Brown’s Pension Talks With California Democrats Falter

Governor Jerry Brown and Democrats who run the California Legislature won’t reach an agreement over his plan to curb public-employee pension costs before lawmakers break for vacation, according to a Brown spokesman.

Last year, the Democratic governor proposed pushing state workers into a hybrid system combining elements of 401(k)-style savings plans commonly used by businesses with traditional defined-benefit pensions. Brown, 74, also wants to raise the retirement age to 67 from 55 for most employees and to ban practices known as pension spiking and double dipping.

Democrats in the Legislature have resisted some of the changes. Lawmakers are set to begin a monthlong break July 6. Brown wants to sign a pension measure soon so he can use it in his pitch to voters for his initiative to raise income and sales taxes temporarily with a ballot measure in November. If the proposal is rejected, it would trigger $6 billion in cuts.

“The governor could not agree to some of the changes in the pension counterproposal shared by the Legislature,” Gil Duran, a Brown spokesman, said today in a statement. “These complex issues cannot be resolved in two days and he has asked the Legislature to continue to work with him over the recess to resolve the substantial differences.”

Rising retiree obligations are straining the budgets of states and cities across the U.S., where leaders are still coping with the revenue effects of the longest recession since the Great Depression. A weak recovery has churned up a backlash against public-worker pay and benefits nationwide as taxpayers’ job prospects wilt and retirement nest-eggs shrink.

To contact the reporters on this story: Michael B. Marois in Sacramento at mmarois@bloomberg.net;

To contact the editor responsible for this story: Stephen Merelman at smerelman@bloomberg.net

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