Category: California Public Employee Pensions

Two Weeks to Go in California Legislative Session



Dan Walters in the above video looks at the last ten days of the California Legislative session.

What issues will be taken up besides the 200 plus bills already being considered?

Public employee pension reform will be tossed a bone with a reduction of “airtime” in order to satisfy some of Governor Brown’s concerns about passing his tax increase measure, California Proposition 30, in November.

The trial lawyers would love to change MICRA and up the medical/dental malpractice pain and suffering damages limits. This may get some serious reform with limits being increased to satiate the lawyers. It will also force more physicians and dentists to retire or leave California.

The big unions and Governor Brown will probably try to reverse the reforms Arnold Schwarzenegger enacted on Workman’s Compensation Insurance. This will mean increased costs for employers.

Most of these end of term measures will only exacerbate California’s state budget deficit, hurt the business climate and the push for tax increases to sort everything out will drive the narrative going into the Fall election season.


Flap’s California Morning Collection: August 16, 2012


California Aqueduct

Good Thursday morning!

The California Legislature is in session.  Today’s schedule is here.

The California Assembly’s Daily File is here and the California State Senate’s here.

On to today’s California headlines:

Jerry Brown, his dog Sutter in tow, kicks off Prop. 30 campaign

Flanked by education and labor leaders, dozens of schoolchildren and his dog, Sutter, Gov. Jerry Brown formally kicked off his campaign Wednesday for Proposition 30, the measure on the November ballot that would raise taxes on state sales and incomes of more than $250,000.

Brown used a Sacramento high school as the backdrop for the event, calling Proposition 30 a choice about whether Californians want to provide more funding for schools. In vintage Brown style, he quoted from the New Testament to make his pitch to voters, urging them to ask the state’s wealthiest residents to pay higher taxes to boost education spending.

“To those who much has been given, much will be required,” he said quoting from the Gospel of Luke, saying the state’s highest earners “now have an opportunity to give back.”

Brown was joined by his dog, Sutter, decked out in a red vest covered with Yes on 30 stickers for the event.

Under a budget signed by Brown earlier this year, public schools would face about $5 billion in cuts if the measure is rejected by voters. The state’s two public university systems would each face an additional $250-million reduction.

Assembly speaker vows action on public pensions, ‘regulatory reform’

Assembly Speaker John A. Perez (D-Los Angeles) said Wednesday that the Legislature would end its two-year session this month by passing measures to overhaul the state’s public pension system and enact a series of “regulatory reforms” to make California more attractive to businesses.

He said he hopes that a combination of “smart cuts and smart investments” will spur voters to approve billions of dollars in tax hikes in November to balance the state’s books.

Speaking at a Capitol news conference, Perez boasted about past achievements — delivering on-time state budgets, approving funding for California’s high-speed rail project, passing protections for homeowners from foreclosure and aggressive bank practices — but provided few details about some of largest items on the legislative agenda in the final weeks of the session.

On pensions, he pledged to deliver “comprehensive action” that goes above and beyond the 12-point plan proposed by Gov. Jerry Brown, but he declined to discuss specifics. On business regulations, he said lawmakers would likely consider legislation as part of “an ongoing effort to modernize our regulatory system so that it more accurately reflects real-world realities.”

California meter maids making nearly $100,000


Money pours in to defeat food labeling ballot measure

An initiative on the November ballot that would change the way packaged foods are labeled is shaping up like a battle between a tiny health food store and a big box grocery.

Proposition 37 would require new labeling on foods made with genetically-engineered ingredients. That would include just about every processed food that is not organic. As of yesterday, supporters have raised $2.4 million while opponents have raised $25 million – about ten times as much.

A list of supporters reads like the aisle of your local health food store: Eden Foods, Nature’s Path, Amy’s Kitchen, Lundberg Family Farms, Dr. Bronner’s Magic Soap.

A list of opponents is like a stroll through Safeway or WalMart: Pepsi, Coca-Cola, Ocean Spray, Nestle, Kellogg’s, Hershey’s, Sara Lee, General Mills.

Enjoy your morning!


Flap’s California Morning Collection: June 27, 2012


Hearst Castle, San Simeone, California

Good Wednesday morning!

The California Legislature is in session.  Today’s schedule is here.

The California Assembly’s Daily File is here and the California State Senate’s here.

Tonight at midnight California Governor Brown must sign the California budget.

Gov. Jerry Brown has until midnight tonight to sign the budget, and both the Senate and the Assembly have scheduled sessions at 9 a.m. to vote on legislation needed to finalize it.

Click here to see the list released Tuesday of 21 updated measures they’re expected to consider. Brown may be sharpening his blue pencil already.

