CA: State loses legal battle over pension bonds

AP on Bakersfield Californian ^ | 7/3/07 | Aaron C. Davis - ap

[NormsRevenge]

Gov. Arnold Schwarzenegger's administration on Tuesday lost a long-running court battle over its plan to sell bonds to cover the state's public employee pension costs.

The ruling by the 3rd District Court of Appeal could complicate negotiations over the state's already overdue budget. Republican lawmakers are holding up the $104 billion spending plan in part because they believe it will leave California with an unmanageably large budget deficit next year.

Tuesday's ruling may only add to that concern, depriving the state of more than $500 million to help close the estimated $5 billion-plus deficit in the 2008-09 budget year.

Schwarzenegger and Democratic leaders have proposed balancing the current, 2007-08 fiscal year budget with billions of dollars from a prior-year tax windfall. That money will run out by the time officials begin drafting the budget that begins on July 1, 2008.

Consumer rights and anti-tax groups praised Tuesday's ruling. They said it set an important precedent limiting the state's ability to borrow money to pay ongoing expenses without voter approval.

"If they had gotten permission to do this, we could have seen massive deficit spending," said Harold Johnson, an attorney for the Pacific Legal Foundation, which fought the bonds. "It's a big victory and a sobering message for the spendthrifts in the Legislature. They can't use the credit card to cover ongoing costs of government."

Former Gov. Gray Davis' administration designed the pension bond plan.

In 2004, Schwarzenegger endorsed the plan. He proposed paying a portion of the state's annual contribution to the Public Employee Retirement System with money raised from a $560 million bond sale.

Schwarzenegger's administration argued the state did not need voters' approval to do so.

But a three-judge panel on Tuesday upheld a lower court ruling that said voters - or two-thirds of the Legislature - had to approve the use of bond money to pay the state's pension obligation.

H.D. Palmer, spokesman for Schwarzenegger's Finance Department, said the administration would not appeal the decision to the state Supreme Court.

The administration did recently prevail in another court case involving welfare payments that would have cost the state about $500 million. However, California's nonpartisan legislative analyst calculates the state faces $2 billion in potential costs from other ongoing court battles.

[calcowgirl]

Correction to my original post:

...1) Multi-million dollar ACRE conservancies to institute regional governance (i.e. Sierra Nevada Conservancy)...

[calcowgirl]

Stopping them has been almost a futile effort, at this point.
Do you see any hope that we could actually rid ourselves of some?

[calcowgirl]

Their fondest wish is to be held accountable for nothing while controlling everything.

Ain't that the truth!

[Carry_Okie]

to divert traditional resources and responsibilities from legitimate local governments simply moves local control in local hands farther way from "the consent of the governeed," compounding the outrage!!!

That's a double-edged sword. Consider what "local control" would look like where I live. They'd make cutting any tree require an outrageously expensive permit and then burn us out just like they did in Tahoe.

[calcowgirl]

My local nazis don’t like trees... they ruin the view.

They tried to take my 50+ year old dwarf pine tree from my front yard. Anything taller than 36 inches is prohibido... unless you get all the neighbors to sign a petition and go fight the city council. I won the last round.

[SierraWasp]

Well, yes, of course. But that can still be fought against on the political battlefield. In larger "regions" like mine, the ruling political classes (as you've called them) utilize their "public/private partnership" with the MSM without even the benefit of an MOU to make the political possiblility fade into expensive non-existence. SACOG includes 19 member local governments and constantly bucks line in directing any grants from our beloved State or Federal taxpaid resources.

Thus, on goes the Demoleftist ruling political class perpetual process of rewarding their supporters and punishing anyone that even questions ANYTHING they are doing!!! The Sacramento BEE features some of this SACOG doings on it's front page above the fold, today!!!

A County Supervisor from Placer County is filling in for Tom Sullivan on KFBK as I type this and is discussing this very subject!!! Right Now!!!

And thanks for not cutting me off at the knees for that last reply that I posted AFTER freedomdefender posted his/her reply that kinda irritated you. If I'd seen that before posting, I'da probably scrapped that long winded reply of mine... Well, no, I don't think so because I wasn't really being confrontational with your comment and certainly not with you.

We've discussed all this before, privately and I have a pretty good understanding of you thinking and don't argue too hard with most of it.

[editor-surveyor]

"Please tell me which group of public employees can retire in their forties?"

Those covered by "safety" retirement regulations, i.e. peace officers, and firemen.

[SierraWasp]

here's the story I was referring to in #106, above

[republicpictures]

I'm glad someone picked up on this story. Here's an interesting take from Ed Mendel's blog at the San Diego Union-Tribune:

July 03, 2007

Death of a Gimmick

SACRAMENTO -- A gimmick used to help balance Gov. Arnold Schwarzenegger's first three state budgets died when his administration decided not to appeal a court decision Tuesday blocking a pension bond.

His first budget in 2004 proposed issuing a $929 million bond to make part of the state's annual pension payment, arguing that voter approval of the debt was not needed because the pension payment is an "obligation imposed by law."

A taxpayer group, not buying the argument, got the courts to block the bond. The next two state budgets assumed that the state would prevail on appeal and issue a pension bond, eventually scaled down to $560 million.

The mythical revenue from a bond issue unlikely to be approved by the courts, as nonpartisan Legislative Analyst Liz Hill noted, was nonetheless used to help the spending plans appear to be balanced.

A lower court ruling blocking the bond issue was upheld Tuesday by the Third District Court of Appeal. The decision not to appeal was foreshadowed earlier this year when the fourth budget proposed by Schwarzenegger assumed no pension bond.

"This is a great Fourth of July gift to Californians," said Harold Johnson, a Pacific Legal Foundation attorney. He represented the Fullerton Association of Concerned Taxpayers.

[calcowgirl]

Ed Mendel has a blog? Excellent news!
He’s one of the only California reporters that sees straight on fiscal matters, IMO.

And here I thought the SDUT only had the nasty Chris Reed as a blogger!

Thank you! I need to check that out.

[SierraWasp]

Welcome to FR!!!

[republicpictures]

Thanks for the welcome. And thanks for being interested in irresponsible taxing and spending in California. Too many people can’t be bothered - which is why the state is in trouble.

[herMANroberts]

If you read the info I popsted earlier, most law enforcement retirement formulas call for a minimum of 50 years of age.

[ChildOfThe60s]

I believe that is the case with SFPD.

I’ll have to check with someone I know there, but I think the pension is matched funds. It’s not entirely a gimme. Something like 7.5% contribution from the cop and 5% from the city. The person I know said they could retire with 30 years at 90% of whatever the highest base salary (overtime is not counted) earned.

[herMANroberts]

I used the CHP and Corrections. The local ones I’m familiar with in socal, require 50 year minimum. Most now have 3% at 50. When I retired it was 2.0 at 50 and 2.5 at 55.