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California

Steven Greenhut
Now, the Union Pushback
Following big victories for public-pension reform in California, the union empire takes to the courts.
12 June 2012

The nation’s public-sector unions have become so emboldened by years of political victories, and so insulated from voter concerns, that they apparently never considered the possibility that voters, given a clear choice, would turn against them. Last Tuesday was as close as the nation gets to a clarifying election, the result of union overreach in Wisconsin and union intransigence in California. “Election results in California and Wisconsin this week are being viewed as a turning point for organized labor—to its detriment,” reported the Los Angeles Times, echoing a story line repeated nationwide.

The biggest news, of course, came from Wisconsin, where angry and increasingly militant public-sector unions tried to recall the governor, lieutenant governor, and three state senators (one incumbent resigned, thus leaving a seat to fill, but no actual recall). Governor Scott Walker pulled out a strong seven-point victory, and the unions appear likely to gain only one senate seat by the slimmest of margins. The California results were almost as impressive, as San Jose voters approved a pension-reform measure with 70 percent of the vote.

Immediately after San Jose’s Measure B passed last week, the unions filed a court challenge against the initiative. Measure B reduces benefits for current public employees; they will have a choice between a new, lower-benefit retirement package or keeping their current benefit plan but contributing more to pay for it. In the private sector, employers can reduce employee-pension benefits going forward, but in California, anyway, the courts have prohibited benefit reductions for public employees.

San Jose officials argue that they’re legally in the right because of specific city ordinances and because of the municipality’s status in California as a “charter city.” Mayor Chuck Reed explained in response to the union lawsuit: “Measure B was carefully crafted to follow California law. San Jose is a charter city and the California Constitution gives charter cities ‘plenary authority’ to provide in their charters for the compensation of their employees. San Jose’s City Charter reserves the right of the City Council and the voters to make changes to employees’ retirement benefits: ‘. . . the Council may at any time, or from time to time, amend or otherwise change any retirement plan or plans or adopt or establish a new or different plan or plans for all or any officers or employees.’”

“San Jose’s Municipal Code,” Reed added, “allows the city to require employees to pay more for retirement benefits. In fact, two years ago, a number of city-employee unions agreed that the city could make employees pay more for retirement benefits.” Reed explained that “more than 200 other California cities have required employees to pay for a larger share of their retirement costs.” Finally, the mayor argues, “the courts have upheld the rights of local government to determine compensation, and according to the Ninth Circuit Court of Appeals, ‘it is well established that public employees have no vested rights to particular levels of compensation and salaries may be modified or reduced by the proper statutory authority.’”

Meantime, San Diego voters also overwhelmingly approved serious pension reform, as well as a measure banning union-exclusive “project-labor agreements” that inflate public-sector contracting costs by keeping out non-union competition. The top vote-winner in the city’s mayoral primary was pension-reform advocate Carl DeMaio. His prospects for winning the mayoralty in November seem promising, given that he will face off against union Democrat Bob Filner. Up the road in Orange County, voters approved a modest pension-limitation measure. A pension-hiking, police-union ally, Todd Spitzer, won back a seat on the board of supervisors—but only after promising that he was a born-again pension reformer.

So the results in deep-blue California are clear. Even in Democratic Party bastions, such as San Jose, voters said “yes” to pension reform and “no” to union priorities by an overwhelming majority. As I wrote previously for City Journal, San Jose’s Reed made the progressive case for pension reform: he argued that the government programs liberal Democrats care about are endangered by a pension burden that now consumes 20 percent of the city’s general-fund budget. He distinguished between union Democrats and progressives, a distinction that will serve pension reformers well as proposals go forward in blue states.

The unions essentially gave up on San Diego’s Proposition B and San Jose’s Measure B long before the election, offering little more than token opposition. They knew they would lose, so they concentrated on a legal and regulatory approach to derail reform. In San Diego, the unions appealed to the Public Employment Relations Board—a state board of appointed union sympathizers—to invalidate the pension-reform measure preemptively. The unions asked the board to evaluate whether even asking voters about reforming the system constituted an “unfair labor practice.” When that failed, and the voters rendered their verdict, the unions shifted to litigation. In San Diego, city attorneys “asked the state’s 4th District Court of Appeal Thursday to hear all five pending court cases involving Proposition B, the pension-system-overhaul measure overwhelmingly passed by voters this week,” according to San Diego News Room. The city wants to resolve quickly the many ongoing and expected legal challenges to a measure written specifically to conform to existing legal precedent.

Given the state supreme court’s recent decision declaring that some “non-vested rights,” such as medical care, may actually be “vested rights” if a county board of supervisors or a city council “implies” as much in an ordinance of resolution, it’s easy to be pessimistic. But this much is certain: the unions can no longer count on winning in the court of public opinion.

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