California Lawmakers Passed a Pension Bomb. Newsom Was Right To Veto It.

Jerry Brown took his share of indefensible positions in his final two terms as governor, but even Republicans acknowledged that he was the last adult in Sacramento—a backstop against the zaniest ideas in the Capitol. In an interview with NPR as he prepared to leave office, he touted his efforts at taming the budget, which provided insight into his mature priorities. He slammed Republicans for only knowing how to say “no,” but also chided fellow Democrats, whose “problem is they only know how to say ‘yes,’ even to harebrained schemes.”

I miss his blunt assessments. Brown racked up several notable accomplishments—eliminating tax-devouring and property-rights-destroying redevelopment agencies, solving the state’s prison-overcrowding crisis by embracing a clever realignment plan that sent nonviolent prisoners to local jails, and reforming the state’s overburdened public-employee pension system. He used his political capital to push through these unpopular, but necessary ideas. Eight years later, he was proven right on all of those signature achievements.

California’s cities have done just fine without those ham-fisted planning agencies, and the state budget has benefited from the relief of backfilling all the revenue they diverted away from traditional public services. Recent reports show that realignment enabled the state to comply with a court order and didn’t boost violent crime. And Brown argued that his Public Employees’ Pension Reform Act (PEPRA), which pared back benefits mostly for new hires, would stabilize the state’s pension funds right about now. That, too, was correct.

Brown’s successor, Gov. Gavin Newsom, has leaned more into the progressive agenda—and at times has seemed willing to undermine Brown’s legacy regarding, say, state spending priorities. So it was heartening that last Sunday Newsom vetoed a bill (Assembly Bill 1383) that would have obliterated one of Brown’s signature legislative victories: pension reform. This definitely was a grown-up move.

Ignoring history, lawmakers from both parties were so eager to ingratiate themselves to public-employee unions that they passed a bill that would have gutted PEPRA by allowing safety employees to receive higher pension formulas and retire at earlier ages. Just as PEPRA started to work as post-PEPRA employees dominated the workforce, these legislative brain trusts wanted to return to the pre-PEPRA era. They were willing to imperil local budgets and the pension systems based on the assumption that the stock market will keep going up forever.

“I was worried that Newsom would undo all of what Brown put together and would totally stomp on Jerry Brown’s legacy,” former Sen. John Moorlach, the Orange County Republican who championed pension reform, told me. “It’s a little late in the game, but he’s finally trying to protect his fiscal legacy.” Or at least his future national political prospects.

Before the Newsom veto, Brown—who we’ve heard little from since retirement—spoke out against AB 1383 to CalMatters: “Every year there’s an effort to achieve more benefits for the organizations, and some organizations like firefighters have a much more compelling case than others, but nevertheless the government has to live within limits. The great danger of pensions is that risk comes later when the current lawmakers and advocates are no longer around, so the current leadership has to act as stewards for future beneficiaries.”

Given the CEO-level pay and benefits earned by firefighters, I take issue with his first statement—but he’s right about the rest. Unions make demands every year. Lawmakers mostly cave in to them because, well, they will be onto other offices when the bill comes due. During Moorlach’s era, Republicans would often speak out against benefit hikes, but this year only two Republicans voted against the AB 1383 giveaway.

That makes it even more amazing that the state’s taxpayers were saved by a man whose fiscal record isn’t exactly stellar. “PEPRA was a necessary reform born of a crisis exacerbated by past policy decisions,” Newsom wrote in his veto message. “I still recall—before PEPRA’s passage in 2012—the alarming forecasts, the fierce criticism of public employees, and the growing pressure to eliminate defined benefit plans altogether. This is an era of California history I do not want to repeat.”

It’s seriously amazing the bill got this far given how closely it mirrors a 1999 law, Senate Bill 400, that set the stage for the 2012 budget crisis. Fortunately, Newsom remembers that history. Local-government groups were relieved, with the California State Association of Counties making the crucial point: “At a time of severe fiscal uncertainty and growing demand for services, it is more important than ever for state leaders to help control costs.” It would have been an act of utter recklessness to boost pensions as fears of a recession loom.

Recession reminders also remind me of Brown, who always warned about them around budget time. Sure, Newsom has come around fairly late in the game, but future California local officials will appreciate this adult decision.

This column was first published in The Orange County Register.

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