A second strike for untouchable California pensions?

This editorial is from the San Diego Union-Tribune:

Herbert Stein, who chaired the Council of Economic Advisers under Presidents Richard Nixon and Gerald Ford, is admired by social scientists for his pithy observation that, “If something cannot go on forever, it will stop.” This, fortunately, means that bad things don't happen in perpetuity because people can only put up with bad things for so long. This is what seems to have dawned on California judges when it comes to government pensions - and it appears they have not just common sense but the law on their side.

Even though no Legislature ever approved the idea of permanent, inviolate, untouchable pensions for government workers, the “ California rule,” which arose out of various court cases, provides just such protections. The rule holds that pension benefits and how they accrue cannot be changed by government agencies unless workers get a similar increase in other compensation - even for years of service not yet worked.

This interpretation and generous benefits have hammered local governments, which are starting to spend 20 percent or more of their revenue on pensions, leading to reductions in law enforcement, community programs and library hours.

This isn't how government is supposed to work. In 2011, law professor Amy Monahan published a 56-page analysis that looked at nearly 90 years of court cases through which the California rule came to pass and found no evidence of any legislative intent to create such a hard and fast rule. Courts that interpret laws in ways that create new obligations are required to demonstrate such intent.

This matters, according to two panels of state appellate court judges in Northern California. On Dec. 30, three judges unanimously rejected a fire union's challenge to a 2012 state pension reform law that reversed a 2003 state law that allowed employees to buy up to five years of credit for years employed in the calculation of their pensions.

Justice Martin Jenkins, the lead author, said there was no evidence that the 2003 legislation had the intention of creating a permanent pension benefit.

Jenkins cited the other unanimous appellate court ruling from last August in which lead author Justice James Richman found no evidence of any legislative intent to give public employees “an immutable entitlement to the most optimal formula of calculating the pension.” The case involved a legal challenge by some Marin County public employes to provisions of the 2012 reform law barring late-career pension spiking. The opinion held that pension terms could be changed for years not worked.

The California Supreme Court has already agreed to hear an appeal of the Marin County case and may well consolidate it with the fire union case. This prospect is welcome because the people of California need clarity on what is legal and what is not.

Instead of relying on dubious precedents, Californians would be best served if the state high court relies on its 1977 ruling in the Miller v. California case, which held “pension rights are not immutable,” that local governments “may make reasonable modifications and changes” and that “the employee does not have a right to any fixed or definite benefits but only to a substantial or reasonable pension.”

If something cannot go on forever, it will stop. Inflexible pension obligations that incapacitate local governments should not go on forever.