peters, Reed unsuccessfully tried to qualify a similar statewide pension reform measure. However, that effort stalled during the qualification stage over a dispute with Attorney General Kamala Harris over wording for the title and summary. This time around, he’ll benefit from DeMaio’s experience as a grizzled veteran of ballot-measure shenanigans.

“We have done a lot of legal work to make sure this initiative is bulletproof,” DeMaio, a Republican, told Reuters. “Because the unions are going to throw the kitchen sink at us.”

DeMaio knows full well the extent to which organized labor will go to thwart pension reform. In 2011, he led the effort to qualify San Diego’s Comprehensive Pension Reform measure for the 2012 ballot. The CPR measure forced all new employees into a 401(k)-style plan and capped contribution levels for current employees.

Labor organizers deployed activists to block signature gatherers and frighten potential signatories with misleading claims that signing would put them at risk of identity theft. At the time, longtime San Diego political operative T.J. Zane, who now serves asexecutive director of the San Diego Republican Party, described the San Diego-Imperial Counties Labor Council’s signature-blocking efforts as “unprecedented in its scope and ferocity.”

After the measure qualified for the ballot, San Diego voters overwhelmingly passed Proposition B in June 2012 by a two-to-one margin.

Chuck Reed: Pension reform in San Jose

At the same time DeMaio was reforming pensions in San Diego, Reed, then-mayor of San Jose, was leading a similar effort in Silicon Valley. Reed’s Measure B passed by an even larger margin: 70 percent to 30 percent. The Wall Street Journal praised Reed’s efforts and described him as “that rare creature, a Democrat in a liberal bastion who is nonetheless focused on salvaging government finances while inviting the wrath of public unions and their political allies.”

Ultimately, courts effectively gutted the most important provisions of Reed’s measure.

“San Jose’s was the most far-reaching, in that it challenged the core obstacle to serious pension reform in California,” Steven Greenhut, one of the state’s leading experts on pension reform, wrote at City Journal. “But a Santa Clara County Superior Court judge gutted the reform measure, saying San Jose could cut its employees’ pay, but not their pension benefits.”

Even after the negative court rulings, Reed’s successor has begun to further distance the city from Measure B in a bid to make “peace in the city’s pension wars.”

Broad-based coalition for reform

The proposed statewide pension measure for 2016 already has received some harsh criticism as the work of two washed-up politicians.

“2 out-of-work pols @carldemaio & Chuck Reed plan to attack @CalPERS, retirees with #pension measure in 2016,” tweeted Democratic political consultant Steven Maviglio. CalPERS is the California Public Employees’ Retirement System, America’s largest public-pension system.

In anticipation of push-back from local governments, state pension funds and organized labor, Reed and DeMaio have made it a point to build a broad-based coalition that sets aside their different political parties.  The coalition also will include David Grau of the Ventura County Taxpayers Association. Last year, after collecting thousands of signatures, Ventura County’s pension reform proposal was removed from the ballot, according to CalPensions.com.

“CalPERS has dedicated itself to preserving the status quo and making it difficult for anybody to reform pensions,” Reed recently said of the effort. “This is one way to take on CalPERS, and yes, CalPERS will push back.”

It’s unclear whether the proposed ballot measure will be drafted as a statute, which requires 365,880 valid signatures, or a constitutional amendment, which requires 585,407 valid signatures.

Originally published on CalWatchdog.com