Legislators take on pension reform

San Francisco Chronicle

Aug. 6, 2012

After a monthlong break, the Legislature returns to work at the Capitol on Monday to take on one of the Golden State's thorniest issues: public employee pensions.

The Senate and Assembly have just four weeks to vote on hundreds of bills before the two-year session concludes at the end of the month, but the main focus will be on changing the pension compensation system.

Just what those changes will entail is unclear. Gov. Jerry Brown has proposed increasing the retirement age and creating a hybrid system that includes a 401(k)-style benefit, among other things, but lawmakers have yet to approve those or anything else.

Legislative leaders said they will discuss a type of cap on pension benefits, along with changes that could impact cities and local government agreements.

A conference committee, made up of members from both chambers, has held numerous hearings on pensions and is expected to produce a proposal in the next few weeks that would be voted on in both the Senate and Assembly.

2 big bills down, 1 to go

The Legislature has passed bills this summer to protect homeowners from foreclosure and to authorize spending for the high-speed rail project, both major initiatives. Legislative leaders said they intend to add pension changes to that list of accomplishments.

"I remain confident that we will have comprehensive pension reform before the end of session," said Senate President Pro Tem Darrell Steinberg, D-Sacramento. "We have to."

Steinberg said pension action is important in part to show voters that lawmakers are being fiscally responsible before the public vote on increasing taxes in November. Labor-friendly Democrats risk alienating their union allies if they approve drastic change, although any change is likely to cause problems.

"The unions are going to be unhappy with whatever comes out of the Legislature, that's guaranteed. It's the level of unhappiness that's being discussed," said Steve Maviglio, spokesman for a union coalition called Californians for Retirement Security.

He said unions would support changes meant to curb abuses that lead to inflated pensions, but labor is expecting lawmakers to go further.

Many union leaders want any significant change to retirement guarantees negotiated at the bargaining table, not imposed by the Legislature. Lawmakers are responding to political pressure by antiunion forces to make more drastic changes than necessary, said Carroll Wills, spokesman for the California Professional Firefighters union.

"Our view is the major changes that have been proposed out there are designed in some cases to punish or kind of attach blame to regular working folks for the excesses of a few," Wills said.

GOP awaits Dem plan

Republicans said they would welcome a comprehensive proposal from Democrats, but are skeptical that it will emerge.

"God bless them for their thoughts, but we've been hearing the same thing - 'Oh, we're going to do it' - the past six or eight months," said Assembly Republican leader Connie Conway of Tulare. But, she added, "If they're really going to do something, that's great."

In addition to the pension issue, many other bills remain for lawmakers to consider - as many as 600 - and it's possible that new proposals on controversial issues will emerge in the waning days, as in previous years.

One significant proposal yet to be voted on is a change in the tax code that affects how corporations with headquarters in other states calculate the taxes they owe in California; it would increase revenue to fund tuition breaks for public university students.

As part of the 2009 budget deal, lawmakers approved a system that allows corporations to choose between two formulas. The proposal would mandate the so-called "single sales factor" calculation, which is based on the total amount of sales that take place in the state.

Eliminating the dual system could bring in about $1 billion, and Assembly Speaker John Pérez, D-Los Angeles, is proposing to use that for significant reductions in tuition costs for middle-class students at the University of California and California State University systems.

One big hurdle for the bill is that, as a change in tax law, it requires a two-thirds vote of both houses. So far there's no indication Republicans would vote for the measure.

The speaker said he will get the votes, though, because Republicans recognize that middle-class students face a crisis in paying for college.

"The middle class has been squeezed over the last couple of years. ... We're confident this is something that we can get a two-thirds vote for," Pérez said.

In the pipeline

Other legislative proposals include a bill that seeks to cut down on frivolous lawsuits against businesses that are based on violations of the Americans with Disabilities Act, a bill to create a digital library of college textbooks and several proposals to regulate the cap-and-trade system.

Finally, lawmakers are planning hearings on the Department of Parks and Recreation's $54 million stash that had not been disclosed for more than a decade and led to the department director's resignation and removal of other staff.

"It's going to be an aggressive last couple of weeks," Pérez said.

Conway said Republicans hope the last few weeks don't bring proposals that emerge at the last minute with little to no public scrutiny.

"I would just caution my friends across the aisle - no nonsense, please. Can't we just do the right thing for once? It's time to do that," she said.

Read more: http://www.sfgate.com/bayarea/article/CA-legislators-taking-on-pension-reform-3764835.php#ixzz22nDmeKr4