PENSION REFORM BILL SIGNED INTO LAW

FOR IMMEDIATE RELEASE: Contact: Governor's Press Office Wednesday, September 12, 2012 (916) 445-4571 Governor Brown Signs Bipartisan Pension Reform Bill to Save Billions by Capping Benefits, Increasing Retirement Age and Stopping Abuse LOS ANGELES – Governor Edmund G. Brown Jr. today signed sweeping bipartisan pension reform legislation that saves billions of taxpayer dollars by capping benefits, increasing the retirement age, stopping abusive practices and requiring state employees to pay at least half of their pension costs. “This is the biggest rollback to public pension benefits in the history of California pensions,” said Governor Brown. “We’re lowering benefits to what they were before I was Governor the first time and reducing costs by up to $55 billion in PERS and billions more in other local pension systems. Under the new rules, employers and employees alike are going to contribute their fair share of the costs, resulting in a more sustainable system.” The pension reform law, AB 340 (Furutani), requires current state employees and all new public employees to pay for at least 50 percent of their pensions and establishes this as the norm for all public workers in California. Importantly, these new reforms eliminate state-imposed barriers that have prevented local governments from increasing employee contributions. The new law also bans abusive practices used to enhance pension payouts. “I am very proud of my colleagues for their hard work to achieve these historic, bipartisan reforms,” said Assembly Speaker John A. Pérez. “The pension reform law outlaws the most objectionable practices, creates new accountability for pensions and saves state and local government as much as 70 billion dollars in the coming years while keeping faith with California’s hardworking public servants. These are meaningful reforms that address one of the biggest long-term challenges facing California, and I believe this is a major victory for the people of our state.”   “Until recently, pension reform was defined by ending the system’s abuses. The reforms we have accomplished do just that but we also ventured significantly further,” said Senate President pro Tem Darrell Steinberg. “Some say that it is far too much and others say that it is not enough but this much is undeniable: the result is a fair and defined middle-class retirement package that goes a great distance toward protecting taxpayers and the fiscal health of our pension systems.”   AB 340 also increases the retirement age for new public workers and caps the salary amount that can go toward pensions.   “The pension reform plan that Governor Brown signed today will save taxpayers billions of dollars by making important changes to the way we calculate pension benefits and eliminating opportunities for abuse,” said Assemblymember Cameron Smyth. “Having been involved in pension discussions with the Governor for many months, I can say that all of us wanted to see this plan go further. We have to be careful, though, not to make the perfect the enemy of the good. This plan is a step in the right direction, and lays the groundwork for more comprehensive reform going forward.”   On Monday, Moody’s Investors Service said that California’s pension reform legislation boosts the credit outlook for state and local governments participating in CalPERS. Moody’s currently rates California an ‘A1’ with a stable outlook.   “Thanks to the Governor's leadership and signature today we have a Win-Win for California's public and private sector,” said Dan Dunmoyer, Senior Vice President for Farmers Insurance and CalPERS board member. “It is a win for the public sector because the new law will take positive steps to ensure we can keep our commitment to our new public servants for decades to come and a win for the private sector as a better funded pension systems will result in less pressure to raise taxes and reduce support for much needed education and infrastructure projects.”   Public Employee Pension Reform Act of 2012 Caps Pensionable Salaries ·         Caps pensionable salaries at the Social Security contribution and wage base of $110,100 (or 120 percent of that amount for employees not covered by Social Security). Establishes Equal Sharing of Pension Costs as the Standard ·         California state employees are leading the way and are paying for at least 50 percent of normal costs of their pension benefits. Requires new employees to contribute at least half of normal costs, and sets a similar target for current employees, subject to bargaining. ·         Eliminates current restrictions that impede local employers from having their employees help pay for pension liabilities. ·         Permits employers to develop plans that are lower cost and lower risk if certified by the system’s actuary and approved by the legislature. ·         Provides additional authority to local employers to require employees to pay for a greater share of pension costs through impasse proceedings if they are unsuccessful in achieving the goal of 50-50 cost sharing in 5 years. ·         Directs state savings from cost sharing toward additional payments to reduce the state’s unfunded liability. Unilaterally Rolls Back Retirement Ages and Formulas ·         Increases retirement ages by two years or more for all new public employees. ·         Rolls back the unsustainable retirement benefit increases granted in 1999 and reduces the benefits below the levels in effect for decades. ·         Eliminates all 3 percent formulas going forward. ·         For local miscellaneous employees: 2.5 percent at 55 changes to 2 percent at 62; with a maximum of 2.5 percent at 67. ·         For local fire and police employees: 3 percent at 50 changes to 2.7 percent at 57. ·         Establishes consistent formulas for all new employees going forward. Ends Abuses ·         Requires three-year final compensation to stop spiking for all new employees. ·         Calculates benefits based on regular, recurring pay to stop spiking for all new employees. ·         Limits post-retirement employment for all employees. ·         Felons will forfeit pension benefits. ·         Prohibits retroactive pension increases for all employees. ·         Prohibits pension holidays for all employees and employers. ·         Prohibits purchases of service credit for all employees.   For full text of the bill, visit: http://leginfo.ca.gov/bilinfo.html.   # # #

Governor Edmund G. Brown Jr. State Capitol Building Sacramento, CA 95814

Protecting California's Timber Industrry - Governor Signs AB 1492 Fire Liability Reform

By Thomas L. Sheehy

For the first time in more than a decade a significant piece of forest legislation has been enacted that enjoys both industry and environmental community support.  This thanks to Governor Brown signing AB 1492 today in Sacramento. The legislation provides critical relief for all private landowners from excessive liability claims made by the federal government for wildfires.   The legislation is a package deal, forged through a collaborative process with compromise from all parties – environmentalists as well as timber industry interest. It is has been controversial because it makes significant reforms to fire liability provision in current law, changes to timber harvest plan (THP) regulations and includes a stable funding source to pay for the regulatory structure. The funding source is a 1% levy on timber products sold in California estimated to raise up to $30 million annually (50 cents on the average lumber ticket at a big box retailer in the state, and less than $150 on a new $300,000 house).

