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Nov. 1 (Bloomberg) -- California state politics are often said to be as dysfunctional as Washington’s. We’ll soon see if the Golden State can rise above such defamation.
Governor Jerry Brown proposed sweeping changes to state pensions last week in an effort to pull California out of a fiscal tailspin. If he can muster the political support necessary to wring concessions from the state’s public unions, California could reclaim its stature as a model, rather than a warning, to other states.
As Bloomberg News has reported, some California city managers earn more than the governor. Prison guards who take an annual physical exam collect a monthly fitness bonus of $130 -- even if they don’t pass. Pay for firefighters in Los Angeles is twice the national average. One state prison nurse was paid $269,810, tripling her base pay with overtime.
California state workers’ pay can be boosted for nearly 400 reasons, from holding a commercial driver’s license to making a presentation to the governor. All told, state workers collected $1.7 billion of overtime, unused vacation time or other extra pay last year. That’s equal to 65 percent of the state’s annual commitment to the strained University of California system.
Brown’s proposals include increasing the full-benefits retirement age from 55 to 67 for most new employees. He also wants higher contributions from workers to their retirement plans and an end to myriad abuses that let state workers inflate their pensions. The governor’s plan is almost certain to face resistance from unions and from the Democratic majority in the Legislature, but Brown’s logic is hard to refute: The state’s budget is in tatters, and its public workforce costs more than California can afford.
The situation is hardly unique. In August, Connecticut employees reached a deal with Governor Dannel P. Malloy that yielded $21.5 billion in cuts over 20 years. New York Governor Andrew Cuomo has also made progress paring down public employee benefits, and is committed to doing more. Illinois and Missouri recently joined Minnesota in raising their full-benefits retirement age for public workers to 67.
California will need cooperation between the state and its workers to dig its way out of debt. The rancor created by public union battles in Ohio and Wisconsin has served no one’s interest. However, recent contract amendments signed by unions for members of California’s 63,000-employee prison and parole system weren’t promising, producing a puny $13 million in savings for next year. With the state’s prison system under court order to relieve overcrowding, layoffs are imminent, but more realistic pay and benefits will also be necessary.
Unions have had a tough run in recent decades. But Brown, a Democrat, isn’t out to crush unions; he’s trying to provide state services on terms that residents can afford. Public sector unions can still thrive, but only if they acknowledge the fiscal realities that states face, and don’t price themselves out of existence.
--Editors: George Anders, Francis Wilkinson
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