PD Editorial: Governor, veto this anti-reform

Three years ago, California enacted a pension reform law.

The law, known by the acronym PEPRA, didn’t erase the unfunded liabilities threatening public employee pension funds or reduce premium costs for public employers.

It was, however, a step in the right direction.

Now pending on the governor’s desk is legislation that would chip away at one of PEPRA’s cornerstones - a legal mandate that public employees contribute half of the normal cost of their retirement benefits.

The 50-50 split still is a good deal for employees. “Normal costs” means the projected cost of retirement benefits. Any shortfalls, such as investment losses or a pension fund’s failure to meet projected income, must be made up 100 percent by the employer - that is, the taxpayers.

All public employees hired since Jan. 1, 2013 are covered by the 50-50 split, and it will extend to all public employees beginning in 2018.

Senate Bill 292 would rescind that requirement for a select few.

If Gov. Jerry Brown signs this bill - and he absolutely should not - count on this: other employees will seek the same exemption, and the odds of truly cleaning up California’s pension mess will become exponentially longer.

The immediate beneficiaries of SB 292 would be employees of nine cities, including Cloverdale, and Santa Clara County. In each of these jurisdictions, property owners pay a tax assessment to help cover the cost of pension benefits for local employees.

SB 292 would exempt all 10 from the 50-50 requirement, meaning that, subject to collective bargaining, they could pay the employer and employee share of pension costs.

That’s a double sweetener for employees. First, they would increase their take-home pay because they wouldn’t have to pay anything toward their retirement benefits. Second, when the employer pays the employee share, it counts as compensation for the purpose of calculating pension benefits. There’s a term for that: spiking.

One of the objectives of PEPRA was to end the practices that allowed former Sonoma County Auditor-Controller Rod Dole to retire from a $208,000-a-year job with a $254,600-a-year pension. SB 292 would bring those shenanigans back, at least on a limited basis.

Supporters of the bill include a host of labor unions, and they argue that barring the use of property tax assessments earmarked for pension expenses to cover employee costs conflicts with the will of the voters.

Balderdash. Some of these taxes date to the 1930s, and whatever voters may have intended has little bearing on the present.

In Cloverdale, the tax was approved in 1974 and is presently 9.3 cents per $100 of assessed value. The revenue covers the city’s costs for retirement benefits that were in place at the time of the vote. The cost of any subsequently approved benefits comes from the general fund or other municipal accounts, according to Cloverdale officials.

A year ago, a handful of judges sought a legislative exemption from pension reform. Brown vetoed that bill, saying he was “unwilling to begin chipping away at these reforms.” He should repeat that message with SB 292.