Pension tension: Brown’s plan surprised Capitol

Few people were more responsible for Jerry Brown’s election than those in California’s public employee unions, and by last Thursday night many were angry.

Brown had proposed a litany of changes to the pensions of state and local government workers, including some  that public workers have bitterly fought, others that as recently as two weeks ago were still in play and still others that were unclear.

But Brown gave no warning before his announcement. And public employee groups, among Brown’s most ardent supporters, were not pleased.

“He just got through three months of negotiations where employees agreed to roll back their pensions,” said Dave Low who heads Californians for Health Care and Retirement Security, a coalition of public employee unions representing some 1.5 million government workers.

“For him to roll out another group of pension proposals that weren’t on the bargaining table and weren’t dealt with – well, that’s problematic for labor,” Low added. “We did not get a heads up, but we were aware that these issues were on the table.”

Brown had said during the campaign that if elected, he would have to “do things that labor doesn’t like,” including cutting pension benefits for public employees and asking labor leaders to “put everything on the table” to get California’s bloated budget under control.

During his campaign for governor, he told the Chronicle’s editorial board that “If you’re looking for frugality, I’m your man.”

When he was governor from 1975 to 1983, he said, “I vetoed the pay raises for the state employees not once, but twice. I was overridden by 23 Republican votes…I called for the two-tier pension system in 1982,” added Brown, 72. “Of course, the next four governors didn’t do anything. I’m willing to get in the battle.”

For Brown, the political calculation of his pension declaration appeared to be this: Take control of a core Republican issue and use it in his talking points when he takes his budget proposals on the road starting as soon as this week. That’s when he’ll push for a special election on taxes to help cover the state’s $26 billion shortage.

It also was seen as a signal that he seeks to re-engage this week with Republicans on the budget in a final effort before heading to a final option – which has support from Senate Democrats – of pushing through a budget on a simple majority vote. On Friday, some in the Capitol said they expected a vote on at least some budget-linked issues by this week.

But moving toward a Republican position on pensions is raising alarms among Democrats.

“There is a genuine concern over how far the governor is moving to the right on pensions,” said Steve Maviglio, a spokesman for Low’s coalition and a veteran Democratic strategist. “I think the governor is under great pressure,” he added. “There are some changes in the pension system of which we have been very supportive. But this is a laundry list.”

Gov. Brown unveiled a 12-point plan to cut public pension costs that blocks “spiking,” prohibits the purchase of retirement credits and stops pension benefits for anyone convicted of a felony related to their job. Many of the proposals are already contained in legislation carried by Republican lawmakers.

Seven of the proposals were in legislation or already drafted, while the other five were linchpins for further negotiations.

It is those five, however, that contain the hottest issues for labor, such as a cap on benefits, a change in the membership of CalPERS’ board, limits on post-retirement public employment and the creation of a “hybrid” pension plan that combines defined benefit and defined contribution models. Brown, a Democrat, said he is moving ahead with pension changes with or without the backing of Republicans.

Brown said the pension issues were raised during the fruitless budget negotiations with GOP lawmakers. Those talks foundered, but not on the pension proposals, according to the governor.

“All 12 of these pension reform measures were presented and discussed in detail with Republican legislators. Talks broke down, however, over other issues,” the governor’s office said.

Slimming down public pensions has been a top priority of GOP lawmakers but opposed by Democrats, many of whom enjoy support from government employee unions.

Politically, by introducing the pension-reform proposals, the governor seeks to take the volatile issue – and one that is popular with the public – out of the GOP’s playbook.

But observers note that public employee groups already have taken concessions, that forced-furloughs and pay cuts already have been put into effect and that the establishment of a two-tier retirement system – in which new hires have a less generous pension system than their predecessors – is likely to become a reality.

“We certainly in favor of eliminating any pension abuses where they may still exist. We just completed contract negotiations which increased employee contributions to their pensions and a lesser formula for future hires,” said Bruce Blanning of the 13,000-member Professional Engineers in California Government.

“We’re not clear as to why he didn’t present them in the contract negotiations that were just completed,” he added.

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