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Breathe a deep sigh of relief now that state legislators have headed home.

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Pension Wars Will be Fought at City Hall

Breathe a deep sigh of relief now that state legislators have headed home.

SACRAMENTO – Breathe a deep sigh of relief now that state legislators have headed home. As Judge Gideon Tucker (and also attributed to Mark Twain) exclaimed, “No man’s life, liberty or property is safe while the legislature is in session.” You are safer now than you were a little over a week ago.

The real issues of reform now shift from the weird world of Sacramento to California’s cities and counties. Even legislators in the craziest of them – San Francisco obviously comes to mind – are more likely to pass needed reforms than those in the state Capitol, where interest-group politics trumps everything else.

Even though Stanford University research pins California’s public-employee pension debt at up to an unfathomable half-trillion dollars, no pension reform measure of substance passed the Legislature. Such crucial bills are nonstarters there, although the Democratic leadership did issue a press release promising unspecific pension reform. This says pension reform is such a hot topic that even its enemies need to pretend to support it.

Actually, the current goings-on in loony San Francisco are more instructive than those in Sacramento, as pension reform remains at the center of the city’s November election. If serious reform passes in that liberal, union hotbed, then reform can pass in any city. The unions know that and are pulling out the stops to derail the effort to trim costs.

Two reform measures compete on the ballot, and two of the leading candidates for mayor are battling over which measure voters should approve. The city’s leadership, which should be looking out for the best interests of the city’s taxpayers and assuring that hard-pressed public services remain well-funded, is instead protecting the city’s unions, particularly the police and fire unions, by engaging in political gamesmanship.

Public Defender Jeff Adachi, a Progressive Democrat who has championed pension reform because he believes pension costs will sap funds for government programs, was unsuccessful last November with Proposition B after unions exploited the measure’s health care reforms to frighten voters about losing health benefits. Adachi came back for this November’s election with a new measure (Prop. D). Given shifting public attitudes, union supporters feared that this could actually pass – especially after Adachi stripped out the more controversial health care elements.

In response, Interim Mayor Ed Lee and the city’s establishment are backing Prop. C, a pension-reform half-measure designed largely to blunt the more serious cutbacks included in the Adachi proposal. This measure, which caps increased pension contributions for high-wage workers, is backed by the city’s unions, which gives you an idea of how far-reaching it is. It’s fair enough a campaign tactic to put a competing measure on the ballot, but it’s not fair the way the mayor and city Controller Ben Rosenfield have surreptitiously undermined the Adachi plan.

According to the San Francisco Examiner, “A deal … Lee struck weeks before announcing his run for a full term would shield police and firefighters from … Adachi’s pension-reform initiative.” Basically, Lee quietly negotiated a deal that exempts many of the city’s highest-compensated workers (police with average compensation of $150,000 and fire with average compensation of $154,000) from the increased pension-contribution requirements if the Adachi proposal is passed by voters.

Adachi is right to call this stunt “undemocratic,” an effort by City Hall to ignore the will of voters if they approve a measure Mayor Lee doesn’t like. It also reduces the savings inherent in the Adachi pension reform measure, which provides campaign fodder for Lee’s preferred measure.

Rosenfield also gave Lee’s plan a boost in his supposedly fair ballot analysis of the competing measures. The comparative cost savings numbers he came up with assumed that the Board of Supervisors would approve the aforementioned Memorandum Of Understanding that exempts police and fire unions from the provisions of Proposition D. The Board of Supervisors OK’d that deal Tuesday “without a peep,” as the Examiner reported, but Rosenfield’s assumption was made much earlier, which means that he meddled in ongoing politics.

Furthermore, Rosenfield assumed, in one scenario, that the pension fund would provide an unrealistic rate of return this year of 25 percent, which was seized upon by the Lee supporters to downplay the size of the pension debt. And Rosenfield inexplicably analyzed the financial timeframe for the cost savings over 10 years for Adachi’s Prop. D, rather than the more reasonable 25-year analysis. Because Adachi’s initiative includes the toughest reforms for new hires, few of those savings will be seen in a decade, but significant savings will be realized further into the future.

Rosenfield denied suggestions that he rigged the analysis. “It’s just not true,” he told me. “My charter obligation is to provide balanced information to San Francisco voters so they can make a fair choice.”

Adachi complained to me that “All the ‘powers that be’ are doing everything they can to undermine [the Prop. D] reform. That’s why a lot of things don’t get reformed.”

Adachi is right.

San Francisco, like other cities, has a large pension gap that must be closed. Without reasonable reforms, other services must be slashed, regardless of whether unions and their allied politicians want to deal with reality. Pension reform that largely exempts the best-paid unions is just window-dressing.

But however San Francisco’s reform efforts play out, there is an important lesson for Californians elsewhere in the state. Namely, the real battle on pensions and other reform issues will come at the local level, not from Sacramento. The most liberal cities still have to operate in the real world, so even San Francisco, ultimately, has to get its pension debt in line. So forget about Sacramento if you want to save California. Look instead to your local city hall.

Written By

Steven Greenhut is the California columnist for U-T San Diego. Write to him at steven.greenhut@utsandiego.com.

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