If we can prevent the government from wasting the labors of the people under the pretense of taking care of them, they must become happy. — Thomas Jefferson

The California Legislature has rejected a chance to save California taxpayers and their cash-strapped state more than $200 million. Unlike previous backroom deals that resulted in waste, this one took place in full view. But this story illustrates a larger problem: buying politicians and selling legislation is accepted in Sacramento, and this constitutional breakdown has led, as it always does, to soaring government spending and the fleecing of taxpayers.

Buying the former governor and tainted legislation
The California Union of Safety Employees (CAUSE) represents 3,200 state employees. CAUSE members include milk testers, billboard inspectors, and DMV employees who test new drivers. The union had been trying to fatten pension benefits for some time. In 2002, it took a new tack.

The union gave more than $500,000 to legislators and $500,000 to then governor Gray Davis, who responded by personally negotiating with the president of CAUSE a pension increase 25 percent more than other state workers. CAUSE lawyer Sam McCall helped write the bill, SB 183. The bill reclassified CAUSE members as public-safety employees, giving them the increased pensions normally reserved for police or firefighters. It benefits the union members to the tune of $11 million in fiscal year 2004-05 and an estimated $216 million over the next 20 years. Not a bad return on its investment.

Where’s the proof of this quid pro quo? Sam McCall admitted it. “All this was the result of buying Gray Davis,” McCall told the Sacramento Bee (May 9, 2004). “We would not have got this done if we had not shoved a lot of money his way.” CAUSE gave Davis $100,000 three days before the bill was amended, $5,000 the day it passed, and $250,000 two weeks after he signed it.

A year later, in a development few predicted, voters tossed out Davis in a recall election and replaced him with Arnold Schwarzenegger. Schwarzenegger inherited a budget mess that calls for belt tightening on all fronts. The Legislature has balked.

“It’s the job of the policymakers to say no.”
In response to the bought pension hike, Sen. Tom McClintock, R-Thousand Oaks, authored SB 9, a bill to block the pension increases for CAUSE members. The Sacramento Bee, usually partial to Democrats and Gray Davis, strongly backed the legislation: “Milk testers are not cops. Billboard inspectors don’t fight fires. California cannot afford to give them richer retirement. Tainted legislation should not be pared back a little. It should be repealed. Send SB 9, the pension repeal bill, to the governor.”

Instead of heeding this advice, the Legislature evaded action on the measure as July 1, 2004, approached, the day the pension increases would go into effect. Rather than act on the bill, Assembly Speaker Fabian Nunez returned it to the Senate, a violation of legislative rules.

The Bee blasted Assembly Democrats for turning that house into a “circus” and looking like “clowns” by avoiding debate on SB 9. Speaker Nunez was called out in sharply raised voice: “So, it’s time to stand up, Speaker Nunez. Either defend the pension boost that will give state milk testers, billboard inspectors, forensic pathologists, and deputy directors at the Department of Real Estate (among others) pension benefits that are 25 percent richer than other state workers get, or vote to rescind them.”

The pensions that “other state workers get,” by the way, are among the most generous in the nation. Most state employees get two percent of their annual pay for every year of service. California Highway Patrol (CHP) officers get three percent of their annual pay for each year of service, enabling retirement at age 50 with 90 percent of their pay. The rationale for the richer pensions is to encourage early retirement, ensuring the physical fitness of those in dangerous jobs.

CAUSE president Alan Wayne Barcelona defended the scheduled hike. His editorial on the CAUSE website argued that DMV testers are “assisting with the national security of this nation.” This is a stretch and an insult to the 200 CHP officers killed in the line of duty since the inception of the force.

CHP Commissioner D. O. “Spike” Helmick told the Bee (May 9, 2004), “There haven’t been 200 milk inspectors killed,” adding, “I don’t fault the employee unions for pushing for it [the higher pension]—that’s their job. But it’s the job of the policymakers to say no.” Unfortunately, California lawmakers ultimately put campaign contributors ahead of ordinary taxpayers.

Evasive action
The Senate saw through Nunez’s evasion and rightly batted SB 9 back to the Assembly for action. On June 23, the Assembly Labor and Employment Committee killed the bill, preventing the full Assembly from having a say on the matter, and permitting the pension hike to go into effect on July 1.

Ironically, while the DMV workers, milk testers, and billboard inspectors gained reclassification and a 25-percent hike, such a move eluded those in truly dangerous jobs. Highway maintenance workers, though in constant peril, did not get the richer public-safety pensions.

The ghost of Gray Davis lingers in Sacramento and continues to cost California taxpayers. As a result of “buying Gray Davis,” taxpayers are now stuck with an additional $216 million pension bill, adding to the state’s chronic budget problems. Majority-Democrat lawmakers chose to favor their high-dollar campaign contributors at the expense of taxpayers, thereby violating a principle of sound government advanced by our Founding Fathers.

The bigger story: The dynamic of taxpayer fleecing
If allowed to do so, politicians will give special benefits to well-organized, concentrated interest groups, such as government-employee unions, in exchange for votes and campaign contributions. These benefits are paid for by taxes on dispersed citizens, who usually see it as not worth their effort to fight these transfers on a piecemeal basis. This is the dynamic of taxpayer fleecing and government growth. The solution is to prohibit politicians from engaging in this behavior. The Founding Fathers knew this well.

A stated purpose of the U.S. Constitution is to “promote the general welfare.” Notice it doesn’t say to promote the “narrow welfare” or the “welfare of the highest-bidding interest group.” Thomas Jefferson noted, “Congress has not unlimited powers to provide for the general welfare, but only those specifically enumerated.” The same applies to state governments.

Gray Davis was no Jefferson. He did not hesitate to make any shady deal with any well-paying interest group, resulting in an explosion in state spending of more than one-third and turning a $10-billion surplus into a $38-billion deficit. That a union lawyer openly brags about buying the governor shows how accepted this practice is in California’s capital.

The pension hike benefits a few at the expense of the many. California’s government should instead promote the general welfare by focusing on its core functions, its enumerated powers. In the area of pensions, the Jeffersonian solution is to pay the salaries of necessary state workers, and allow each worker to decide for himself how much of that salary to invest in private retirement accounts.

For refusing to save California taxpayers more than $200 million when they had every chance to do so, the California Legislature, specifically the majority Democrats on the Assembly Labor and Employment Committee, earn Pacific Research Institute’s 8th California Golden Fleece Award.

K. Lloyd Billingsley is editorial director and Lawrence J. McQuillan, Ph.D., is director of Business and Economic Studies at the California-based Pacific Research Institute. They can be reached at lmcquillan@pacificresearch.org.

About PRI
For more than two decades, the Pacific Research Institute for Public Policy (PRI) has championed individual liberty through free markets. PRI is a non-profit, non-partisan organization dedicated to promoting the principles of limited government, individual freedom, and personal responsibility.