California’s growing economy is pouring billions of new tax revenue into state budget coffers, but it may also be obscuring attention from serious financial threats related to exploding public employee pension and retiree healthcare obligations. These obligations are consuming a larger and larger share of local spending, with public employee pension debt in California growing from $6.3 billion in 2003 to $198 billion in 2013. In addition, state and local governments have approximately $150 billion in unfunded liabilities for retiree health care benefits.

A bipartisan group of current and former elected officials led by former San Jose Mayor Chuck Reed and former San Diego City Councilmember Chuck DeMaio is working to keep the issue front and center, and this week (June 1) filed a statewide ballot measure to reform how compensation and pension benefits of state and local government employees are determined. Reed championed a similar ballot measure in San Jose in 2012 that the Bay Area Council supported as part of its continuing work to reform public pensions. Voters overwhelmingly approved Measure B, but government employee unions have been fighting it court.

The initiative provides a “check” on state and local politicians by explicitly affirming the ability of voters to ensure that government employee compensation and retirement benefits are affordable for their communities. In particular, the initiative would:

  • Require voter approval of any defined benefit pensions for new government employees;
  • Require voter approval of any increase in pensions for existing government employees;
  • Prohibit any taxpayer subsidy of government retirement benefits in excess of 50 percent of the cost – unless voters expressly approve a higher contribution; and,
  • Prohibit politicians and government agencies from delaying, impeding, or challenging any voter-approved state and local ballot measures regarding compensation and retirement benefits.

To engage in our pension reform policy work, contact Senior Vice President Matt Regan.

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