California’s Public Sector Unions are Trying to Undo Pension Reform
California’s problem is that it is spending too much money, and public pensions play a significant role.
One step forward, three steps back.
That just about sums up how California’s public sector unions, which represent state and local government employees, are trying to undo the only progress that’s been made on pension reform in a generation.
They might succeed. That’s because in Sacramento, public employee unions are the most dominant and well-funded political interest groups.
They all but control the Democrat-run state Legislature, and Gavin Newsom as well.
Pension reform became an urgent necessity decades ago. The state had massive unfunded pension liabilities — that is, it had promised employees generous future benefits without the money to pay for them.
California also suffers from volatile budgeting, with tax receipts rising and falling dramatically, because the state depends so heavily on taxing the fortunes of a few high earners.
In 2012, Democratic then-Gov. Jerry Brown made real progress by championing and signing the Public Employees’ Pension Reform Act (PEPRA).
It was a significant reform that adjusted benefits for new hires. By reducing abuses like “pension spiking” (by which some employees juiced payouts), raising the retirement age for many, and requiring the new hires to pay a larger share of their own pension costs, the reform sought to save taxpayers tens of billions of dollars.
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