Skip to main content
Part of complete coverage from

Pension reform is key to California's budget crisis

By William J. Bennett, CNN Contributor
May 16, 2012 -- Updated 1300 GMT (2100 HKT)
Gov. Jerry Brown speaks at a news conference about California's budget problems on Monday.
Gov. Jerry Brown speaks at a news conference about California's budget problems on Monday.
STORY HIGHLIGHTS
  • Gov. Jerry Brown of California faces a budget deficit of nearly $16 billion
  • William Bennett: California should look to Wisconsin as role model
  • He says Wisconsin addressed the root of budget problem: public employee unions
  • Bennett: Pension reform is the key to California's fiscal crisis

Editor's note: William J. Bennett, a CNN contributor, is the author of "The Book of Man: Readings on the Path to Manhood." He was U.S. secretary of education from 1985 to 1988 and director of the Office of National Drug Control Policy under President George H.W. Bush.

(CNN) -- Over the past weekend, Gov. Jerry Brown of California took to the safety of YouTube to reveal that the Golden State's budget deficit is now $15.7 billion, far greater than the original $9.2 billion estimate in January.

California state taxes, already some of the highest in the nation, brought in an anemic 20% less revenue than expected in April, causing California's deficit to nearly double in only four months. On Monday, Brown released a revised budget plan. California Dreamin' it may be better known as.

Brown's budget calls for new spending cuts, to which state workers have yet to agree; even higher taxes, at which voters may balk; and rosy revenue assumptions, which already came up massively short in April.

William Bennett
William Bennett

The new deficit strategy relies heavily on higher taxes: Raising the state sales tax from 7.25% to 7.5% and hiking income taxes on those making more than $1 million from 10.3% to 13.3%, the highest rate of any state. Although he calls his plan a "millionaire's tax," it would also boost rates on incomes starting at $250,000. Brown's now famous explanation -- "Anybody who makes $250,000 becomes a millionaire very quickly, if you save" -- illustrates well the calamity that is California economics today.

If Brown's plan fails, again, he would institute an automatic $5.5 billion cut to public and higher education. California's children shouldn't be punished for the mistakes of adults, nor should its residents be forced to choose between tax hikes and education cuts to try and solve their budget problems.

Follow @CNNOpinion on Twitter and Facebook.com/cnnopinion

California should look to Wisconsin. Gov. Scott Walker closed a large budget hole without raising taxes or cutting education but by going straight to one of the roots of the problem -- public employee unions. Last summer, Walker required union members to contribute 5.8% of their pay toward pensions and 12.6% of their health insurance premiums, while also reforming collective bargaining agreements for government workers.

At first glance, Walker's reforms appeared to be political suicide. But as the returns come in, and schools aren't closing, draconian cuts aren't being made and taxes aren't getting higher. Walker's success leaves his opponents with little ammunition.

Milwaukee Mayor Tom Barrett, Walker's Democratic opponent in the June recall election, hardly mentions Walker's union reforms anymore. With Walker opening a lead in recent polls, top Wisconsin Democrats are angry that the Democratic National Committee is unwilling to invest heavily to recall him.

Wisconsin recently reported that property tax bills for the median homes fell by 0.4% in 2011, the first drop in more 13 years.

In January, Baldwin-Woodville School District reported a $100,000 budget surplus thanks to Walker's reforms. And in Kaukauna School District, school officials say the pension and health care reforms will transform their $400,000 budget deficit into a $1.5 million surplus.

In Chief Executive's annual survey of the Best and Worst States for Business, Wisconsin jumped from 41st place in 2010 to 24th place in 2011 and bumped up to 20th place in 2012. California, once again ranked dead last, is begging for similar public pension and health reforms.

California state teachers are the highest paid teachers in the country, with an average salary of $68,000. The typical pension plan allows them to retire after 30 years with 75% of their salary intact. It's no coincidence that the California State Teachers Retirement System has a $65 billion unfunded liability.

Brown has introduced pension reform, but it's been shelved for the past six months. Senate leader Darrell Steinberg and Democratic leaders have yet to commit to any increase in retirement age or pension contributions.

Until California addresses comprehensive pension reform, the state will continue to sink deeper into debt. Even Democrats in Rhode Island, New Jersey and Illinois are pushing through pension reform. There may eventually be hope for California. But, in the words of Winston Churchill, only after they've tried everything else.

The opinions expressed in this commentary are solely those of William J. Bennett.