This reform package has been desperately needed. California is subject to substantial forest fire threat and when public lands are damaged through negligence occurring on private lands, the damage liability under current law is eight to ten times the actual commercial value of the property. No other state in the country has such a fire liability scheme.  The result of this is that California timber operators are facing a terribly difficult time getting liability insurance, and when they do; it costs more and covers less. Inability to get liability insurance will simply put many family companies and other operators out of business. And with them, thousands of good paying jobs with benefits that are highly coveted in the rural areas of the state. Indeed, the cost of the current regulatory structure and cost of liability insurance has made California lumber less competitive. Today, up to seventy percent of lumber consumed in this state is imported from the Pacific North West, Canada and other areas. California is exporting thousands of good paying jobs to other areas as our friends and families in the industry suffer and lose their livelihoods.

Some opponents to this reform package expressed concerns over limiting fire liability to a more reasonable approach like all the other states have. Others made a major issue out of the one percent timber fee to pay for forestry regulation.  The fact is, this new funding source will provide a stable stream of revenue to pay for THP review, allow the state to eliminate highly regressive regulatory fees now being paid, and will level the playing field so that all producers of lumber selling into California have skin in the game. For smaller timber producers in rural California, it gives them a better opportunity to compete with large out-of-state producers and to create good jobs in Northern California. Many politicians and policy makers constantly repeat that they want to help the state’s economy and create jobs. Well this THP reform legislative package is ground zero in job creating and economic development. With it, we can expand California’s share of timber production and consumption in the state and create thousands of new jobs. Without it, more producers would have been forced out of the business causing California to import thousands more truckloads of lumber from out of state and send our coveted jobs across the state’s border.

 

SB 1118 Mattress Extended Producer Responsiblity - Top 10 Reasons Why It Failed

Top Ten Reasons SB 1118 (Hancock) Was Stopped

Mattress Extended Producer Responsibility
 

Lack of mattress recycling fee is severe financial burden.

Like existing California recycling programs, mattress recycling must be funded by a uniform fee collected at retail. It is unfair and completely unworkable to make the manufacturers pay 100% of the cost to implement an extended producer’s responsibility (EPR) program in the state. The bill should explicitly require that the recycling obligations imposed by the law be funded by a fee collected at retail. California has never enacted an EPR program that did not include a recycling / disposal fee paid up front by the consumer. This precedent would be extremely bad policy.

Major new costs imposed on manufacturers.

Mattress manufacturers will face MAJOR untold costs to set up new recycling centers, pick up and transport mattresses, store mattress, coordinate with retailers, consumers, waste companies, police illegal dumping, run a public relations campaign and otherwise become waste management experts (in areas where they have little or no expertise) to comply with the bill’s provisions. The cost to implement this EPR program statewide will be $10’s of millions of dollars.

 

Unrealistic recycling targets with draconian fines.SB 1118 also contains arbitrary and unrealistic recycling targets and there is no evidence to show that these mandatory targets are practical or achievable (75% recycle rate by 2020). As a result, the unattainable targets set by SB 1118 could guarantee excessive fines approaching $2 million annually (up to $5,000 per day) for every mattress manufacturer and retailer in the state. 

 

Retailer mandate to pick up mattresses but no ability to recover costs.

SB 1118 mandates that mattress retailers who deliver mattresses to their customers must offer a pickup service or provide a voucher for mattress recycling. However, it prevents them from charging for this service thus placing a great burden on the retailers.

On-line versus brick and mortar – unfair competition.
The bill exempts on-line retailers of mattresses from having to participate thus creating an unfair advantage over brick and mortar sellers. 

Unlimited fee authority by state Cal Recycle.

The bill grants unlimited fee authority to CalRecycle to pay for the regulatory scheme. These fees must be remitted by the manufacturers and the state can set the fees at whatever level it deems appropriate.

Higher prices to consumers / lost jobs in the economy.

The net effect of the EPR regulatory scheme in SB 1118 is going to be significantly higher prices for consumers and lost manufacturing and retail jobs as a result. This is an anti-business, anti-economic development piece of legislation that will hurt the state’s economy.

Where’s the problem?; Retailers already pick up old mattresses.

This bill appears to be a solution in search of a problem. Mattresses are already collected in a responsible manner.  Most retailers offer a collection service when a new mattress is purchased.  Retailers then dispose of these mattresses through the proper channels and established mattress recyclers.

Eight new recycling centers established in California.

The industry has not turned a blind eye to recycling. In fact, there have been 8 new recycling centers opened in California in the last decade including a very large and successful one right in the middle of the author’s district.

Recession hit industry hard in California.

The mattress industry was hit hard by the recession.  Sales dropped by over 20%, bankrupting large and small manufacturers and retailers in California and across the country.  As the industry struggles to recover from this very difficult period, now is not the time to impose substantial new costs on vulnerable businesses or impede their ability to sell new products.  Higher costs will jeopardize businesses and jobs.  But laws like SB 1118 will be a step backward for the industry by significantly increasing costs, reducing demand for new product and killing jobs.