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Disputed Pension Spikes

Disputed Pension Spikes 

The court fight isn't over, but taxpayers are losing.

February 18, 2009

Long Beach Press-Telegram Editorial

If a government employee is ready to retire and just before walking out the door his or her employer increases pension benefits 50 percent, would that be an earned increase or a gift of public funds? The answer to taxpayers is obvious.

But not necessarily to a judge. L.A. Superior Court Judge Helen Bendix ruled tentatively last week against the Orange County Board of Supervisors' contention that the county's 2001 pension spike benefitting sheriff's deputies was retroactive, unearned, and therefore an illegal gift of public funds. She granted the deputies' union request to dismiss the case.

The judge held off on a final decision to hear more arguments, and will issue a final ruling within a few days. But it's clear which way she is headed.

Too bad for taxpayers. The deputies' union has said the lawsuit is a waste of money, $1.5 million so far, but that's a trifling compared to the billions that are at stake elsewhere. Which explains why cities and counties are watching this case so closely.

The most enthusiastic supporter of the lawsuit is Orange County Supervisor John Moorlach who, to his credit, says he wants to appeal the decision. He says a retroactive pension spike amounts to extra compensation for work already performed, and incurs indebtedness without bothering to ask for a two-thirds approval by voters. This is true on the face of it, though not necessarily illegal.

We like a quotation in the Orange County Register of George Miller, a columnist for Governing magazine: "Retroactive pension increases serve no purpose except to buy favors with incumbent union members to get a contract signed ... at the expense of future taxpayers who don't even know what hit them."
It's worse than that, actually. It's politicians paying off their own employees in exchange for campaign support, and often campaign cash, to benefit their political careers. If politicians did that for contractors and weren't careful about it, they could end up in prison.

The pension spike in question was approved in 2001 by a board of supervisors that didn't include Moorlach. But similar pension deals have been done all over the state, and with state employees as well. Now, by law, the pensions can't be reduced unless the government entity goes into bankruptcy, like the pension-burdened city of Vallejo. Moorlach has predicted that four more California cities could do the same next year.

Orange County's court case might seem like a long shot. But it will have to do, at least until taxpayers wake up and finally realize what's hit them.