The State Worker: Pension reformers retooling with help from Texas

10/03/2013 12:00 AM

10/17/2013 5:55 PM

With the first deadline looming for a new public-pension proposal to make the November 2014 ballot, a Texas nonprofit has emerged in a behind-the-scenes battle poised to break into public view next year.

Union interests are howling that San Jose Mayor Chuck Reed, a Democrat pushing a controversial idea to dial down government retirement benefits, asked a Houston-based group to give $200,000 to his local chamber of commerce last summer for “policy analysis for statewide pension reform,” according to a report Reed filed in August.

The Texas organization, Action Now Initiative, is a 501(c)(4) group (a reference to the applicable IRS code) that can raise and spend unlimited money, tax-free, without revealing donors.

Action Now’s gift revives memories of an Arizona nonprofit that last year put $11 million into defeating Gov. Jerry Brown’s tax initiative and to support another ballot measure to hobble union-dues collections. The group had connections to the Koch brothers, but we still don’t know who gave the money. When a court ordered disclosure, the organization pointed to two other faceless out-of-state nonprofits.

A message left Wednesday with Action Now wasn’t immediately returned, but it shares an address with the Laura and John Arnold Foundation, which was launched in 2008 by a former Enron executive and his wife. Its website lists a number of causes, including “structural changes” to public pensions that are “comprehensive, sustainable and fair.”

That agenda aligns with Reed’s idea to alter California’s constitution so that state and local governments could lower pensions prospectively for current employees, while keeping their earned benefits intact. Prevailing wisdom says that retirement promises to current employees can’t be altered. A voter-approved rollback for San Jose city employees is testing that theory in court.

Meanwhile, Reed has about a month to file ballot initiative papers, said Mike Arno, head of Arno Political Consultants, “and ideally you have money, leadership and a coalition before that.”

Then Attorney General Kamala Harris will give the measure its ballot title and summary by the end of this year. Proponents of a pension measure failed to get their proposal before voters last year, they said, after Harris skewed the language and killed their fundraising.

Assume that doesn’t happen again. Reed raises a couple million bucks. His group collects 1.3 million signatures. The state certifies them around the end of June.

Reed raises $10 million to $20 million from deep-pocketed donors. His campaign cites Stockton, San Bernardino, Vallejo and Detroit as proof of flawed pension math. Mayors from other struggling cities ask, What will it be? Pensions or police services? Pensions or parks?

The unions throw everything they have at the measure. Their messages: It’s an overblown issue. New pension reforms are taking hold. Government must keep its promises. Reed is a tool of the rich.

Just look, they’ll say, at Action Now.

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