California lawmakers have a long history of passing sweeping legislation in the heat of the moment, often without fully weighing the long-term costs. The state’s track record includes plenty of ambitious promises that fell apart under closer scrutiny.
Perhaps the most glaring example is the high-speed rail project approved by voters two decades ago. Backers pitched a $9.95 billion bond measure and told Californians the full bullet train system connecting the north and south would cost roughly $40 billion and be running by 2020. Today, the price tag has soared past $126 billion, and even the first 171-mile stretch between Merced and Bakersfield remains years from completion — at a cost roughly equal to what the entire project was originally supposed to cost.
Now a new bill awaiting Gov. Gavin Newsom’s signature could follow a similarly troubled path, this time affecting pensions for police officers, firefighters and other public safety employees.
Assembly Bill 1383, which sailed through the Legislature with strong bipartisan support, would boost retirement benefits for public safety workers — a move that could ultimately cost state and local governments, many of which are already grappling with tight budgets, several billion dollars or more.
Critics say the bill echoes a costly mistake made in 1999, when then-Gov. Gray Davis, who owed his election in large part to public employee unions, backed a major pension increase along with expanded workers’ compensation benefits. Lawmakers were assured at the time that strong investment returns from the California Public Employees’ Retirement System, along with healthy workers’ comp reserves, would cover the costs without burdening taxpayers.
That assumption didn’t hold up. When the economy soured during the early 2000s, both systems were left in serious financial trouble. By the time Jerry Brown returned to the governor’s office in 2011, he was forced to overhaul the pension system, cracking down on “pension spiking” abuses and creating a two-tier structure — known as PEPRA — that preserved benefits for existing workers while scaling them back for future hires.
Interestingly, a similar two-tier system had existed briefly under Republican Gov. Pete Wilson before Davis repealed it. Brown’s reforms brought that structure back to stabilize the system.
AB 1383 threatens to chip away at those protections. According to estimates from legislative analysts and the state Department of Finance, the bill could cost more than $8 billion. And while public safety unions are pushing the measure first — likely because police and firefighters tend to enjoy strong public support — other government employee unions are expected to seek similar benefit increases if the bill becomes law, making the true long-term cost difficult to predict.
Supporters argue the affected employees would cover half the added expense. But that assumption only holds if pension fund investments perform as expected. If returns fall short, taxpayers could end up shouldering the difference.
Whether Newsom signs the bill remains uncertain. His own Department of Finance has come out against it, warning that the legislation “partially unwinds the reform objectives, structural safeguards and fiscal cost containment guardrails established by PEPRA,” and could create fairness issues between safety and non-safety employees while significantly raising costs for state and local governments.
Still, political reality may complicate the governor’s decision. With speculation mounting that Newsom plans to seek the presidency, rejecting a bill strongly backed by public safety unions could carry political risks as he looks toward a future national campaign.
The timing of the union-backed push is not likely coincidental — arriving, as it does, during Newsom’s final year in the governor’s office.
Original source: CalMatters
