News

Californians in April will start paying more to register their cars — not to help maintain roads, but to keep the pension checks rolling for the motorcycle cops who policed them.

A mix of 5,000 California state social and health care workers will get an 11.5 percent raise over the next three years if they approve a contract their union announced this week. . . Some members would gain as much as 17 percent next year, depending on their job categories.

In a move that critics say could increase costs and delay projects, a low-profile government agency responsible for handing out $500 million to restore San Francisco Bay’s wetlands and improve flood control has ruled that most of the construction contracts must be awarded to union workers.

One new deal announced this week would give a 14 percent raise over three years to the maintenance workers and electricians in International Union of Operating Engineers. . . Many of its members also would receive special salary adjustments bumping up their pay by an additional 5 percent. Some heavy equipment mechanics and telecommunications technicians would gain as much as an extra 10 percent in special pay increases.

Top officers of the largest U.S. pension fund want to lower their investment targets, a move that would trigger more pain for cash-strapped cities across California and set an increasingly cautious tone for those who manage retirement assets around the country.

This trend undermines the ability of state and local governments to invest in their public services by recruiting and retaining high-quality civil servants. For example, according to a report from Bellwether Education Partners we reported on last Spring, teachers could be making an average of 15 percent more if it weren’t for the unfunded liabilities that pension funds had accumulated over the years.

For state and local workers, the larger share going to defined-benefit costs comes at the expense of other forms of compensation. In the same period 10 years ago, wages and salaries made up 67.3% of compensation. As of September this year, that had dropped four percentage points to 63.3%. . . In the private sector, where workers are more likely to have a defined-contribution plan, the shift has been less dramatic. Wages and salaries made up 69.8% of compensation as of September, down less than a percentage point from a decade ago. In other words, as a share of total compensation, private-sector workers get to bring home more or less as much as they did a decade ago.

“Employees would begin making contributions toward their retiree health benefits at a rate of 1.2 percent of their salary on July 1, 2018. That contribution would increase to 2.3 percent the following year. Brown’s initial offer called for a raise of just under 12 percent spaced over four years that would be offset by retiree health contributions totaling 3.5 percent by 2019.”

Almost $20 billion in annual federal stimulus money to California could go on the chopping block when President-elect Donald Trump tries to make good on his promise to end Obamacare. Insurance coverage for more than five million Californians, thousands of jobs and a hefty chunk of business for health plans, providers, brokers and others hang in the balance.

Menlo Park, California-based Lucid Motors will build an electric vehicle manufacturing facility in Casa Grande and has plans to build its luxury electric vehicles for first sale in 2018. . . “While all the markets wanted an automotive OEM facility, Arizona was the state that made us feel as if it were a partner in the process,” said Brian Barron, director of manufacturing for Lucid Motors, formerly Atieva. “We were impressed that Gov. Ducey made a trip to California to meet our team and was so accessible when we were in Arizona. This was one of the key deciding factors in choosing Casa Grande.”

According to a 2014 study by U.S. Common Sense, a fiscal watchdog group founded by Stanford graduates, this policy decision has left San Francisco with by far the highest unfunded liabilities on a per-person basis of any California local government of significant size.

California’s pension funds continue to face a fusillade of bad news, including new reports showing that retirement benefits consume 20 percent of Los Angeles’ general-fund budget. Put another way, one out of every five dollars the city spends goes to a retired city worker, a percentage that has quadrupled in the past 14 years. That’s an astounding number that is crowding out other public services. Things are even more troubling in San Jose, where pensions and retiree health care now consume nearly 28 percent of the budget.

The California Supreme Court decided Tuesday to review a ruling that would give state and local governments new authority to cut public employee pensions. . . But the court will not review further arguments in the case until a court of appeal resolves another pending pension dispute. That could take months.

The union has denounced the administration’s proposed wage increase of 12 percent over four years as inadequate because it fails to address what it contends are gender pay inequities in the state workforce. It also objects to the administration’s proposal that employees pay more for their health benefits.

CalPERS is preparing more pension rate hikes, and they could cost government agencies billions of dollars.