Ex-mayor and part-time lawyer Chuck Reed will take another crack at statewide pension reform, reviving a campaign to cut public retirement costs and bolster his political legacy.
Reed, who termed out as San Jose mayor at the end of 2014 after a bitter years-long battle defending his signature municipal pensions reform, has linked arms with former San Diego Councilman Carl DeMaio, a Republican, to place a state initiative on the 2016 ballot.
“Without serious pension reform in California, we face a future of cuts to important services and more tax revenues diverted to unsustainable pension payments,” said Reed, who’s also enlisted help from his former mayoral policy aide, David Low.
The measure would target CalPERS, California’s $300 billion public pension administrator, which oversees retirement funds for more than 3,000 government employers. Public pensions have long been considered sacrosanct, immune to renegotiation even in the event of a bankruptcy (although a recent court decision appears to upend that notion).
California’s pension debt has ballooned from $6.3 billion in 2003 to $198 billion in 2013, Reed noted in a statement Wednesday. Meanwhile, unfunded liabilities for public retiree healthcare benefits hover around $72 billion. Pension costs make up the largest debt in most California cities and are projected to jump up by 50 percent for many local governments in the next five years, he added.
“It is clear that politicians in Sacramento are not serious about reforming unsustainable pension benefits for government employees, so voters must take the matter into their own hands and impose reform at the ballot box,” DeMaio said.
Reed’s initiative will rally formidable opposition from public employee unions, who argue that pension cuts unfairly hurt current workers and retirees. CalPERS spokeswoman Rosanna Westmoreland told San Jose Inside that the pension system has already taken steps to ensure the long-term sustainability of its fund without reneging on promises made to public employees. Dialing back pension benefits could hurt a city’s ability to stay competitive as an employer.
“Pensions are an integral part of deferred compensation for public employees and a valuable recruitment and retention tool for employers,” Westmoreland said.
Reed plans to submit his proposed initiative—one that would allow local governments to renegotiate defined-benefit contracts—to the state for review by May. A similar effort died last year, after Reed claimed that California Attorney General Kamala Harris approved ballot language that was biased toward unions.
As mayor, Reed pushed for a local pension reform measure that remains a source of contention between the city and local public employee unions. Parts of Measure B were struck down after a series of union lawsuits challenged their constitutionality in court.