Pension Cuts 2013

Last week San Jose Mayor Chuck Reed delivered his usual speech about the benefits of slashing the retirement benefits of his city’s public employees – and why he is now pushing for a statewide ballot measure that could dramatically change the lives of hundreds of thousands of Californians.

Reed’s initiative – which he characterizes as a bipartisan effort and which hasn’t yet qualified for the 2014 ballot — would allow the state and local governments to reduce retirement benefits for current employees for the years of work they perform after the measure’s changes go into effect. What was not usual about Reed’s speech was its setting: The Roosevelt Hotel in New York City, 3,000 miles from California.

Reed was a keynote speaker at a “Save Our Cities” conference sponsored by the Manhattan Institute, a conservative think tank co-founded by Ronald Reagan’s CIA director, William Casey. There was another California presence at the gathering: The video-streamed image and voice of former Los Angeles mayor Richard Riordan who, like the ghost of Hamlet’s father, seemed to demand revenge – in this case, for the ignominious implosion of his own $800,000 effort in 2012 for an L.A. ballot measure that would have forced city employees into 401(k) plans.

New York wasn’t Reed’s only port of call last week. The following day he spoke again — on a panel at the Mandarin Oriental Hotel in Washington, D.C. There he discussed firefighter and police pensions as part of a conference on state and local retirement systems sponsored by the Pew Charitable Trusts, the Urban Institute and the Laura and John Arnold Foundation.

Reed was invited to both events, says Michelle McGurk, Reed’s spokesperson. She says the Manhattan Institute and Pew Charitable Trusts each paid for one flight, and the city of San Jose also paid some costs, based on the amount of city work Reed did while on the East Coast.

“It was a mixture of him being invited to speak and city business,” McGurk says.

Reed’s message at both venues was the same: Cutting pensions of public employees is needed to stave off cuts in public services and even possible bankruptcy. That, and the fact that his initiative is part of a bipartisan or even largely Democratic-led effort.

This last statement has raised eyebrows.

“Mayor Reed’s East Coast junket shows exactly where his bread is buttered,” says Jordan Marks, executive director of the Washington, D.C.-based National Public Pension Coalition. “The Manhattan Institute and Pew Charitable Trusts are both aligned with right-wing ideologue John Arnold, who has funded a massive effort to gut public pensions all across the country.”

On October 15, Reed filed papers with the California Attorney General for his ballot initiative, known as the Pension Reform Act of 2014. Democratic mayors Bill Kampe of Pacific Grove, Pat Morris of San Bernardino and Miguel Pulido of Santa Ana, along with Anaheim’s Republican mayor, Tom Tait, joined Reed in filing the papers. Since then Reed has become a national spokesman for slashing the retirement benefits of public employees.

In a statement released during the October 15 filing, Reed said that “skyrocketing retirement costs are crowding out funding for essential public services and pushing cities, counties and other government agencies closer to insolvency.”

The money Reed has raised for his bipartisan effort has come from mostly partisan conservative policy advocates. He has drawn $200,000 from the Action Now Initiative, a nonprofit affiliated with Texas billionaire and former Enron trader John Arnold; $25,000 from Basic American Foods heir George Hume; $25,000 from venture capitalist Michael Moritz and his wife, novelist Harriet Heyman, and $50,000 from Richard Riordan. Reed disclosed the payments in behested payment reports filed with the city of San Jose.

“Californians,” says Jordan Marks, “should be wary of what Texas billionaires are selling for its firefighters, police officers, teachers and thousands of other public workers.”

Those supporting the current ballot measure are seasoned advocates for what they call pension reform. They include Dan Pellissier who, like Riordan, abandoned his own 2012 statewide ballot crusade after California Attorney General Kamala Harris wrote ballot language describing its efforts to gut constitutional pension protections in unusually frank terms. Moritz and Heyman also helped finance San Francisco’s defeated Proposition B, a 2010 measure that would have cut pension benefits for that city’s employees, with a $245,000 check that bought the signatures to qualify that measure for the ballot. Hume also contributed to this lost cause with $50,500.

As Reed’s New York appearance shows, the effort to cut pensions in California is being closely watched by conservative activists nationwide. Which might explain why, as the battle over his ballot initiative heats up, Reed and his supporters seldom cease repeating the mantra that his proposal is a bipartisan effort.

“I’m a Democrat,” Reed told his Manhattan Institute audience last week. “We’re a Democratic city in a very blue Democratic state. So why would a Democrat in those circumstances take on pension reform over the objections of not only our 11 bargaining units in the city of San Jose but statewide bargaining units as well?

“That’s because the alternatives were worse,” he continued. “The alternative of doing nothing put us at risk of service delivery insolvency and ultimately, bankruptcy.”

Union activists and their supporters disagree.

“The reality is that this is a right-wing driven effort with Chuck Reed as the puppet,” says Steven Maviglio, a publisher of the California Majority Report and a Sacramento-based political consultant whose clients include Californians for Retirement Security, a labor coalition representing 1.5 million public employees and retirees. “If you peel back the veneer, you can see that the money, the energy and the reasoning for this is all driven by Republicans.”