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Jerry Brown Calls On LA Biz Leaders To Support Tax Hikes, Pension Reform

Ryan Faughnder |
January 26, 2012 | 9:27 p.m. PST

Executive Editor

California Gov. Jerry Brown took to LA Live Thursday night to rally support from business leaders at the LA Area Chamber of Commerce Inaugural Dinner for his plan to fix the state’s fiscal troubles through tax hikes, and spending and pension cuts. 

Gov. Jerry Brown (Ryan Faughnder)
Gov. Jerry Brown (Ryan Faughnder)

Brown has been touring the state to get businesspeople on board with his plan to increase taxes on wealthy Californians for five years to fund K-12 education, getting support in some Republican strongholds, but a more tepid response in San Diego, according to the LA Times. In his 10-minute speech in L.A., he touted his economic record, noting that under his watch the state has cut its chronic budget deficit from $26 billion to around $9 billion, despite gridlock among lawmakers.

“If my program of cuts and taxes is accepted, we will eliminate that budget now and going forward,” he said. “Our credit rating, instead of being almost at the bottom, will continue to improve, as it’s just starting to do.”

He told the audience, made up largely of wealthy Californians who would be affected by the tax hikes, that “there are a couple good things” about his tax program. “It’s half of Schwarzenegger’s program,” he said. “Just two years ago, you were paying $12 million that you’re not paying anymore. So I hope you used it or saved it to get ready for my temporary tax program.”

The Governor’s tax-and-cut plan, which will go before voters in November, recently received mixed reviews in a public opinion poll by the Public Policy Institute of California. About 68 percent of likely voters said they like the idea of taxing the rich to fund schools, but were less enthusiastic about the plan with the taxes and cuts to social services included. 

A close look at the poll, however, suggests that voters may not have been expressing support for raising taxes, but rather fear of the consequences of the "trigger cuts" to K-12 schools that would take effect if the plan fails to pass.

Brown was cautious when asked about the numbers. “I’m not taking it to the bank,” he told reporters after addressing the crowd. “Those polls look okay, but it’s a volatile state. Anytime you ask people to dig into their pockets and pay a little bit more, it’s controversial.”

A recent Legislative Analyst Office report said that the Governor's estimation of revenue that would come from the tax hikes was too high by a significant margin.

Brown's pension overhaul, which he proposed in late October last year, got a swell of applause when he mentioned it in his speech Thursday. “This is a call to action. We’re not ready to fall off a cliff,” he said. “But if we keep acting in a way that doesn’t take into account the arithmetic, we will.”

Under the plan, public employees' contributions would make up 50 percent of their pensions. The retirement age for non-safety employees would be raised to match the Social Security age of eligibility, 67. New safety employees would see a rise in their retirement age, as well. 

Measures would also curtail the practice of pension spiking. Retirees' benefits would be based on their average pay over their last three years of employment, rather that just the last year, a policy that is vulnerable to abuse.

Convicted felons would forfeit their pension benefits. Retroactive pension increases and pension holidays would be prohibited. In addition, limits would be placed on the hours that refugees can work for public institutions while receiving benefits.

A Field Poll in December registered general support for the Governor’s pension plan. The Sacramento Bee published an editorial Wednesday that expressed little confidence that the state legislature would go forward with the proposal in a serious way:

So here's what's really happening. The Legislature is stalling, waiting to see if either of the two pension reform initiatives that have been proposed by private interests can gather the necessary signatures to qualify for the November ballot. If and when those measures qualify – and it's doubtful they will because no deep-pocket supporter has yet emerged willing to finance the effort – only then will lawmakers likely approve some sort of weak pension reform measure and stick it on the ballot to try to confuse voters and defeat serious reform.

Matt Rezvani, the General Manager of External Affairs at BP, said he hasn’t decided whether or not to support Brown’s tax plan, but he admires the work the Governor has done on the budget so far. 

“It takes a lot of courage to do what he’s done,” he said. “I personally don’t like the cuts to education, but at the end of the day, something’s got to give.”

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