Davis’ Signing of Labor Bills Is Raising Questions

Two bills recently signed into law by Gov. Gray Davis would benefit public safety unions that have contributed millions of dollars to his campaigns -- but could add significant new costs to cash-strapped local governments.

The first enables police unions in Los Angeles, San Diego, Ventura and 17 other counties to negotiate a new benefit called a deferred retirement option. The provision would allow law enforcement officers to “retire,” but continue working for up to five years, collecting both a salary and pension pay.

Davis has twice vetoed similar legislation, saying it could create substantial new costs for local governments. But he signed SB 274 on Oct. 12, five days after voters overwhelmingly recalled him.

On the same day, Davis approved another bill, SB 440, mandating that local governments abide by the ruling of an arbitration panel in police union disputes unless the local governing board votes unanimously to reject the arbitrators’ decision.

Critics say the bill could make it harder for counties and cities to control labor costs. A previous law mandating binding arbitration was found unconstitutional by the California Supreme Court in April.

Police and firefighters’ unions have been among Davis’ strongest supporters, giving his campaigns $2.7 million over the last five years. Previous legislation signed by Davis has boosted government employee pension benefits dramatically and cost taxpayers billions of dollars.

Police in many counties and cities are now eligible to retire at age 50 with a yearly pension of 90% of their salaries. The latest approvals are more of the same, critics say.

“Wasn’t it Louis XV who said, ‘After me, the flood?’ ” said Republican state Sen. Tom McClintock, who voted against both bills. “Basically, that’s what’s happening. These measures could dramatically increase the total burden of public payrolls at a time when pension obligations are already growing out of control.”

But a Davis spokesman said the financial support of police unions had no effect on his actions. The governor has always put a priority on law enforcement workers and programs, said spokesman Russell Lopez.

“We are talking about people who protect us and put their lives on the line every day,” he said. “Can you put a price on that? Every person who lives in California is going to benefit from a strong and well-funded law enforcement organization.”

The deferred retirement benefit operates in various ways.

One option allows an employee to set a retirement date, but continue working for a few years after that date. Pension payments that would have been made during that period are instead deposited into a separate account and paid out in a lump sum once the officer stops working.

Other options combine a lump-sum payment and reduced pension payments.

The Peace Officers Research Assn. of California, a law enforcement advocacy group based in Sacramento, has pushed for passage of the deferred-retirement bill for three years.

But the group, which has given Davis $194,000 since he took office five years ago, failed in two previous attempts. This year, however, it agreed to a provision allowing local government to pull out of the program if it proves too costly.

“Under this bill, the [benefit] is required to be cost-neutral to public-sector employers and provides employers the tools to design a program that will achieve that result,” Davis wrote.

Ken Ringlen, a Police Officers Research Assn. spokesman, said the benefit made sense for officers nearing 50 who were not ready to stop working.

“There are still some guys who are going to still hang on until 55 even though they don’t have to,” he said. “They just enjoy their jobs and they should be fairly compensated for doing them.”

But one veteran pension administrator said he doubted the benefit could truly be cost-free.

“Cost neutrality is in the eyes of the beholder,” said John Descamp, who runs the retirement system for Sacramento County employees. “The unions will be able to negotiate all of these factors.”

The other bill signed by Davis may also be harmful to local governments, officials said.

Binding arbitration in general disenfranchises the local governing boards that are responsible for controlling costs, McClintock said. Elected supervisors and council members are the “last line of fiscal defense” against employee cost overruns, he said.

Johnny Johnston, Ventura County’s executive officer, agrees with that assessment. Ventura County was one of several local governments around the state that challenged the previous binding arbitration law in court and won.

Although SB 440 provides that an arbitration award can be rejected, that can only be done with a unanimous decision by the local elected board. That can be an impossibly high bar to meet, Johnston said.

“It’s a formula for failure,” Johnston said. “And it’s one more step in eliminating the ability of local government to manage itself.”

Times staff writer Dan Morain contributed to this report.