With his career drawing to a close, the governor finally stands up to public-sector unions in a major California Supreme Court case.
There’s little question that Jerry Brown has had a long and storied career in California politics. He was the state’s youngest governor when he was first elected in 1975 and will soon begin his final year as the state’s oldest and longest-serving chief executive. One can already find early reviews of his historical role in California politics, especially given that it’s highly unlikely the 79-year-old “Moonbeam” will run for anything else.
This may be hard for Spectator readers to believe, but by California standards Brown is viewed as the last adult in Sacramento. Sure, he rants about the existential crisis that global warming poses to planet Earth, increases taxes, passes budgets that set spending records, and signs many of the loony left’s social priorities. But he talks like a budget hawk — and holds the line against a Legislature that would otherwise spend the state into oblivion.
Quite a few conservatives have an occasional soft spot for Brown. He’s smart, savvy, and in a different league intellectually than anyone in the Legislature. Even Howard Jarvis, author of 1978’s property-tax-limiting Proposition 13, said that he voted for Brown after the young governor vowed to strongly enforce the initiative he personally opposed. These days, Republicans openly worry about our near future — with leftwing Lt. Gov. Gavin Newsom poised as Brown’s likely successor.
My biggest problem with Brown are his many missed opportunities. He has more political capital than any politician has ever had in modern California. He could pull a “Nixon goes to China” on any number of issues, most importantly in reforming the state’s pension system and rolling back the iron grip of the public-sector unions he helped empower. Brown clearly knows the problems they cause, yet has done very little to rein them in even though they are destroying public services.
Brown always talks a good game about budgets and debt, then rarely acts decisively on his own statements. So I’m resisting the urge to clap too vigorously at his latest — and unquestionably heartening — efforts on a court case involving pension reform. The governor’s legal team just filed a stunning brief defending his modest 2013 pension-reform law. Attorney General Xavier Becerra and former AG (and current U.S. Senator) Kamala Harris may have been too reluctant to stand up to a powerful union, according to some reports.
On the surface, the case centers on a bizarre union giveaway called “airtime.” In 2003, the state Legislature allowed public employees to buy additional fictional years of service under the supposition that the retirement credits wouldn’t cost employers (i.e., taxpayer-funded government agencies) anything. Where have we heard that promise before?
California still is reeling under a 1999 law (Senate Bill 400), rammed through with little vetting, that sparked a statewide wave of retroactive pension increases. The California Public Employees’ Retirement System (CalPERS) promised that it wouldn’t cost taxpayers a “dime.” It didn’t cost a dime, but will probably cost taxpayers hundreds of billions of dollars. Anyway, Brown’s Public Employees’ Retirement Reform Act (PEPRA) chipped away at some of the worst excesses, including airtime.
It’s not a surprise that Brown would defend his own law in court. And airtime is such a ridiculous abuse that it’s a sign of hubris that unions would even contest it. Lower courts have upheld the law and it’s a reasonable bet that the California Supreme Court will side with the state on this one. But this seemingly minor issue touches on something of supreme importance — a series of court rulings that are known collectively as the “California Rule.” Basically, it states that once public employees are given a vested benefit promise it can never be rolled back, even going forward.
For instance, I received a small defined-benefit pension at a company where I had previously worked. The company eliminated that benefit. I received all the benefits I earned up until the day of the change, but no longer received the pension from the next day onward. Because of the California Rule, a similar scenario cannot apply to public employees here. They must be granted the full benefit promise forever. So as pension costs spiral out of control, there’s little public agencies can do about it because they are forbidden from ever trimming benefit levels.
The fire union claims that airtime is a benefit that cannot be trimmed. The Brown administration says otherwise: “Here, there is no evidence that the Legislature intended to extend an irrevocable offer to purchase airtime and prevent future legislators from adjusting benefits for the fiscal health of the state’s pension system.… Especially when unfunded liabilities of California’s public pension systems are at record levels and rising rapidly, the union’s attempt to radically expand the scope of the vested rights doctrine should be rejected.”
Bottom line: Airtime wasn’t so much a promised benefit as it was something employees could buy at (supposedly) no cost to taxpayers or the agency. CalPERS vastly underpriced the benefit, but that doesn’t mean that it’s something vested and contractual that can’t be changed. The state was well within its rights to take it away.
But the really significant part of the brief directly assaults the California Rule, even though it doesn’t mention the doctrine by name. The Brown administration argues that even if airtime were a contract, it could be changed anyway: “This court has repeatedly noted that ‘(n)ot every change in a retirement law constitutes an impairment of the obligation of contracts…. Nor does every impairment run afoul of the contract clause.’”
That lines up with the lower court rulings that found that employees have a right to a reasonable pension, “not one providing fixed or definite benefits immune from modification.” Those words remain the one slim hope that Californians have to reform a severely underfunded pension system that is crowding out public services and driving up taxes. If we can’t reduce future benefits for public employees, then we can’t do anything other than watch a slow-motion train wreck. Brown argues that the state can indeed slice benefits going forward.
CALmatters columnist Dan Walters argued recently that the Brown brief shows that “with nothing politically to lose, (Brown) has the freedom to do whatever he wants.” That’s an unrealistically optimistic take. The governor has had plenty of opportunities to do something before now, but chose not to do so. It’s better late than never, but there’s little reason to think Brown will do much more than this in his final year in office.
“Do I wish he put more of capital on the table to resolve this sooner?” asks Dan Pellissier, one of the state’s best-known pension reformers. “Sure. But it’s good. It helps us. This lays out a good-government case for reducing pension costs.”
There you have it. This brief isn’t enough to salvage a legacy marred by missed opportunities. But it does offer a chance — probably, the only chance — for the state to lessen its pension mess. After Brown leaves the Capitol, many Californians will miss him not so much for what he has done, but because whatever comes next will be far worse.
Steven Greenhut is Western region director for the R Street Institute. Write to him at firstname.lastname@example.org.