On June 5, the cities of San Diego and San Jose both passed measures implementing pension reforms. The day after San Jose voters overwhelmingly supported Measure B, police and fire unions filed suit challenging the legality of the measure.
San Diego Mayor Jerry Sanders said that the vote proves residents are frustrated with rising pensions and reduced city services. San Jose Mayor Chuck Reed has said that the pension reductions are needed to restore public safety positions, reopen firehouses and libraries, and ensure the future viability of the city.
It is unclear whether these ballot measures will boost support for pension reform in the Legislature though just last week during the California State Association of Counties Legislative Conference, Senate President Pro Tem Darrell Steinberg (D-Sacramento) said he believed it was the Legislature’s obligation to deliver pension reform by the end of this legislative session.
Gov. Jerry Brown also weighed in saying, “the pension vote in San Jose, which is a more liberal city than the state as a whole, is a very powerful signal that pension reform is an imperative. It's really important. Right now, I want to lock this budget down. But people should have confidence that pensions and their reform are on the agenda, right at the top.”
The Governor’s sentiments on pension reform are contained in his 12-Point Pension Reform Plan initially released in April 2011, and revised later in October. Earlier this year he released two documents containing language for his reform plan: Part 1 and Part 2.
The following are the twelve points listed in the Governor’s summary:
Requires equal sharing of the normal cost of pensions among employers and employees;
Hybrid risk-sharing pension plan for new employees;
Increases retirement ages for new employees;
Requires a three year average calculation for final compensation for new employees;
Calculates benefits based on regular, recurring pay;
Limits public employee post-retirement employment to 960 hours;
Requires forfeiture of benefits if convicted of certain felonies;
Prohibits retroactive pension increases;
Prohibits pension "holidays;"
Prohibits purchase of "air time" or additional service credits;
Increases pension board independence and expertise; and
Reduces retiree health care costs for the state and encourages local governments to do the same.
The Conference Committee on Public Employee Pensions has met five times since the end of last year, with its last meeting in April 2012. Although a conference committee report has not been released, the Legislature may take action on pension reform following the passage of the state budget. The issue could also be delayed until August when legislators return after summer recess. As speculation abounds in the Legislature on this issue, nothing is certain on when or whether the Legislature will act on pension reform.
Potential Ballot Measures
June 28 is the deadline for the Legislature to place items on the November 2012 ballot, but that deadline has been pushed back in the past. Ballot measures require a two-thirds vote, therefore requiring Republican votes for passage. Some of the items that may surface for discussion late this month include:
A constitutional amendment to enact elements of a legislative pension reform package;
A revision to the California Forward ballot measure expected to qualify for the ballot; and
A revision to the water bond scheduled for the November ballot, or to move it to another ballot.
Addressing pension reform may mean a two-bill approach, one that enacts necessary statutory reform language and a second measure to address constitutional issues.
The Governor and the Legislature have discussed applying pension reforms across the board to all state and local government employees regardless of differing retirement systems though, this gets a little tricky. While most reforms can be done in the Legislature with a majority vote bill, any changes to charter cities would arguably have to be done via a state constitutional amendment. The Legislature however may think differently.
California Forward Initiative
California Forward recently submitted signatures to qualify its proposed government reform measure for the November ballot. Prior to submitting signatures, representatives for California Forward attempted to negotiate a substitute measure in the Legislature that would mitigate concerns raised by labor and environmental groups. The organization submitted signatures for qualification when no agreement was reached.
In May, the League board of directors, when advised that California Forward was attempting to negotiate an alternative to the initiative to be placed on the ballot by the Legislature, directed League staff to pursue amendments to any legislative initiative to address numerous city concerns raised in policy committees.
For more please see “League Board to Pursue Amendments to Possible California Forward Bill.”
The Safe, Clean and Reliable Drinking Water Supply Act of 2012 is a legislatively-referred bond act currently on the November 2012 ballot in California. The bond allows the state to borrow $11.1 billion to overhaul the state’s water system. Projects that could receive funds from this bond include drought relief and water conservation, small community wastewater treatment improvements, integrated regional water management projects, Bay-Delta projects, water storage projects, ecosystem and water shed protection and restoration, groundwater protection and cleanup, and water recycling projects.
This bond, which was already moved once from the November 2010 ballot, has once again been rumored to move to a future ballot. In January, the Governor noted that he though it should be moved to the 2014 general election. Moving the bond to a future election takes a two-thirds vote by the Legislature. The League has not taken a position on this bond measure.
Cap and Trade
Next week, several of the League’s policy committees will be reviewing the State Air Resources Board Cap and Trade program, a key element of the state’s greenhouse gas reduction program established under AB 32. The program is projected to provide a multi-billion annual revenue stream, some of which may be available to cities.
The committees will review the logistics of the program and discuss pending legislation addressing the allocation of future Cap and Trade auction revenues.
For more information on this discussion, please see the June Environmental Quality Policy Committee agenda, attachments B and C.
In 2011, Assembly Member Nancy Skinner (D-Berkeley) introduced AB 710, a bill that would have prohibited cities from requiring a minimum parking standard greater than one parking space per 1,000 square feet of nonresidential improvements and one parking space per unit of residential improvements for any new development project in transit intensive areas. Essentially, it penalized communities that promoted transit oriented development by imposing a one-size-fits-all parking standard. Interestingly the author also exempted two projects in her own district from the bills requirements in an effort to move it forward.
Ultimately, AB 710 (Skinner) was defeated in the Senate at the end of session. However, despite the bill having died last year, the issue is still very much alive and in several ways even more damaging to local governments.
There are several versions of the potential new bill being circulated but some of the most concerning provisions include:
Undermining the density bonus law by allowing developers to take parking reductions without providing affordable housing;
Creates disincentives for upward infill building;
No exceptions for parking standards for unique projects like mass-transit stations, stadiums, medical offices, or big box stores;
Would provide zero parking for affordable housing projects; and
Definition of transit intensive areas includes areas that have not been built but are planned for including high speed rail.
High Speed Rail
High-speed rail continues to be discussed in the Capitol. The High Speed Rail Authority (HSRA) approves a revised 2012 Business Plan in April, and has announced that Jeff Morales (former CalTrans director and HSRA consultant) will take over as CEO. President Barack Obama’s administration has shown significant support in California’s HSR program, both in the press and financially. To date, the federal government has committed $3.3 billion in federal funding, but the funding may be rescinded if the Legislature does not approve $2.7 billion in state bond funds this month.
The Governor has indicated that High-Speed rail is a top priority for him. Recently, it has been reported that he plans to ease legal scrutiny of the HSR program under CEQA. In addition, he may propose some type of CEQA exemption for HSR.
Gut and Amend Bills
As evidenced by last year’s SB 89 and SB 922 (Steinberg), Gov. Brown did not demonstrate any objection to the practice of last minute “gut and amend” bills. Some parties may see this as an opening to push more bills through in the final hours of the session.
City officials should remain ready for last minute action alerts from the League should we see an upswing in “gut and amend” bills this year.