Pension Reform, Taxes & the Parkway

It is pretty much accepted fact in California that the biggest problem for the public funding of public service in general and parks—as the end of the funding line—specifically, lies in the overly generous pay and pensions awarded to public employees over the past several years.

To address this, California political leadership has presented a pension reform bill, which this article from City Journal addresses.

An excerpt.

“From Rhode Island to San Jose, at least a few serious Democrats have embraced pension reform because they understand the math: without reform, a tsunami of unsustainable costs will wipe out their most cherished programs and services. Unfortunately, California governor Jerry Brown and his Democratic allies in the state legislature continue to demonstrate how unserious they are about reform—even as they rhetorically support the idea of a new pension overhaul that trims costs from the state budget by capping pension payments and hiking contribution rates for employees.

“On August 31, the legislature approved a pension-reform bill by strong margins and sent it to the governor. But the reform package is mostly about politics and only tangentially about fiscal reform. A Reuters story summed up the political game: “Brown intends to promote those savings to help sell voters on his November measure to raise the state’s sales tax and boost income taxes on wealthy Californians.” Proposition 30, the measure in question, would temporarily raise the sales tax by a quarter-cent and impose additional income taxes on Californians earning $250,000 and up, with the stated goals of closing a $15.7 billion deficit and restoring some spending cut from public education. According to a recent poll, 55 percent of likely voters back the measure. But the support is soft and—two months before the election—the proposition’s “prospects are partly cloudy with a chance of rain,” said Benjamin Tulchin, president of Tulchin Research, which helped conduct the poll.

“Looking to sway public opinion, the governor turned to pension reform. AB 340 is fine, as far as it goes; but that’s the trouble. The bill would reduce pension formulas, increase retirement ages, and ban some pension-spiking gimmicks. Most of its reforms, though, apply only to new employees, whose retirements are a long way off. Current and new state workers would be required to boost their retirement-contribution rates to 50 percent; employees hired before January 2013 won’t have to do this until 2018. According to published reports, the legislation also limits some of the most absurd pension abuses, bans pensions for public employees who commit felonies on the job, and stops local governments from taking pension holidays (in which they don’t make their expected contributions to the state system). The law also bans “air time,” a program that allows government employees, in exchange for a fee, to add extra years to their public service and thus inflate their benefits, at steep cost to taxpayers.”

About David H Lukenbill

I am a native of Sacramento, as are my wife and daughter. I am a consultant to nonprofit organizations, and have a Bachelor of Science degree in Organizational Behavior and a Master of Public Administration degree, both from the University of San Francisco. We live along the American River with two cats and all the wild critters we can feed. I am the founding president of the American River Parkway Preservation Society and currently serve as the CFO and Senior Policy Director. I also volunteer as the President of The Lampstand Foundation, a nonprofit organization I founded in 2003.
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