January 27, 2011

Giant pensions and giant slaloms

By Giant pensions and giant slaloms

Author: Harold Johnson

Well, that was quick. Only a week after oral argument, yesterday the Calif. Second District Court of Appeal ruled in the Orange County "retroactive" pension case.  The three-judge panel unanimously rejected the county supervisors' challenge to the whopping retirement benefit increases that their predecessors, in 2001, had showered on public safety employees, for work already performed under a previously agreed-to pension package.

PLF and the Fullerton Association of Concerned Taxpayers weighed in against the constitutionality of the benefit bonanza, and while our arguments may have been rejected they were not refuted.

Indeed, you have to run a slalom course around the case law to exclude these pension hikes from the requirement for voter approval of local-government debt. The court stressed that past cases applying the right-to-vote-on-debt rule have dealt with different facts. Well, yes, but the underlying dynamic is the same: taxpayers are faced with a long-term financial liability. That's what counts, that's why taxpayers deserved to say yes or no to the increases — and the state Constitution (article XVI, Section 18) guarantees them that right.

By boosting pension benefits for employees' work in the past, the county created an immediate multi-year debt for taxpayers – – just as in the case of bonds or a purchase agreement for a building or a park. The legal precedents also say, explicitly, that you don't have to be able to precisely measure the amount of the liability in order for the voter-approval requirement to kick in.

The state Constitution gives voters a say before they can be saddled with this kind of long-term obligation. In Orange County, voters were denied that right when retroactive pension goodies were larded out to favored public employees, and that fundamental right was diluted again with yesterday's ruling.

With governments up and down California submerged in red ink, in large part because of reckless pension promises like those in Orange County, this would be an appropriate case for review by the state Supreme Court. The constitutional and financial implications are that profound.

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