The Governor, who is seeking re-election for an unprecedented fourth term, spoke candidly about the growing problem of pension and other post-employment benefits obligations and the pressing burden on state and local agencies. Pointing out that personnel costs for a city can equal 80 percent of its General Fund, the Governor observed that the state’s payroll costs are a much smaller percentage of its budget compared to local agencies. He frankly acknowledged that the state’s current unfunded pension liabilities are approximately significant — $40 billion but that number is expected to grow to $60 billion — with its retiree health care liability just as high or higher. Making CalSTRS, the teachers’ pension fund, solvent is a priority to the Governor as well as addressing other pensions including the University of California Retirement System and the state’s judges’ pensions.
As California continues on the road of economic recovery, Governor Brown told League board members, the state must still be prudent with the allocation of resources. “We are doing a lot of good things. We never say no completely but we have to look at long-term obligations and the day to day.” Politicians, want to take credit for new jobs but the Governor believes that in fact, neither he nor the Legislature are necessarily responsible for job creation.
The end of redevelopment has been a source of tension between the Governor and California cities and the Governor did not shy away from the issue. He admitted that as Oakland mayor he readily used the program to revitalize the Fox Theater, stating “I got all I could before the whole damn thing went away.” He spoke of the fact that as Governor he had to balance the state budget, something that crushed the previous two Governors, and that is why he felt he had to dismantle the redevelopment program. “Now we’re back in the black and to stay there, I will have to say no to a lot of things,” said Governor Brown.
The Governor engaged the officers and directors in his theory of how laws are created and lawsuits then ensue. Laws begin, according to the Governor, with a desire that becomes a need, which is then viewed as a right, sparking the creation of a law, which then is challenged in a lawsuit. He said he has seen this process repeated over and over again throughout his decades in public service.
Following the Governor’s remarks he took several questions from the League’s officers and directors. Woodland Council Member Bill Marble inquired how the Governor felt about AB 1147, the League-supported bill that would restore local government’s land use authority over massage therapy businesses. First Vice President and Arroyo Grande Mayor Tony Ferrara stressed to the Governor that the existing law had allowed for the proliferation of establishments where prostitution and human trafficking existed.
Murrieta Council Member Randon Lane turned the discussion back to pensions by asking the Governor about his willingness to support the need for local flexibility and ability to contract out for services as a way to manage costs. Governor Brown responded that he is moving very carefully on this issue and said he will be examining the pressures as well as the stakeholders’ perspectives.
Second Vice President and Stockton Council Member Kathy Miller continued by talking about realignment, something that she admitted she was initially skeptical would work. San Joaquin County, Council Member Miller said, had developed a model that is working but leaders in the community were worried that without a funding stream, the program would falter especially because property crime has increased since AB 109’s enactment in 2011. The Governor responded that he is traveling throughout California to talk with county officials and law enforcement about realignment and is urging them to use more probation and programming to help former offenders continue to rehabilitate.
The robust conversation with Governor Brown concluded with his view about the different levels of government. He said that like realignment, he is having a lot of discussions about education and the local funding formula. The Governor sees a great deal of micromanaging from above and that sometimes higher levels of government are more remote from the policies being implemented. In both of these programs, the local agencies are given more responsibility for how to implement the policies in a way that meets the local needs. Governor Brown ended by saying, “We need to build a big tolerance for difference.”