Friday, August 31, 2012

California Senate votes for 'sweeping' pension reform; Legislature poised to ... - Contra Costa Times

SACRAMENTO -- The state Legislature today overwhelmingly approved a controversial pension reform bill as it also considered overhauling workers' compensation as part of what's expected to be a marathon last day of the legislative session.

The bill passed, AB 340, on a 50-8 vote, with two Republicans voting for it and two Democrats voting against it. Of the 22 Assembly member not voting, 19 were Republicans, three were Democrats.

The Senate later passed it 36-1, with Sen. Joel Anderson, R-San Diego, the only no vote.

California Gov. Jerry Brown, who calls the reform "sweeping," is expected to quickly sign the bill.

The legislation caps benefits for new public

employees who make more than $132,120, eliminates "spiking" and raises the retirement age for new employees. That and other fixes are estimated to save between $40 billion and $60 billion over 30 years.

"Pension reform is long overdue and we can take a bold step forward by passing it today,'' Brown said before the vote.

Critics say the plan won't come close to reining in runaway pension costs that are stressing state and local governments obligated to pay the bills.

When the debate over pensions began, state Senate leader Darrell Steinberg said, it was the egregious six-figure pensions, the double dipping, spiking and other abuses that outraged the public.

"This package we voted on deals with all that and a whole lot

more," said Steinberg, D-Sacramento. "There are those who defined pension reform as eliminating defined-benefits middle-class pensions. I wouldn't go for that.

"I hope this puts this issue, which has so dominated our public discourse for a long time, if not away, at least to the side."

Steinberg disagreed with criticism that the reform failed to cut deeply into the the state's long-term pension liabilities, but said he is open to looking into reforming public employees' health benefits as part of implementing federal health-care regulations.

Assemblyman Jim Beall, D-San Jose, said the bill wasn't perfect but it's a start .

"Is now the time to defer this, or should we start the process?" Beall said. "We'll have to watch this over the next several years, but let's take this considerable step now."

Assemblyman Chris Norby, R-Fullerton, said the Legislature should have deferred to Brown's 12-point plan proposed last October. Democrats, he said, "emasculated and gutted and amended" the governor's proposal.

Republicans questioned whether labor truly was as outraged as they've expressed.

"This is a very, very, very short haircut for unions," said Assemblywoman Shannon Grove, R-Bakersfield.

"Each of us know in our hearts that this is a small, small, small step," said Sen. Mark Wyland, R-Escondido.

Under the reform, someone working for 30 years and retiring at 55 would get 48 percent less than a current employee, said Sen. Joe Simitian, D-Palo Alto.

"You hear me right," Simitian said. "The difference between what we're obliged to pay today and what people will be entitled to is close to half. I don't think anyone can call that nibbling around the edges."

Legislators are also tackling workers compensation reform, aimed at providing relief to workers who suffer injuries that don't knock them out of the workforce but affect their ability to make the same wages that they'd made in their previous job.

The reform is backed by labor groups and small business groups -- with large employers on the sidelines. But applicant attorneys oppose it because it makes it more difficult to bring injury cases to the courts. The money that would go into a fund for the newly classified injured workers would be taken from a fund that goes toward higher awards.

Brown said the bill would "avert an imminent crisis where workers suffer and rates will skyrocket. That happened in 2004, but this time, we have the chance to fix a problem before it becomes a crisis. We have the chance to make the Workers' Compensation System better -- much better -- for workers and cheaper for business."

Brown hopes to use the reforms -- and other cost-cutting moves he made this year -- to enhance his chances to win voter approval of his tax-hike initiative, Proposition 30, in November. His proposal would raise income taxes on the wealthy and boost the sales tax by a quarter cent, raising about $6 billion a year, enough to prevent massive new cuts to schools and colleges.

Brown's initiative leads in the polls, though by a narrow margin. A rival tax initiative for schools, Proposition 38, the measure backed by wealthy civil rights attorney Molly Munger, has lagged in the polls.

Legislators produced the pension legislation, AB 340, earlier this week, pounding out a 40-page bill with no time left to send it to the floor after months of negotiations with Brown. Republicans complained that Democrats were rushing through a bill with little scrutiny.

But the howls of outrage came from labor groups, who said that they were being thrown under the bus by Brown and Democrats.

Pension reformers say the legislation fell short of the larger need of tackling unfunded liabilities for retirees and current employees, estimated around $150 billion.

The legislation would require new and current public employees to pay at least half of the payments to their pensions, sharing the burden with their employers. It would also raise the retirement age for new employees and put in place new formulas for calculating pensions.

The state also provides retirement programs for many local city and county workers. And many cities have been forced to slash services as their pension bills have skyrocketed in recent years.

Check back for more as this story develops.

Contact Steven Harmon at 916-441-2101. Follow him at Twitter.com/ssharmon. Read the Political Blotter at IBAbuzz.com/politics.

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