(Reuters) - Proponents of an initiative to reduce public pension obligations in California took a step forward on Thursday with approval to start collecting signatures to get a proposal onto the November 2016 ballot.
Two initiatives, with varying language, were approved by California Secretary of State Alex Padilla for circulation. Both would restrict the amount of money employers would have to contribute to the retirement plans of public employees hired after Jan. 1, 2019.
Should either initiative get the necessary 585,407 signatures within the next 180 days, it would be the first time a proposal to cut pensions made it onto a statewide ballot in America’s most populous state.
“That gives us the green light to start collecting signatures. However we are going to do some polling because we are not going to move ahead with two initiatives,” said the ballot campaign’s leader, Chuck Reed.
Reed is the former Democratic mayor of San Jose who returned to practicing real estate law in 2015 after eight years in office.
The measure would take aim at CalPERS, America’s largest public pension fund with $300 billion in assets. It is the administrator of pensions for more than 3,000 state and local agencies, and has long argued that pensions cannot be touched or renegotiated, even in bankruptcy.
A call to CalPERS seeking comment was not immediately returned.
While California’s economy has improved in the past few years, public worker pension debt grew to $198 billion in 2013 from $6.3 billion in 2003. Unfunded liabilities for retiree healthcare benefits are approximately $150 billion, according to the group.
One initiative, in part, would bar government employers from contributing more than 11 percent of their base compensation. The other initiative, in part, would bar the enrollment of new employees in defined benefit pension plans.
Both initiatives would bar government employers from paying more than half of the cost of their pension and retiree healthcare benefits without voter approval.
“By putting a cap on the payments it ensures we won’t be generating these huge unfunded liabilities that will then drive the cost (higher),” Reed said.
“Employees would have to pay more if they want a bigger or more expensive pension, or they have to ask the voters to approve it,” he said.
Reporting by Daniel Bases in New York; Editing by Lisa Shumaker
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