Just how good of a salesman is Jerry Brown?
It’s not just an idle question. California’s financial future depends on it.
There is a growing sentiment among voters that they may not buy into an increased sales tax despite it being wed with the populist “make the-rich-pay-their-fair-share” income tax gambit.
The reason is simple. There is a strong perception - right or wrong - that state employee pension plans will be the biggest benefactor of increased state revenue given the spiraling costs of maintaining them. It’s a tough sell when people see their 401k plans or their private pension plans sink. They worry that they will be paying a half cent for over a four-year period that will simply be gobbled up by the state pension plan’s bottomless pit.
Giving up an additional penny every time you spend $2 doesn’t sound like a lot. But people can put two and two together and realize that a part of that penny is going to underwrite pension plans for state employees that haven’t been readjusted to the new reality like other pension plans have.
State employees contend it is a promised benefit. You can’t argue with that, except for the fact there are a lot of other people out there who were promised specific retirement benefits only to see them drastically reduced or eliminated as companies and local government have struggled to remain afloat.
That is why Brown is also pitching pension reform that isn’t getting him a whole of love with one of his strongest bases - state employees.
Brown’s 12-point pension reform plan - if adopted - would go a long way toward bringing the state back to financial stability and could be enough to secure support for the half cent sales tax.
The highlights of that plan are:
•requiring public employees to pay at least 50 percent of the annual cost of covering their pension benefits. Currently, state employees pay at least 8 percent while some make no contributions. The 50 percent level would be phased in over time.
•developing a hybrid risk-sharing pension plan for new state employees.
•increasing the retirement age for all new non-safety public employees from 55 to 67 and for new public safety employees from 50 to an age that is less than 67.
•eliminating the ability to spike retirement by eliminating any pension calculated on a single year of final compensation that can include payment for unused vacation and sick time. Instead pensions would be based on the average of the last three years of employment compensation.
•eliminating the ability to use bonus, overtime, unused vacation or unused sick time and any other pay perk as a way to calculate retirement.
•limiting post-retirement employment to no more than 960 hours a year for a public employer after retiring.
•barring any retired employees who serve on public boards and commissions from earning any retirement benefits for that service.
•requiring all public officials convicted of felonies in the course of their public duties to forfeit pension benefits.
•prohibiting retroactive pension increases.
•banning “pension holidays” where public employees are given a pass in good economic times from paying their share of benefit costs.
•reducing retiree health care costs for state employees. New state employees would be required to work for 15 years to be eligible for the state to pay a portion of their retiree health care benefits and 25 years for the maximum state contribution. It also would eliminate retirees paying less for heath care premiums than current employees.
Give the fact state employee unions say it goes too far and conservative Republican lawmakers say it doesn’t go far enough, Brown’s plan hits a true middle-of-the-road solution.
Supporting Brown’s plan means you don’t want to take a chain saw willy-nilly to state employee benefits while at the same time you understand they have to make concession to adjust to the times.
If Brown can sell the pension reform, he should able to sell the sales tax.
And if he can, he will accomplish something that no other governor for at least 30 years has ever done - putting California on the road to living within its means.
This column is the opinion of managing editor, Dennis Wyatt, and does not necessarily represent the opinion of The Bulletin or Morris Newspaper Corp. of CA. He can be contacted at email@example.com or 209-249-3519.