Your eyes on California Government

NOV. 10, 2011

By JOHN HRABE

It’s official. San Diego’s Comprehensive Pension Reform measure has qualified for the June 2012 ballot.

It’s dubbed “CPR” from the initials of the measure, but also from the CPR medical procedure for reviving a nearly dead patient. The ballot CPR would bring San Diego’s finances back from cardiac arrest.

“According to the official count by the City Clerk, a total of 115,991 valid signatures were contained on our petitions — well in excess of the required 94,500 signatures necessary to force an issue on the ballot,” Councilman Carl DeMaio announced in an email blast to his supporters on Nov. 8. “After years of fiscal crisis, service cuts, and higher fees, voters can now impose a comprehensive solution to end unsustainable pension payouts in city government.”

For those keeping score at home, that’s 21,491 more signatures than were needed to qualify the city-charter amendment for the primary ballot. The campaign’s meticulous internal verification process produced a valid signature rate of 80 percent.

It hasn’t been an easy road for proponents of the measure, who spent more than $1.1 million to qualify the measure for the ballot. They also faced what can only be described as a signature-gathering street fight.

A Competitive Edge Research poll from earlier this year showed 70 percent of San Diego voters supported major changes to the pension system. But leaders of the pension reform coalition aren’t taking any chances. They’ve invested too much sweat equity into the campaign to become overconfident or complacent.

During my weekend shadowing the initiative campaign, Tony Krvaric, the chairman of the San Diego County Republican Party, and Tom Sudberry, the past president of the San Diego County Lincoln Club, both went door-to-door to collect signatures.

Warned Krvaric (pictured at right in the red t-shirt), who collected 37 signatures in the span of two hours, “Let there be no doubt. Local unions will mount an unprecedented campaign to defeat this measure in order to preserve the status quo, including bringing in national union resources and frivolous legal challenges. They will not go quietly into the night. When Comprehensive Pension Reform passes, San Diego will become a national model for how taxpayers can take back control of their local government from labor union bosses.”

Krvaric’s prediction that the measure will serve as a national model assumes it can withstanding two major legal challenges.

The Definition of Pensionable Pay

The most anticipated legal challenge centers around the five-year freeze on employees’ base compensation. Proponents of the initiative claim that the city can cap pensionable pay and preserve the authority to provide performance-based bonuses. City employees contend that such an action would violate the terms of their collective bargaining agreement.

To preempt this legal challenge, San Diego’s City Attorney Jan Goldsmith, a vocal supporter of pension reform, drafted a January 2011 legal opinion in defense of the base compensation cap provision.

“The City, acting through the San Diego City Council, has the authority to freeze ‘Base Compensation’ within the meaning of San Diego Municipal Code section 24.0103, subject to the Meyers-Milias-Brown Act and the City’s Civil Service provisions,” Goldsmith wrote in Opinion 2011-1. “Although employees have a vested right to have their ‘base salary or wages paid’ included in their retirement calculations, they do not have a vested right to have amounts paid in addition to base salary or wages included in their pensions.”

Goldsmith’s opinion also acknowledged that the city has little power to change vested pension benefits, “which are entitled to contract clause protection.”

Unions hoping to rebut Goldsmith’s opinion may find themselves resurrecting the talking points of two unlikely politicians: CPR supporters Mayor Jerry Sanders and Councilman Kevin Faulconer. Earlier in the year, Sanders and Faulconer opposed DeMaio’s initial pension measure out of fear that a pensionable pay cap was illegal.

“The opinion we received casts serious doubt about the legality of pensionable pay through a ballot measure that changes the charter,” the pair told the San Diego Union Tribune in March. “With this no longer a viable option, we will now focus on incorporating other elements into our measure that will be legally defensible and provide immediate cost savings to the taxpayers.”

Sander and Faulconer later changed their minds and agreed with Goldsmith’s opinion on the legality of a pay cap.

Violation of Labor Negotiations

Mayor Jerry Sanders will be featured prominently in the other major challenge, an unfair labor practices claim. The complaint, which is expected to be filed with the state Public Employment Relations Board, would likely allege that the mayor, in his capacity as the official representative for the city, bypassed labor negotiations with a citywide initiative.

The argument would involve the substantial rewriting of San Diego’s pension history.  The labor-friendly council majority repeatedly rebuffed attempts to pass meaningful reforms. Proponents turned to a citywide initiative only after unions refused to come to the negotiating table. Moreover, the unions, through their signature blocking efforts, directly negotiated with every San Diego resident about the terms of their compensation and benefits.

Both the pensionable pay lawsuit and the labor relations complaint confirm the observation of the San Diego Union Tribune. It noted, “Labor has been attacking it from all angles in hopes of derailing the proposal before it gains voter approval and goes into effect.”

Pension Model for California?

Aside from the legal challenges from unions, some pension reform advocates are reluctant to exalt San Diego as the national model for pension reform.

Jack Dean, the editor of PensionTsunami.com, expressed frustration with any plan that includes a public safety exception, a component of San Diego’s compromise measure.

“San Diego is great for taking on the unions,” he said. “But, if you carve somebody out, it still leaves a problem.”

Dean believes Rhode Island’s reform package proposed by Democratic Treasurer Gina Raimondo offers taxpayers the best hope for staving off the inevitable financial catastrophe caused by public pensions.

Former State Assemblyman Roger Niello, who has filed the preliminary paperwork for two statewide pension initiatives, also cautioned against making San Diego the model for California.

Niello would “prefer a legislative solution to the pension problem. If that’s not satisfactory, an independent ballot initiative strategy would still be necessary to achieve real reforms.” He admitted that San Diego’s political climate may have merited a more aggressive approach than what is needed on a statewide level.

“The landscape is different in this case than in San Diego, which I think dictates their approach. That has been manifested in the labor campaign fear tactics involving allegations of potential identity theft in signature gathering,” he said. “That’s an outrageous tactic but it defines the nature of the opposition.”

Savings Undone by Future Politicians

San Diego’s CPR measure, Niello’s statewide compromise, or Rhode Island’s pension dream, regardless of which pension reform plan you prefer, each plan is susceptible to future giveaways by politicians. The collective bargaining process will always allow politicians to increase public employee unions’ pension benefits and compensation.

That’s why DeMaio’s pension measure is accompanied by his mayoral campaign.

“You want to get a politician in there, he won’t want to make anyone upset. He’ll just try to play nicey nice with all parties,” he said in between greeting voters at a September signature drive. “I think people are sick and tired of the political crap. They want results. They want someone who can go in there, face reality and make tough decisions.”

Tags: Carl DeMaio, Jerry Sanders, John Hrabe, Pension Reform, Roger Niello, San Diego, Tony Krvaric