After six months of study and negotiation, the city of more than 36,000 located in the foothills of the San Gabriel Mountains east of Pasadena developed an unusual five-point “CalPERS Response Plan“ that does not cut staff or services.
Five years later, he’s in court making an expansive case that government agencies should be able to adjust pension benefits for current workers, too.
A new brief his office filed in a union-backed challenge to Brown’s 2012 pension reform law argues that faith in government hinges in part on responsible management of retirement plans for public workers.
“At stake was the public’s trust in the government’s prudent use of limited taxpayer funds,” the brief reads, referring to the period when he advocated for pension changes during the recession.
The LAO’s outlook shows the state would finish its 2018-19 budget year with more than $19 billion in reserves – assuming lawmakers and Gov. Jerry Brown don’t make any more spending commitments. About $11 billion is obligated for the state’s rainy day fund.
Lawmakers could spend about $7.5 billion of the surplus, although analysts recommend that they save it to prepare for a recession.
The Sacramento region’s largest local governments will see pension costs go up by an estimated 14 percent next fiscal year, starting a series of annual increases that many city officials say are “unsustainable” and will force service cuts or tax hikes.
The increases come after CalPERS in December reduced the expected rate of return from investments, forcing local governments and other participants in the state’s retirement plan to pay more to cover the cost of pensions.
. . . Leyne Milstein, the city of Sacramento’s finance director, said the city’s pension costs will double in seven years. While city revenues have also increased in recent years, thanks in part to a strong real-estate market, they have not increased as much as pension costs in actual dollars.
“It’s not sustainable,” Milstein said. “These costs are going to make things incredibly challenging.”
The Supreme Court said Thursday it would consider whether public employees can be required to pay union dues, revisiting an issue that deadlocked the court after Justice Antonin Scalia’s death last year.
Under a 1977 Supreme Court precedent, states may authorize contracts between public agencies and their employee unions that require represented workers to pay dues, or an equivalent fee, for collective bargaining costs.