Governor Jerry Brown to Cities: Pensions, That's Your Problem!

Via Bloomberg, it is reported that Governor Jerry Brown told cities via his budget:

"A lot of cities signed up for pensions they can’t afford," the term-limited governor said during a budget briefing in Sacramento. "I don’t think the state is in a position, as far as I can see, to step in the shoes of mayors and supervisors. They’re going to have to handle that themselves." 

Cities looking for more relief may find it in the courts, Brown suggested. The governor in January predicted that legal rulings in pending cases may make it easier to cut pension benefits for existing workers.



This is an interesting comment that EXISTING workers should pay attention to. Any pension cuts will hit current city workers. The statement implies that retired workers will not be impacted.

As mentioned in the San Diego Union Tribune, Governor Brown telling cities that the state won't be helping them out does make some sense. The state didn't make those deals. The cities did. Yet, the Tribune does make this point:

That year [1999], the state Legislature and, to his subsequent regret, then-Gov. Gray Davis, bought the astounding claim of the California Public Employees’ Retirement System that the then-booming stock market would keep booming in perpetuity and approved a retroactive pension boost of 50 percent for state employees.

The Tribune argues that cities felt they could just follow the state's lead. They point to a pension study League of California Cities. Yeah, feeling that the state was giving a green light to boosting pension plans doesn't mean that cities had to follow the state. I will dive deeper into this study as it probably has some interesting findings -- though perhaps biased.