ADVERTISEMENT
Part of complete coverage on
December 25, 2014 -- Updated 0633 GMT (1433 HKT)
Danny Cevallos says the legislature didn't have to get involved in regulating how people greet each other
December 23, 2014 -- Updated 2312 GMT (0712 HKT)
Marc Harrold suggests a way to move forward after the deaths of NYPD officers Wenjian Liu and Rafael Ramos.
December 24, 2014 -- Updated 1336 GMT (2136 HKT)
Simon Moya-Smith says Mah-hi-vist Goodblanket, who was killed by law enforcement officers, deserves justice.
December 24, 2014 -- Updated 1914 GMT (0314 HKT)
Val Lauder says that for 1,700 years, people have been debating when, and how, to celebrate Christmas
December 23, 2014 -- Updated 2027 GMT (0427 HKT)
Raphael Sperry says architects should change their ethics code to ban involvement in designing torture chambers
December 24, 2014 -- Updated 0335 GMT (1135 HKT)
Paul Callan says Sony is right to call for blocking the tweeting of private emails stolen by hackers
December 23, 2014 -- Updated 1257 GMT (2057 HKT)
As Christmas arrives, eyes turn naturally toward Bethlehem. But have we got our history of Christmas right? Jay Parini explores.
December 23, 2014 -- Updated 0429 GMT (1229 HKT)
The late Joe Cocker somehow found himself among the rock 'n' roll aristocracy who showed up in Woodstock to help administer a collective blessing upon a generation.
December 23, 2014 -- Updated 2115 GMT (0515 HKT)
History may not judge Obama kindly on Syria or even Iraq. But for a lame duck president, he seems to have quacking left to do, says Aaron Miller.
December 23, 2014 -- Updated 1811 GMT (0211 HKT)
Terrorism and WMD -- it's easy to understand why these consistently make the headlines. But small arms can be devastating too, says Rachel Stohl.
December 22, 2014 -- Updated 1808 GMT (0208 HKT)
Ever since "Bridge-gate" threatened to derail Chris Christie's chances for 2016, Jeb Bush has been hinting he might run. Julian Zelizer looks at why he could win.
December 20, 2014 -- Updated 1853 GMT (0253 HKT)
New York's decision to ban hydraulic fracturing was more about politics than good environmental policy, argues Jeremy Carl.
December 20, 2014 -- Updated 2019 GMT (0419 HKT)
On perhaps this year's most compelling drama, the credits have yet to roll. But we still need to learn some cyber lessons to protect America, suggest John McCain.
December 22, 2014 -- Updated 2239 GMT (0639 HKT)
Conservatives know easing the trade embargo with Cuba is good for America. They should just admit it, says Fareed Zakaria.
December 20, 2014 -- Updated 0112 GMT (0912 HKT)
We're a world away from Pakistan in geography, but not in sentiment, writes Donna Brazile.
December 19, 2014 -- Updated 1709 GMT (0109 HKT)
How about a world where we have murderers but no murders? The police still chase down criminals who commit murder, we have trials and justice is handed out...but no one dies.
December 18, 2014 -- Updated 2345 GMT (0745 HKT)
The U.S. must respond to North Korea's alleged hacking of Sony, says Christian Whiton. Failing to do so will only embolden it.
December 19, 2014 -- Updated 2134 GMT (0534 HKT)
President Obama has been flexing his executive muscles lately despite Democrat's losses, writes Gloria Borger
December 18, 2014 -- Updated 1951 GMT (0351 HKT)
Jeff Yang says the film industry's surrender will have lasting implications.
December 18, 2014 -- Updated 2113 GMT (0513 HKT)
Newt Gingrich: No one should underestimate the historic importance of the collapse of American defenses in the Sony Pictures attack.
December 10, 2014 -- Updated 1255 GMT (2055 HKT)
Dean Obeidallah asks how the genuine Stephen Colbert will do, compared to "Stephen Colbert"
December 18, 2014 -- Updated 1734 GMT (0134 HKT)
Some GOP politicians want drug tests for welfare recipients; Eric Liu says bailed-out execs should get equal treatment
December 18, 2014 -- Updated 1342 GMT (2142 HKT)
Louis Perez: Obama introduced a long-absent element of lucidity into U.S. policy on Cuba.
December 16, 2014 -- Updated 1740 GMT (0140 HKT)
The slaughter of more than 130 children by the Pakistani Taliban may prove as pivotal to Pakistan's security policy as the 9/11 attacks were for the U.S., says Peter Bergen.
ADVERTISEMENT