Thursday, June 7, 2012

California Pension Update

California's Pension Watershed suggests the Democratically controlled state legislature doesn't want to let the people vote and the public sector unions want the courts to have the final say in that state's public sector pension plan funding fiasco.

Voters in San Diego and San Jose recently said otherwise, so it makes for a most interesting situation.

Subtitled 'Voters in San Diego and San Jose reform what Sacramento won't,' here's what the article has to say:

"Government reformers notched several victories on Tuesday, including two in California, of all places. Voters in San Diego and San Jose—the state's second and third largest cities—overwhelmingly approved two of the most aggressive pension reforms the country has seen in recent years by a more than two-to-one margin.

Both cities have laid off hundreds of workers in recent years to pay their soaring pension bills, and bankruptcy is possible without reining in benefits. Voters in San Diego sought to avert insolvency by shifting new hires to defined-contribution plans, which will take taxpayers permanently off the hook for future workers' pensions. San Jose's ballot measure created a bigger splash because it reduces benefits for current workers; most state and local pension reforms have only affected new hires. Employees will have to choose between accepting a lower level of benefits going forward or paying up to 16% more of their salary to keep their current plans.

Because the unions couldn't stop these reforms at the ballot box, they'll try to block them in court. The unions argue that reducing the pensions of current employees violates California's constitution, which forbids governments from impairing contracts. What is unclear under state law is whether workers' contracts include their unaccrued benefits in addition to those they've already earned. No other California city has recently tried to scale back unearned benefits, so the lawsuit will help clarify state law.

Voters had to take matters into their own hands because Democrats in Sacramento won't even bring Democratic Governor Jerry Brown's pension proposals to a vote. Once again the Golden State's referendum process has proved its democratic worth by letting voters leap over union special interests."

Summing Up

An old legal saying goes like this, "When the facts are on your side, argue the facts. When the facts aren't on your side, argue the law."

The unions will be arguing the law in court, and the state legislature will try to keep from ever having to vote on the issue. Meanwhile, voters will try to make their feelings abundantly clear  through the state's referendum process, as they did in San Diego and San Jose

Of course, We the People will be well advised to watch all this closely as well.

Thanks. Bob.

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