Gavin Newsom Pushing ... Pension Reform?

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Gavin's doing his pension dance again...
Moments ago in a live interview on Channel 2, Mayor Gavin Newsom said he's hoping for a "third" pension reform deal to be struck before he leaves office. He reminded TV viewers he was working on pension reform before it was politically expedient to do so.

Yes, Newsom has signed the dotted line on two prior worker benefits reform measures. But for him to claim he's been an advocate of pension reform rings as hollow as Hummer-driving Gov. Arnold Schwarzenegger being lauded as an environmentalist.

Two years ago, the city did pass Proposition B -- not the contentious Prop. B of 2010 that would have mandated greater worker health care and pension contributions. The Prop. B of 2008 finally undid a jaw-dropping health care setup in which workers were fully vested for life after only five years of service. New hires must now toil 20 years for that right, and contribute to a retiree health care pool. 

Here's the problem, however: Every worker -- and retiree -- hired before the enactment of Prop. B is still on the books. As a result, the city faces an unfunded retiree health care liability exceeding $4 billion. And, of all the massive numbers you read about dealing with city government, not one cent is being devoted to chipping away at that number.

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Nice to have. But not when you owe billions.
What's worse, in order to even begin addressing the city's unfunded health care calamity, it was deemed politically necessary to insert worker-friendly language into Prop. B -- creating billions more in pension and cost-of-living obligations.

The other pension measure Newsom is talking about is Prop. D, passed in June of this year. Of course, this pension measure ended up being watered down so heavily in the negotiating process that author Supervisor Sean Elsbernd yanked his name off of it. Among other things, it changed the amount of time used to calculate workers' final pensions from one year to two years. It also mandated new public safety employees pay more toward their pensions.

Again, however, this measure didn't deal with any of the city's existing workforce -- but just future hires. This means any savings Prop. D brings us won't come about until decades down the road. And while it is estimated to produce a quarter of a billion or so in savings, it warrants mentioning the city will soon be spending $400 million a year on pension costs. In this context -- and over this time period -- even $250 million is small potatoes. 

So good luck to Newsom with his "third" pension measure. If it's anything like Nos. 1 and 2 it'll sound a lot better when he's talking about it than when San Francisco is living with it.

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