On to today’s California headlines:

Stockton council votes to go into bankruptcy protection

Years after betting on a sustained housing boom to bankroll a waterfront redevelopment and dole out salary and benefit perks to city employees and retirees, Stockton cashed in its chips Tuesday in a plan that will lead it into bankruptcy.

The City Council voted to approve an austerity plan, including stopping bond payments and making deep cuts in retiree health care, as part of a plan to file Chapter 9 bankruptcy.

The insolvent city of nearly 300,000 residents, home to America’s second-highest rate of foreclosure, is now certain of the additional ignominy of becoming the largest city in America to declare bankruptcy.

Only six years ago, Stockton had appeared to be a boomtown as median home prices shot up from $110,000 to $400,000.

Bursting with new tax revenue and anticipating 10 percent annual increases in its budget resources, Stockton cashed in by selling bonds for an urban renewal including a $68 million arena and invested $125 million in a pension fund that resulted in fiscal disaster.

On Tuesday night, in preparation for the bankruptcy filing, the City Council voted 6-1 to enact a plan to slash retiree health coverage starting this year and possibly eliminate it next year.

Stockton also will use bankruptcy protection to suspend contracts with its public employee unions to cut city employee pay and benefits. It will also stop bond payments as it seeks protection from creditors and renegotiates its debts.

Stockton to file for bankruptcy, will be largest U.S. city to fail

This Gold Rush-era port city, an epicenter of California’s agricultural exports, will become the nation’s largest city to seek protection under the U.S. bankruptcy code after its City Council on Tuesday stopped bond payments, slashed employee health and retirement benefits and adopted a day-to-day survival budget.

City Manager Bob Deis likened the process to cutting off an arm to save the body. He is expected to file bankruptcy papers immediately.

A Delta wind had scrubbed the Central Valley sky blue as residents gathered hours early for the 5:30 p.m. meeting.

Most knew what the night held; bankruptcy has been a long time coming. Stockton has been in negotiations with its creditors since late March under AB 506, a new California law requiring mediation before a municipality can file for reorganization of debt. It was the first use of the law, and policy analysts who watched its torturous and tedious progress have titled their report on it “Death by a Thousand Meetings.” Mediations ended Monday at midnight.

Recent council meetings have been boisterous and contentious. Tuesday night’s meeting was quieter, with an evident sadness on faces in the packed audience. Many residents said they were there mostly to hear for themselves that the day so long expected had finally come.

The Three Words That Made Pensions Untouchable

As it stands in California law, on the day municipal workers start their jobs, their pension benefits can only go up, not down.

This legal principle has been a bedrock behind the city of San Diego’s decade-long pension drama. Despite a growing pension debt that has dominated the city’s political discourse, reforms have focused on new employees, not the retirees or current workers who are owed the bill.

It’s one reason why the June pension initiative, Proposition B, stuck new workers with 401(k)s, yet did nothing to guarantee San Diego’s existing pension debt would be cut.

This legal principle is important, foundational even, to how California governments do business. And, according to a fascinating new article in the Iowa Law Review, it all goes back to three words in a 1917 California Supreme Court decision about benefits for a police widow.

At issue in that 1917 decision was the legal status of pensions. Are they bonuses granted to employees after their service to the government? Workers’ property akin to their houses or other possessions? Or part of their employment contracts?

The 1917 decision didn’t make a definitive call. Instead it used the three words, “in a sense,” to link pensions to unbreakable contracts for the first time. In the 95 years since that initial decision, courts in California and other states have expanded on that three-word phrase to the point where we are now with pensions. The article calls the legal principle the “California Rule.”

Shenanigans abound as final budget vote nears

 More legislative shenanigans appear to be in the works as state lawmakers prepare to vote on the final pieces of the state budget Wednesday.

One newly introduced budget trailer bill would create a statewide authority to negotiate union agreements for In-Home Supportive Services workers. The IHSS program is managed at the county level, where collective bargaining agreements are currently negotiated.

This new proposal, pushed by the Service Employees International Union and American Federation of State, County and Municipal Employees, would take collective bargaining power away from the individual jurisdictions that actually run IHSS and give it to officials in  Sacramento, the seat of union power.

Watch for this bill to be controversial with some moderate Democrats.

Another trailer bill raising eyebrows deals with Californians who qualify for both Medi-Cal and Medicare, which we wrote about earlier on the OC Watchdog blog. This bill would enroll so called “dual eligible” Californians in Orange and seven other counties into managed care plans, to save the state money on their health care.

Some California doctors have been concerned that this proposal would force them to accept low fees for their services, but the initial, proposed language of the bill tempered some fears. Initially, the bill said that doctors would be paid “according to the prevailing Medicare fee schedule” and would receive “the full Medi-Cal rates for Medi-Cal benefits.” From the doctors’ perspective that’s not so bad.

