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Gullixson: A pension fix voters may never see on ballot

  • Paul Gullixson.

Most would agree that when people fall on hard times — lose a job, suffer a medical setback, etc. — they should have every opportunity to cut their spending to get back on their feet.

Our common belief in the value of second chances is so strong it even led to relief efforts in recent years that allowed some homeowners to walk away from the only contractual obligation that was considered unassailable for individuals — their home mortgage.

But what if individuals were prevented by law from scaling back on how much they pay their tax preparer, for example, or gardener, even in bankruptcy?

That's the situation where many cities and counties in California find themselves.

Under prevailing court opinion, public agencies in California cannot — even in the worst of economic times — scale back on one of their biggest expenses, what they are to pay for future pensions.

And given the generous giveaways that occurred 15 years ago when California lawmakers, supported by public-employee unions, significantly bolstered retirement benefits with little regard for the potential long-term impacts, that's a heavy burden.

It was the elephant in the room as the governor announced a new budget on Thursday that calls for $155 billion in spending. Meanwhile, the state's retirement benefits for public employees are underfunded by $218 billion, and the governor has offered no real solution.

The same is true at the local level. Although the economy is rebounding, the pension problem is not going away. Santa Rosa, at last check, was $127 million behind in meeting its pension obligations, an amount equal to more than the city's annual general fund spending. Meanwhile, Sonoma County is some $527 million behind.

But relief could be in sight.

On Monday, Attorney General Kamala Harris issued the formal ballot title and summary for a constitutional amendment that would allow public employers in California — cities, counties, schools, the state — to renegotiate future pension and retirement benefits for public workers. In certain situations, such as in a financial emergency, it would allow employers to reduce future retirement benefits.

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