California Republicans back Democrat governor on pensions

Reuters News
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Posted: Feb 22, 2012 6:48 PM
California Republicans back Democrat governor on pensions

By Jim Christie

SAN FRANCISCO (Reuters) - Republican lawmakers in California on Wednesday fully embraced Governor Jerry Brown's plan for overhauling public pensions and pressed his fellow Democrats, who control the state legislature, to back it as well.

The legislature's Republican minority last year called for reforming the state's public pensions to rein in costs, which are also a concern for Brown. He earlier this month handed a 12-point plan to lawmakers for overhauling pensions for the state's public-sector employees.

Senate Republican Leader Bob Huff recently told Reuters that Republican lawmakers could get behind Brown's plan - despite being sharply at odds with him on his plan for increasing taxes to help balance the state's books - and they have formally done so by introducing the plan as legislation.

"We have not changed one comma, one period or one word. This is his plan as he wrote it, and we will stand with him to see it passed," Huff said in a statement.

Assembly Republican Leader Connie Conway added that Brown's plan "represents the first step of the changes that must be enacted to get our runaway pension system under control."

Conway said Republicans also plan to propose other changes "to end the abuse of the system, bring public employee pensions in line with those in the private sector and preserve fair retirements for government workers."

The move by the Republicans came a day after a report released by the Stanford Institute for Economy Policy Research said California municipalities are now spending 10 percent of their budgets on pension expenses. Pension costs are also expected to consume a greater share of spending in coming years, which could force spending cuts in other areas.

Polls have shown voters would back dramatic changes to California's public pensions.

In San Diego, city officials including Mayor Jerry Sanders, are seizing on that sentiment by pushing a local measure for the June ballot that would propose putting most new employees of the state's second biggest city into defined-contribution pension plans to replace the traditional pension plans that guarantee a fixed payout.

DEMOCRATS DIVIDED

Brown's plan will effectively dominate California's state-level pension politics after a group of activists, mainly Republicans, recently shut down their campaign to put a pension measure on the state's November ballot.

One measure the group was considering would have proposed putting California's new government employees into so-called hybrid pensions, which would combine features of traditional pensions with guaranteed payments and a 401(k)-like retirement accounts.

Brown has proposed similar changes. He would also have public-sector employees and their employers share contributions to pension accounts evenly as well as raising the retirement age for state and local government employees.

Those elements of Brown's plan may be difficult for many Democratic lawmakers, who are closely allied with public employee unions, to support.

But other parts of his plan have bipartisan appeal, such as a provision that would strip public employees and elected offices of all or part of their pensions if they are convicted of felonies tied to their public-sector work.

Among the concerns Democrats have about hybrid pension plans is the investment risk it would put on public employees.

Many Democrats also see Brown's proposed retirement age as too aggressive, said Senator Gloria Negrete McLeod, co-chair of the legislature's pensions conference committee.

Brown wants the retirement age for most new public employees to be 67, but many public employees in California can now retire at age 55 while those in public safety fields may retire at 50.

Negrete McLeod's committee will oversee bills stemming from Brown's plan. Legislation the committee approves will not be allowed to be amended when it reaches the state Senate and Assembly.

(Reporting by Jim Christie, Editing by Gary Crosse)