Recently, however, the language was changed to say that the state would “pay providers reimbursement rates sufficient to maintain an adequate provider network and ensure access to care for beneficiaries.” This new language has doctors very worried that they’re going to be forced to take peanuts for their services.

Enjoy your morning and Dan Walter’s Daily video: ‘We told you so’ on majority-vote budget


Flap’s California Morning Collection: June 7, 2012


Thousand Oaks Civic Arts Plaza and City Hall

Good Thursday morning!

The California Legislature is in session.  Today’s schedule is here.

The California Assembly’s Daily File is here and the California State Senate’s here.

The California Franchise Tax Board is meeting today:

The Franchise Tax Board, meanwhile, is discussing “The Tax Gap, The Underground Economy, And The Criminal Element,” as the agenda puts it. That gap is estimated at $10 billion a year after enforcement and collections. The meeting starts at 1:30 p.m. at 9646 Butterfield Way, Town Center’s Gerald Goldberg Auditorium in Sacramento.

On to today’s California headlines:

 Few centrists advance in California’s new primary system

California’s new voting system may have been designed largely to shake up the polarized state Capitol, but Tuesday’s election made it clear that the promised political earthquake will have to wait.

Despite newly drawn districts and a primary system that allowed cross-party voting — changes that backers said would produce more moderate lawmakers — California could face continued partisan brinkmanship, at least for a while.

Just a few centrists emerged Tuesday in contests marked by some of the lowest voter turnout in state history, less than 25%, according to the secretary of state’s latest tally.

A handful of GOP candidates succeeded by challenging their party’s anti-tax orthodoxy, which has long stymied budget talks, but they face stiff challenges in November. Several Democrats backed by the state’s business interests — and representing a potential check on the power of labor unions — also appear vulnerable.

Still, the increased competition was undeniable — and expensive.

Experts predict that the new primary rules will result in perhaps the costliest legislative campaigns in state history, increasing the power of the special interests that fund them. Spending by labor, business and other groups in support of candidates in dozens of legislative races approached $14 million, nearly double that of two years ago.

“Competition is expensive,” said Jack Pitney, a government professor at Claremont McKenna College. “If you want cheap elections, go Soviet.”

California’s top-two system shakes up field

As many as 29 California legislative and congressional districts will see two members of the same party compete in the November general election, a function of new balloting rules that made a statewide debut in Tuesday’s primary.

Hundreds of thousands of votes remain to be counted around the state, and the results in a handful of races could change. But clear trends emerged. Incumbents survived. Not one failed to at least make the runoff.

Business groups fared better navigating the top-two terrain than their adversaries in organized labor, delivering wins for some moderate Democrats. A handful of Republicans who refused to sign a no-tax pledge also secured top-two spots.

And supporters of the new primary system said the number of same-party runoffs could make good on their argument that the change will force candidates to run and govern in a way that appeals to a broader spectrum of voters.

2012 ELECTION: Democrats reeling from loss

The path to a Democratic majority in the U.S. House of Representatives runs straight through California, party leaders have said for months.

They trumpeted a crop of new candidates they said could yield several pickups in the Golden State. Among them was Pete Aguilar, the 32-year-old mayor of Redlands.

Democrats saw Aguilar as a lock to finish among the top two in this week’s primary in the 31st Congressional District. Instead, two Republicans — U.S. Rep. Gary Miller and state Sen. Bob Dutton — received the most votes, leaving Aguilar about 1,500 votes short and Democrats nationwide pondering how one of their best opportunities slipped away.

Ultimately, Aguilar was undone by a combination of factors: California’s new top-two-primary system, a lopsided field of candidates, a huge influx of outside money and poor voter turnout.

California pension cuts may have ripple effect

Decisive victories for ballot proposals cutting retirement benefits for government workers in two of the largest cities in the U.S. emboldened advocates seeking to curb pensions in state capitols and city halls across the nation.

The voter responses in San Diego and San Jose were stinging setbacks for public employee unions, which also came up short on Republican Gov. Scott Walker’s recall victory in Wisconsin.

“The message is that if elected officials and public employee unions do not responsibly deal with this issue, voters will take things into their own hands,” said Thom Reilly, former chief executive of Clark County, Nev., now a professor of social work at San Diego State University. “We could see more draconian measures from citizens.”

In San Diego, two-thirds of voters favored the pension reduction plan. And the landslide was even greater in San Jose, where 70 percent were in favor.

Enjoy your morning and Dan Walters’ Daily video: Tuesday’s important votes? Pension reform


Flap’s California Morning Collection: April 25, 2012

Reagan Library

Air Force One at the Reagan Presidential Library in Simi Valley, California

Good Wednesday morning!

The California Legislature is in session.  Today’s schedule is here.

Remember: Friday is the last day for policy committees to pass fiscal bills introduced in their house. So, there will be some action around the Capitol this week.

