Lawmakers fiddling while pensions burn

Feb. 25, 2007 - In recent weeks, the California Assembly has debated the merits of spanking, while the state Senate debated the president's policy in Iraq, and Gov. Arnold Schwarzenegger defended his efforts to deal with climate change. The correct word to describe such typical goings-on in Sacramento is “hubris,” which refers to “exaggerated pride.”

Meanwhile, Moody's Investors Service, the Wall Street credit rating agency, issued a report about a pressing problem that California's political establishment actually should be dealing with, if only it had the courage to do so. That is the pension crisis. Moody's said this month that rising costs to pay for generous pension and health-care promises legislators have made to today's government workers and to currently retired government workers “could reach a critical mass” - leaving a choice of drastic cuts in other services or large tax increases. The report focused on California's largest cities.

Unfortunately, there is no leadership on this issue in Sacramento. Former Assemblyman Keith Richman, R-Northridge, has been sounding the alarm in recent weeks. He calls it a “ticking time bomb,” and told a recent group of Ventura business leaders: “This really is about our ability to compete in the future. ... I truly believe this is the biggest fiscal issue facing the state.” Mr. Richman is a former legislator; sitting legislators tend to be afraid of fights with powerful public employee unions.

The problem has long existed and has gotten worse as elected officials have granted unparalleled pension increases to public employees in recent years. For instance, two years ago, the Orange County Board of Supervisors granted a 62 percent retroactive pension spike to county employees.

Locally, pensions have been a hot-button issue in Sutter County in recent years. Critics of the Board of Supervisors are leveling pension-spiking accusations, warning that the county is headed toward financial disaster. At issue is the formula that calculates pensions based on the highest-single year salary rather than on the formula that calculates pensions based on an average of the three highest years.

The Sutter County Taxpayers Association argues that the single-year calculation makes it possible for a retiring employee to “pile on extra duties” - and the accompanying pay - for a year in an effort to increase the money they draw for pension.

Sutter County officials argue that offering competitive salaries and pensions are critical to attract and retain employees.

Meanwhile, Gov. Schwarzenegger is doing worse than nothing about the problem. He appointed a commission to look at unfunded liabilities - a punt that will assure that nothing is done for at least a year. “Schwarzenegger persists in trying to borrow several hundred million dollars to pay part of the state's annual obligation to its employee pension fund in the coming year,” wrote Sacramento Bee columnist Dan Weintraub. “The proposal almost certainly violates the state constitution . ... [E]ven if a court eventually concludes that the idea is legal, the plan also breaks Schwarzenegger's promise to the voters in 2004 to ‘tear up the credit card' and stop borrowing to balance the budget.”

But who cares about promises, or an issue that is credibly viewed as a financial time bomb, when there's a world to save from global warming?