Despite vetoes, pension limits are still possible

The Legislature’s plans to limit the pay of local government officials in California may be dead for the year, after the governor vetoed a key bill inspired by the scandal in the city of Bell.

But some variation of lawmakers’ proposals to rein in excessive pensions still stands a chance of becoming law this year, even though the governor also rejected those measures.

Gov. Arnold Schwarzenegger said he rejected the bills because they were piecemeal and did not go far enough.

“The scandal with the city of Bell was a disgraceful use of public funds,” Schwarzenegger wrote in one veto message. But, he added, “I encourage the Legislature to enact thoughtful and meaningful solutions rather than a rushed proposal that is severely limited in its application.”

One measure would have banned employment contracts guaranteeing city managers annual salary increases that exceed the cost of living. Schwarzenegger said the ban should apply to a much larger segment of the local government workforce than just city managers, including workers represented by unions.

With the regular lawmaking session wrapped up for the year, it is unlikely that issue will be revisited before Schwarzenegger leaves office in a few months.

But there is still an opportunity to revive some elements of a pension overhaul, even though the governor vetoed a bill he said would make only a “small dent” in the state’s pension problems. That legislation would have set a cap of 125% of the governor’s pay on the salary used to calculate the pension of any government official.

Schwarzenegger raised similar objections in casting aside two other bills that were introduced before the Bell controversy but intended to address some of the issues it raised. In Bell, Robert Rizzo, the former city administrator, had a salary of nearly $800,000 and could be eligible for a pension of about $1 million a year.

The measures Schwarzenegger vetoed would have barred the padding of end-of-career salaries, which are used to calculate pensions. Such “spiking” typically is done through bonuses, promotions and accrued vacation time.

The governor is pushing for more extensive changes in the state’s public pension system and he has vowed not to sign a state budget unless it includes them.

As Schwarzenegger was vetoing the Bell pension bill, AB 194, by Assemblyman Alberto Torrico (D-Newark), his aides were in intense discussions with legislative leaders over a more comprehensive rollback of some of the high pension costs that are eating into the state budget.

“Pension reform will be part of the budget or the governor will not sign it,” Aaron McLear, a spokesman for the governor, reiterated Friday.

Schwarzenegger has proposed requiring new state employees to work additional years to receive full benefits, basing final retirement compensation on the highest three years of wages instead of the highest year, and increasing to 10% the minimum that employees must contribute toward their retirement. Some unionized employees contribute 5% now.

The proposal being negotiated by the governor and legislative leaders involves state employees, but Schwarzenegger encouraged lawmakers Thursday to offer changes that would affect local government as well.

“I am still hopeful that the Legislature will pass an acceptable bill that addresses the real cost issues that have driven up the liability in the public pension system,” Schwarzenegger wrote in one veto message.

Assemblywoman Fiona Ma (D-San Francisco) criticized Schwarzenegger for vetoing her anti-spiking measure affecting local governments but said she hoped such restrictions would be taken up when new pension rules are ultimately adopted.

patrick.mcgreevy@latimes.com