MOORLACH UPDATE — LB Press-Telegram — February 7, 2011

The OC Register has printed my submission today.  You can see it at http://www.ocregister.com/opinion/debt-287045-pension-california.html.

The Long Beach Press-Telegram also made mention of my OC Register piece in today’s editorial below.  The author fully understood what I was communicating:  you can’t have it both ways.

Brown must curb unions

Scaling back overfat public pensions has finally begun.

Gov. Jerry Brown says his budget plan would raise taxes but also cut spending, therefore it is reasonable. But there’s a better description for it.

Orange County Supervisor John Moorlach says any ballot measure that would raise taxes without pension reform should be labeled the Extravagant Pension Subsidy Act, and he is exactly right. Still, there is no serious effort in Sacramento to do anything about it.

Overinflated state employees’ pensions are taxpayers’ biggest long-term financial threat, and there is no realistic alternative to deflating them. Unless legislators face up to the problem they have created, voters will have to do it. Expecting them to raise taxes first is a fantasy.

This message may not be getting through to Sacramento politicians, but it is beginning to be heard locally. Not in the financially crippled city of San Diego, which has been debating pension reform for more than 10 years, but in places like neighboring Chula Vista, which a week ago pressured through agreements with the last of its employee unions that will deal with huge deficits.

Even the less desperate and better-managed city of Long Beach is taking a firmer stand on pensions. The City Council voted unanimously last week to impose pension reform on one of its employee unions, the 250-member Association of Engineering Employees.

These things don’t come easily. The city declared an impasse in contract negotiations and imposed conditions on the engineers that force its members to pay full costs of pension contributions and will cut pension benefits for new hires. The union’s response: it agrees about reform, but disagrees about the impasse and worries that Long Beach’s reduced benefits won’t be competitive when it comes to hiring. (That’s a management concern, and management doesn’t seem worried.)

In an article written for the Web site of Public CEO, Long Beach Councilman Gary DeLong said the council is determined to roll back pension benefits to the level in 2001, when disastrously generous increases were made, retroactively. Long Beach’s mayor, Bob Foster, says the city will take the issue to voters if the unions try to block reform.

Orange County Supervisor Moorlach would agree with all that and more. He is pushing a lawsuit claiming pension retroactivity was an unconstitutional gift of public funds. The suit lost recently in appeals court, but Moorlach wants to take it to the state Supreme Court. He makes a compelling point, that public agencies try to claim unfunded liabilities aren’t the same thing as a debt, yet issue pension obligation bonds against it as if it’s a debt. Can’t have it both ways.

That’s a theme that should catch on. Even in Sacramento.

FIVE-YEAR LOOK BACKS

February 7

2001

David Haldane of the LA Times provided the next chapter in the Edison saga with “2 County Officials Call for an Audit of Investments.”  Here are the related sentences:

In the wake of Orange County’s recent investment in troubled Edison International, two top county officials have requested an immediate internal audit of such procedures at the county treasurer’s office.

"There’s an art to making investments," said Board of Supervisors Chairwoman Cynthia P. Coad, who joined the county’s chief executive, Michael Schumacher, in making the request.

John M.W. Moorlach, who became treasurer-tax collector in the wake of the county’s 1994 bankruptcy, said he welcomes the internal audit. "We are a transparent and open shop," he said, "and we welcome any review of our procedures. We have gotten clean reports in the past, and we’re looking forward to another one."

2006

The OC Register had an editorial about the city of San Diego’s efforts to place a measure on the November 7th ballot that “would require voters to approve employee pension-benefit increases.”  It was titled “Pension power to the people – Let voters have a say in public-employee benefits.”  The County of Orange would successfully follow this idea, with minor modifications, with Measure J on the November 2008 ballot.

Orange County Treasurer John Moorlach, a leading critic of recent pension increases and a candidate for the Board of Supervisors, thinks the Sanders proposal would be good for the county, even though “the cat’s already out of the bag” in both Orange County and San Diego because the contracts signed with the employee unions are almost impossible to change.  Nonetheless, Mr. Moorlach said, allowing voters to pass on future pension increases would help prevent irresponsible pension spikes.

                San Francisco’s pension obligations are more than 100 percent funded, compared with Orange County’s 69 percent, Mr. Moorlach noted, because San Francisco law requires voter approval for any increase in future obligations to taxpayers, whether bonds or pensions.

                We urge the county Board of Supervisors, as well as city councils throughout the county, to imitate Mayor Sanders’ proposal and put this reform before voters as soon as possible.

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