Unless Marin and California voters elect state lawmakers who are willing to cut benefits for teachers and other public employees, state coffers will be swamped by pension and health care obligations in the next downturn, a speaker said this week.
“You just have to win” state elections, David Crane, president of Govern for California, told about 110 people crowded into Piatti’s Restaurant in Mill Valley on Monday at an event sponsored by the Coalition of Sensible Taxpayers Marin. “You have to wake up every morning and say, ‘What do I have to do to win?'”
Crane said state Assembly and Senate members must be elected who are “courageous” enough to make reductions in three areas: public pensions, retiree health care and Medicaid. Employee unions that don’t want the changes must be made to understand that the whole solvency of the state is at risk, he said.
“‘The big takeaway from David is that all the power resides in Sacramento, the Legislature — that’s the Assembly and Senate,” said Ken Broad, a financial analyst and community advocate. “Most people here are railing against Trump and are very focused on local grassroots issues — and yet, all the leverage is up in the Legislature.”
Broad is assisting Crane with Govern for California, a network of political philanthropists who say they give money to candidates who work for the benefit of citizens instead of special interests.
If lawmakers willing to make changes are not elected, “nothing will change, unfortunately. And he (David Crane) presented a strong case that it’s a cost tsunami.
“In the next downturn, revenues are going to shrivel — I think he (said) $60 billion will swamp the (state) Rainy Day Fund,” Broad added. “So, you ain’t seen nothing yet.”
Attendees, such as Susan Kirsch of Mill Valley and Michael Hartnett of Greenbrae asked Crane what residents can do locally. School board trustees do not have the power to negotiate a reduction in pension benefits, for example, Crane said, but they could reduce retiree health care benefits.
“Marin County has some of the highest parcel taxes in the state — I think a lot of it has to do with pensions,” Hartnett said. “How do you tell the school boards they can’t keep doing this?”
“You gotta win,” Crane responded, meaning that local residents should focus on getting their people elected to the school boards and making sure they do whatever they can to stabilize costs. Part of winning is knowing that it takes 41 Assembly votes and 21 state Senate votes to get a bill passed.
“There are three groups of people who understand this: health care companies and public employees; crony capitalists such as the state dental association; and regulated entities such as PG&E,” Crane said. “They know the names of every legislator — and you would too if your livelihood was at stake.”
Most other Californians don’t know the name of their local state lawmakers, such as Marin representatives Assemblyman Marc Levine and Sen. Mike McGuire, he said.
“How do we do more to educate people about what’s going on and give them a sense of the tools and empowerment they are there to make a difference?” said Kirsch, of Livable California in San Francisco.
Crane, a lecturer of public policy at Stanford University, said if the changes he outlined had been made 13 years ago, the state would be on top of its pension liabilities and in good fiscal shape. Now, he said, “the current public employees are going to have to be robbed to pay off the (pension) debt to the former employees.”
He said it was not the fault of the employees who want higher pay and benefits, but of state officials such as those at the board of CalSTRS, the California State Teachers Retirement System, who “overstate their rate of return (on investments), and understate their liability.”
“They have to cut the COLA (annual cost of living adjustment on pension benefits) and reduce benefits for the years not worked (after retirement),” Crane said.
Mary Jane Burke, Marin County superintendent of schools, said she thought Crane’s talk was informative and useful — even though local districts lack the control to remedy the situation.
“There’s no question that the issues related to fiscal solvency for our state and the local governments will be critical to all of us in the future,” she said. “It looks like what we need to do is to get more information and to join the rest of California to ensure that when our state says we have local control, that we actually have local control.”
In addition to Govern for California, which he formed in 2011, Crane, 64, who lives in San Francisco and also has a cottage in Bolinas, was an adviser to Gov. Arnold Schwarzenegger from 2004 to 2010. From 1979 to 2003 he was a partner at Babcock & Brown, a financial services company. He has current and former experience as a member of several high-powered state boards.
A video of Crane’s full talk from Monday will be posted later this week on the COST Marin website.
