eye on California
Blue Reform at its Limit

California Governor Jerry Brown, a center-left pragmatist in a deep blue state, has taken credit for shoring up Sacramento’s dire fiscal scenario in the wake of the 2008 economic downturn. But despite his best efforts, as the San Jose Mercury News reports, Governor Moonbeam hasn’t been able to do much to restrain the growth of the state’s most ominous budgetary hole: pension payouts to retired workers.

A year after his 2010 election, Gov. Jerry Brown confronted lawmakers about the steep cost of public employee pensions and urged them to pass his 12-point pension overhaul so public retirement costs would not overburden future generations. […]

Instead, legislators tinkered at the margins, passing some of Brown’s proposals but rejecting those with the biggest cost-savings potential. Although Brown touted it as the “biggest rollback to public pension benefits in the history of California,” it is now clear that the package of modest changes he signed into law in 2012 has done little to slow the growth of retirement costs. […]

Democratic lawmakers are strongly allied with public employee unions, for which pension protection is a top priority. Public employee unions gave $12.5 million to Democratic candidates for the Legislature between 2010 and 2014, compared with $1 million for Republicans, according to the nonpartisan National Institute on Money in State Politics.

The Mercury News notes that when Brown took office, the conditions were about as favorable for pension reform as they could ever be expected to be. The recession and growth slowdown had made many Californians worried about their own retirement positions and increasingly skeptical of public worker lifetime pension guarantees, which were far more generous than comparable benefits in the private sector. Meanwhile, Brown, “popular with voters, enjoyed good relations with public employee unions and had a supermajority of his party in power in the Legislature,” broke with blue model orthodoxy and made a concerted effort to address the pension crisis that he recognized could derail his state’s finances over the long term.

But all of this reformist momentum crashed into the cold, hard reality of public union capture of California’s political system. The unionized state bureaucracy, among the most powerful interest groups in Sacramento, balked at the idea 401(k) style retirement plans for public workers and fought tooth and nail to prevent any meaningful cutbacks from being implemented. At over one trillion dollars, California’s public pension time bomb shows no signs of defusing itself. Meanwhile, it is starting to force painful cutbacks in services at the state and local level—a small preview of what is to come as pension payments consume a larger and larger share of the state budget.

By California standards, Brown is a fiscal hawk in the league of Rand Paul. That an otherwise largely successful governor with the right impulses failed to make a meaningful change in such a critical area highlights the degree to which blue model decay can become entrenched and difficult to uproot as the state bureaucracy mobilizes itself to protect existing ways of doing business even if it undermines the quality of government service. Hopefully the next governor has more luck, but given that Brown-style Democratic-moderation is on life support in the Golden State, successful pension reform may not be in the cards anytime soon.

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