The California Assembly’s Daily File is here and the California State Senate’s here.

On to today’s California headlines:

Judge says state controller lacks power to block legislators’ pay

State Controller John Chiang acted beyond his authority when he withheld pay from state legislators after concluding the budget they had passed last year was not balanced, a Superior Court judge tentatively ruled Tuesday.

The Legislature meets its obligation to pass a budget when it sends the governor a bill that “on its face,” proposes spending that does not exceed revenue, Sacramento County Superior Court Judge David I. Brown wrote in a ruling that he will consider finalizing at a court hearing Wednesday.

State Senate leader Darrell Steinberg (D-Sacramento) and Assembly Speaker John Pérez (D-Los Angeles) sued Chiang in January, alleging he improperly interpreted the voter-approved Proposition 25, which docks legislators’ pay if they fail to pass a budget by June 15 each year. The Legislature passed the budget by the deadline last year, but Chiang said it was not balanced and withheld their pay for 12 days.
Brown agreed with the legislators that the “Controller has no authority to review the Legislature’s estimate of General Fund revenues and appropriations for the coming fiscal year as set forth in the budget bill, to make his own assessment of whether the budget bill passed by the Legislature complies” with the Constitution “and to unilaterally enforce his opinion by deeming the salaries and expenses of the Members of the Legislature to have been forfeited…”

Case of mad cow disease discovered in Fresno County

The carcass of a dairy cow slated to be rendered at a Fresno County plant is infected with mad cow disease, federal and plant officials announced Tuesday.

The discovery of mad cow disease — only the fourth in U.S. history and the first in California — was made during routine testing of a carcass headed to the Baker Commodities plant in Kerman.

Federal officials would only say that the carcass came from a “Central California” dairy. Valley agricultural officials say they don’t know whose cow it was. The central San Joaquin Valley is one of the largest dairy producing regions in the nation, with hundreds of dairies.

In announcing the find, federal and state officials were quick to reassure the public that the food supply is safe.

“Milk and beef remain safe to consume,” said Karen Ross, California Department of Food and Agriculture secretary. “Because of the strength of the food protection system, the cow did not enter the food or feed supply.”

Dennis Luckey, executive vice president of Baker Commodities, said that as part of the U.S. Department of Agriculture’s surveillance system, carcasses that come through the company’s dead-stock handling plant in Hanford are skinned and their brains randomly tested for bovine spongiform encephalopathy, or mad cow disease, before being rendered in Kerman. He said the plant generally services the central San Joaquin Valley.

The diseased carcass came into Baker’s Hanford plant last Wednesday, was tested that day and samples sent to a University of California laboratory. The results came back inconclusive, but further testing at a USDA lab in Ames, Iowa, confirmed the cow was infected.

Is a California public pension overhaul dying this year?

A key legislative committee isn’t going to act on a package of public pension reforms proposed by Gov. Jerry Brown and adopted by Republicans in their own bills.

Assembly pension committee chairman Warren Furutani said in a letter that surfaced today that GOP measures that mirror Brown’s 12-point reform plan won’t be heard in his committee. Furutani also co-chairs a special conference committee that is working on public pension reform, and bills could surface there.

“I believe it is appropriate this year to limit the bills considered this year in the policy committees to those that are not within the purview of the Conference Committee,” Furutani said in an April 18 letter to Assemblyman Cameron Smythe, R-Santa Clarita.

Dan Morain: Nurses union puts politics ahead of health

State Sen. Lois Wolk wants to encourage – not require – that health care workers get annual flu vaccinations if they come into contact with patients in hospitals.

No right-thinking person could possibly oppose her legislation. But in our dysfunctional Capitol, public health has become a contested issue. Too often, lobbyists place the interests of the organizations they represent ahead of what’s best for the rest of us.

Wolk’s main opposition doesn’t come from conservatives who want nothing to do with government. It comes from unions, specifically those that represent nurses and health care workers.

Bonnie Castillo, the California Nurses Association’s chief lobbyist, made a point of telling me that the union “highly recommends that all nurses receive vaccinations.”

But Castillo says Wolk’s bill steps on workers’ rights, or at least bargaining rights, by requiring that health care workers wear surgical masks if they refuse to get flu shots.

In her view, there are many reasons not to wear masks. They’re uncomfortable to wear. They might scare patients who might why the nurse is wearing one. Being required to wear a mask is like a “Scarlet Letter,” Castillo said.

“What’s really problematic is if you’re punitive and require nurses to wear a Scarlet Letter, which divulges private health information,” Castillo said. To which Wolk replied that Nathaniel Hawthorne would be insulted that the title of his great 19th-century novel had been so badly mangled and misused.

“They should be embarrassed,” the Davis Democrat said.

Enjoy your morning and Dan Walters daily video – today discussing Prognosticating California’s population: