San Jose Mercury News, 1/21/10.
Priorities have become a hot topic in the state’s Capitol.
Two weeks ago, Gov. Arnold Schwarzenegger introduced a budget fully funding education while cutting prison and other spending, and also delivered his final State of the State address in which he implored the legislature to reform the budget-breaking pension system put into place by lawmakers in 1999. The governor’s words were met with criticism by Senate President Pro Tem Darrell Steinberg as not reflecting California’s priorities. Which leads me to ask, just what are Mr. Steinberg’s priorities?
Darrell Steinberg should well remember Sept. 10, 1999. On that date, the then-assemblyman from Sacramento voted to issue tens of billions of dollars of state debt to government employees on a gamble that the stock market would rise forever at a rapid rate. The bill — SB 400 — granted massive, retroactive and ongoing pension boosts to state employees and bet that the cost would be paid for by the stock market. If not, it would come out of state budgets.
The state lost that bet, and big. Pension costs have risen 2000 percent since 1999. This year alone, $3 billion was diverted to pension costs from other programs. It’s no wonder that, since 1999, spending on higher education has fallen five percent and spending on environmental protection and other important programs has failed to keep pace with inflation and population growth.
This is just the tip of the pension-iceberg. CalPERS predicts that pension costs will keep rising to double-digit billions per year — and that assumes the stock market doubles in ten years and keeps on doubling. If it doesn’t, the costs will be even higher.
The 1999 gamble was so big and so reckless that it threatens funding for every program except K-14 education unless the Dow Jones gets all the way to 600,000 by 2049 and 28 million by the end of the century. Any way you look at it, the 1999 Legislature and then-Assemblyman Steinberg mortgaged state programs in order to boost government employee compensation. What does that say about his priorities?
The pension boost was a costly mistake with terrible consequences. Yet legislators not only refuse to address this problem, they insist on digging an even deeper hole. SB 400 not only boosted pensions for existing employees but also granted the higher benefits to all future employees, taking even more money from higher education and other important programs that Steinberg professes to support.
This is why Schwarzenegger has repeatedly asked the legislature to establish pensions for new employees at the levels in place before the 1999 increase. Now is the ideal time to act because many new employees will be hired to take the place of retiring state workers. No single act would better protect future funding for important social programs. Yet our legislators, now led by Steinberg, refuse to do so. What does that say about his priorities?
Simply put, one cannot both be in support of social programs and be opposed to pension reform. Every numerate legislator knows this, yet so far, not one has had the courage to publicly say so.
Sen. Steinberg, you can change that. While you can do nothing about your 1999 vote, in 2010 you can courageously stand up for the beneficiaries of important social programs and the taxpayers who fund them by calling for pension benefits for new government employees to be established at their pre-SB 400 levels. If not, we know where, and for whom, you really stand.