Pension reform may prevent unions from supporting Brown's tax hike

February 3, 2012 12:00:00 AM PST
A "double-whammy" for Governor Jerry Brown: The state's labor unions are threatening to withhold support of his tax initiative unless Brown changes his proposal for pension reform.

For public-employee unions to turn their back on Brown is almost unheard of, but it could happen because of the big pension changes that Brown is proposing.

Governor Jerry Brown's pension reform package that's finally in bill form is getting a huge "thumbs-down" from public-employee unions that had hoped to negotiate something less severe. It asks current employees to contribute more and calls for a hybrid retirement plan for new hires, essentially including a 401(k).

"The things that he's proposing are bad for the taxpayers, bad for the government, bad for the employees who are affected, and it just takes money that's right now securely invested and turns it over to the Wall Street profiteers," said Bruce Blanning, Professional Engineers in California Government.

Unions won't publically bad-mouth a governor they helped get elected, but privately, several are thinking about not supporting Brown's tax initiative because of the drastic pension changes. They'll be meeting to discuss the possibility over the next few days and weeks.

"That's kind of like, 'I'm going to take my ball and go home if you don't let me win,'" said former California Finance Director Mike Genest, who was appointed by then-Gov. Arnold Schwarzenegger.

Genest says Brown's package is a good start to fixing the state budget.

"If it were enacted exactly like he's proposing, it would be a monumental change, and it would, in the very long term, make pensions much more sustainable," said Genest.

Brown has already lined up a broad coalition of support for his tax initiative with donations from the healthcare and oil industries and even Indian tribes.

"If they take a walk, so what?" said political analyst Tony Quinn.

Quinn says the pension changes are a strategic move to win voters over on a small, temporary sales-tax increase and income-tax hike on high-wage earners.

"I think he's trying to reach a bargain with the voters by saying, 'Look, I'm asking you to raise taxes on yourself, raise your sales taxes. Everybody in the state pays that. And in exchange I will do some cutting of these public employee pensions,'" said Quinn.

The unions especially don't like that some of the pension changes will be written into the state constitution, essentially taking away their collective-bargaining ability.


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