Friends with Benefits: Prepping for the 2016 Election

The SacBee got out its calculator today and determined that

the latest federal figures show California’s public pension debt in 2013 stood at $4,425 for every man, woman and child in the state, despite strong investment returns by public retirement funds.

The per-capita obligation ranked 11th highest among U.S. states, according to a Sacramento Bee analysis of latest data by the U.S. Census Bureau. California’s total pension debt, $610.3 billion, is the largest in the nation.

The Bee also notes that the stats are timely since

Such statistics will likely pour into a complex debate over state and local public retirement benefits in the new few months. The ballot proposal aimed for the November 2016 election would, among other things, change California’s constitution to require that voters approve public pension enhancements. Unions oppose the measure as an attack on working people disguised as voter empowerment.

Now the first week of August is about the least noticed time to alert people to this or any other issue even if we are talking about a $136B shortfall, but since we are talking about 2016 there is plenty of time to fill the airwaves with fear, uncertainty and doubt.

 

Comments

[Joe]

It looks like Kamala Harris' Proposition summary statement is deja vu all over again. The SacBee reports

Backers of a similar pension-altering measure sued Harris last year over her office’s description of that initiative, arguing that the characterization would bias voters against the measure. The court ruled against them, saying there was “nothing false or misleading” about Harris’ description.

They had similar criticisms for the title and summary issued Tuesday, which state that the measure “eliminates constitutional protections” for current employees and would lead to “significant effects – savings and costs – on state and local governments.”

“This simple initiative gives voters the ability to stop sweetheart and unsustainable pension deals that politicians concoct behind closed doors with government union bosses,” former San Jose Mayor Chuck Reed and former San Diego City Councilman Carl DeMaio, the measure’s proponents, said in a joint statement.

Read more here: http://www.sacbee.com/news/politics-government/the-state-worker/article30794346.html#storylink=cpy

[Joe]

According to today's SacBee, the ballot initiative is dead for this year:

For the third time in five years, an effort to put a government pension measure before voters has stalled for lack of money.

Former San Jose Mayor Chuck Reed and former San Diego Councilman Carl DeMaio announced Monday that they are backing off plans to qualify a proposal for the November ballot. Instead, they said in a joint release, “we have decided to re-file at least one of our pension reform measures later this year for the November 2018 ballot.”

Read more here: http://www.sacbee.com/news/politics-government/the-state-worker/article55310175.html#storylink=cpy

[Joe]

More debt calculations from the controller:

California faces a $74.1 billion obligation to cover state retirees’ medical expenses over the next three decades, according to a new report released by state Controller Betty Yee.

The figure, which captures unfunded retiree health care costs as of mid-2015, grew nearly $2.4 billion from the year before. It does not account for the impact of future inflation.

Read more here: http://www.sacbee.com/news/politics-government/the-state-worker/article56844253.html#emlnl=Todays_Top_Stories#storylink=cpy

[Joe]

You really have to love our state government. The SacBee is listing bills that are may or may not move out of the "suspense file" and get a vote in this session. Included is this doozy:

Senate Bill 1234 from Senate President Pro Tem Kevin de León, D-Los Angeles, would create a statewide retirement savings plan for private employees.

The State cannot even come close to running a retirement plan for state employees at near solvency so now they want to EXPAND to private employees??? Unbelievable.

[Joe]

The move to 7% from 7.5% is in the works. Of course, even 7% is wishful thinking
__________________________

The cost of that government pension is about to go up again, for California taxpayers as well as some public employees.

CalPERS moved to slash its official investment forecast Tuesday, a dramatic step that will translate into billions of dollars in higher annual pension contributions from the state, local governments and school districts.

Employees hired after January 2013, when a statewide pension reform law took effect, will also have to kick in more money. Older employees could see higher contributions, too, although that would be subject to contract bargaining.

CalPERS’ Finance and Administration Committee voted 6-1 to lower the forecast from 7.5 percent to 7 percent in phases over three years, starting next July.

Read more here: http://www.sacbee.com/news/business/article122088759.html#emlnl=Morning_Newsletter#storylink=cpy

[Joe]

The SacBee thought police somehow let through an article about real police and operating engineers trying to talk sense into CalPERS:

“It’s time for CalPERS to re-evaluate their investment strategies and focus more on improving their investment returns and less on ‘socially responsible’ investments,” said Steve Crouch, its director of public employees.

Opponents to divestment say those decisions are costly. CalPERS has missed about $8 billion in potential earnings because of its divestment choices dating back to the 1980s, according to a February report by Wilshire Associates.

That matters because both CalPERS and the California State Teachers’ Retirement System are badly underfunded, with each holding assets worth about two-thirds of what they’d need if they had to pay all of the benefits they owe immediately. If the funds don’t catch up, taxpayers eventually could be forced to make up the difference.
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Here's tasty bit:

Those proposals all have passionate supporters.

Dozens of Dakota Access Pipeline opponents packed CalPERS’ February meeting,

Dozens, I tell you, dozens!!!

[Joe]

The whole article is here:

http://www.sacbee.com/news/politics-government/the-state-worker/article161772508.html#emlnl=Todays_Top_Stories

[Bruce Dickinson]

Joe, let Bruce Dickinson remind everyone that all you need is a 40% stock market correction and a 20% drop in real estate prices, and California will be running big budget deficits again. Also Burlingame will be in deep doo-doo if it continues along the aggressive capital project spending trajectory (to wit, the too costly Rec center that can really be done at half-cost and new city hall).

Running governments, by its very nature has high fixed costs so revenue generation that is mostly dependent on the boom-and-bust of asset prices (property and capital gains taxes) will have much more volatility compared to the costs. The only way to deal with this, is to maintain surpluses so that any revenue shortfalls can be absorbed by the surplus, then once revenues pick up again, the surpluses are rebuilt. Folks, this is how basic businesses are run, yet, such extremely elementary concepts seem to evade government officials at the state and local level, even the city of Burlingame staff and seemingly, some of the city council, who ironically have business interests--one would think they of all people, would be the ones to get it.

Folks, seriously, you gotta get back to economics 101 before having any hope of avoiding future problems!

[Joe]

Here is a little gem brought to light by the California Policy Center:

The California legislature passed a $300 billion budget this week and buried in it is a gift to government unions. The easily overlooked section creates a new tax credit for government union members who pay union dues, euphemistically named the “Workers Tax Fairness Credit.” At present, union members can deduct union membership dues from their taxable income. The proposed switch would give union members a third of the dues paid off their final tax bill. The result is a huge boon for government unions who can now tell members they can basically receive a discount for the union dues they pay. The rest of us, of course, will pay for that discount.

[MBGA]

Hey everybody, sing along...

It's a third world after all,
It's a third world after all,
It's a third world after all,
It's a third third world.