09.07.2012 1

California’s chickens have come home to roost

Jerry BrownBy Bill Wilson — What a difference seven years can make.

In 2005, when then-Gov. Arnold Schwarzenegger attempted to restore order to California’s broken fiscal house via the referendum process, taking on the public sector unions, the Democrat political machine went into overdrive to turn back the assault.

Schwarzenegger’s proposals would have increased eligibility for teacher tenure from two years to five years in the classroom, made the use of union dues for political campaign contributions voluntary, imposed state budgetary spending limits and redrawn the state’s school district funding formula, and reformed the states’ redistricting system.

The establishment couldn’t have that, and so, in short order, the referenda were soundly defeated at the ballot box. At the time, Washington Post columnist Harold Meyerson mocked Schwarzenegger’s “reign of error” for even bothering to try, accusing him of “[showing] little inclination to work both sides of the aisle and, indeed, who’s taken out after the Democrats, their constituents and their causes.”

Would that Californians had listened to Schwarzenegger when they had the chance. Prior to the 2005 special election, he had made no headway with the Democrat-dominated state legislature in 2004 on the issue of public sector reform.

Fast forward to 2012, when California’s debt has swollen to more than $117 billion according to data assembled by State Budget Solutions. Its unfunded union pension liabilities total more than $500 billion. And it has the second worst credit rating in the nation according to Moody’s Investors Service.

The only state with the dubious distinction of making California look good is Illinois, which is getting pounded by rating agencies as the Democrat-controlled legislature there refuses to do anything to reform its bankrupt pension system.

That’s the least we can say about California. But things may actually be starting to change.

Recently, the legislature there passed legislation that would raise public employees’ retirement ages, have them pay more into their pension accounts, and cap retirement benefits in a move Brown says will save some $30 billion.

With their backs against the walls — the budget deficit this year in the not-so Golden State has ballooned to $16 billion — now Democrat lawmakers have taken up Schwarzenegger’s mantle. Even Gov. Jerry Brown has gotten in on the act. What was Brown’s secret? How’d he get this passed?

“Labor did not have input on this,” said Barbara Maynard of Californians for Retirement Security, which represents some 1.5 million public employees and retirees, expressing concern that the unions were being shut out.

Exactly.

Like Gov. Scott Walker in Wisconsin, who signed into law legislation limiting “collective bargaining” for public sector workers, the way to get things done and reform state budgets is to cut the unions out of the process — completely.

Even Frankin Roosevelt understood this, who in 1937 said, “The process of collective bargaining, as usually understood, cannot be transplanted into the public service.” He called a strike by public workers “unthinkable and intolerable”.

Now, even the Washington Post finds time to profusely praise Brown’s efforts, writing in a recent editorial, “Public-sector employees have been able to negotiate pensions and health-care benefits that often exceed those available to private-sector workers whose tax dollars finance state and local governments.” See, now they’re getting it!

Even Brown seems get it. He will have to continue to channel his inner-Walker, however, as the tepid $30 billion in savings from his proposal will do nothing about the other 94 percent of the problem, the $500 billion unfunded pension liability problem.

As noted by PensionTsunami.com’s Jack Dean, most of Brown’s reforms will only affect new state employees, not existing ones. “This should more accurately be called the ‘Public Employees Pension Reform Act of 2043,’ since it will be at least three decades before it even begins to have any effect on state or local finances,” said Dean in an interview with Calwatchdog.com’s John Seiler.

Talk about kicking the can.

To be fair, Brown acknowledged the difficulties ahead, saying, “We have lived beyond our means. The chickens have come home to roost and this is just one in a series of countermeasures that will be required over the next decade.”

Ouch. Who needs the Governator or Scott Walker or Chris Christie to take on the public sector unions when you have Governor Moonbeam? Brown has his work cut out for him, but the progress he is making should be noted for what they may represent, a turning point.

Bill Wilson is the President of Americans for Limited Government. You can follow Bill on Twitter at @BillWilsonALG.

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