Mixed Results for Pension Reform Supporters in Midterms

Candidates who have taken on the unions fared
well in last night’s elections. Initiatives related to reforming
their pensions did not, however, do so well.

Rick Snyder of Michigan and Scott Walker of Wisconsin, both
Republican, fended off challengers to earn additional terms as
governors. Both have earned the ire of unions;
Snyder for supporting right-to-work laws and
Walker for stripping public sector employees of some collective
bargaining powers. Walker already survived one recall effort from
unions over his policies.

Possibly more important, though, is the victory by Democrat Gina
Raimondo in Rhode Island. As treasurer, Raimondo hammered out
significant public employee pension
reforms, forcing them into solvency and shifting employees into
hybrid plans to reduce the amount of potential debt obligations the
state would take on. Polls then showed union workers rallying
behind her Republican opponent, Allan Fung,
42 to 30 percent. She eked out a three-point victory,
nevertheless. (Also of interest: a third-party candidate, Robert
Healey of the Moderate Party, drew in 22 percent of the vote! Now
that’s how you spoil a race.)

On the flip side, a couple of public employee reforms on city
ballots failed. In
Phoenix, a ballot initiative to fight pension spiking and to
force new city employees into 401(k)-style defined contribution
plans
failed (warning: autoplay video), losing 43 to 57 percent.
Pension reform supporters had been applying a lot of pressure to
getting the ballot measure passed (The Reason Foundation: which
publishes this site and Reason magazine, produced reports
analyzing the impacts of the initiative). Opponents of reform
insisted that the initiative would have actually increased costs
rather than reducing them. Given that pension reform has shown to
be popular in polls in the much bluer state of California, it’s
possible that argument (despite being countered) may have played a
role in the initiative’s fate.

In a smaller loss, but a loss nevertheless, bankrupt San
Bernardino, California, has failed to make changes to the charter
so that the City Council can actually have some
control over public employee salaries. San Bernardino is
unusual in that the city’s charter gives its leaders absolutely no
control over public safety employee wages. Instead, their wages are
determined by calculating an average based on the salaries of
nearby similar-sized cities in California. Given that San
Bernardino is extremely poor and many nearby cities used for these
calculations are not, it means many city public safety employees
are getting wages (and therefore pensions) in the six-figure ranges
and well above what it’s poor citizens can afford. Measure Q would
have eliminated this part of the city’s charter and allow the city
to engage in collective bargaining with police and firefighter
unions just like most other California cities. It didn’t
necessarily mean the employees would get pay cuts, but it gave the
city the flexibility to try to actually negotiate for some.
However, Measure Q failed, 45 to 55 percent. The city will continue
to have to calculate salaries based on wages paid in nearby tony
communities like Irvine even while in the middle of a bankruptcy
reorganization.

If there is a message to take away from these results (hard
since the initiatives are in no way connected to the candidates
involved), it’s that non-union voters are less likely to punish
candidates for taking unions on, even when some candidates are on
the left. But pension and reform-based ballot initiatives have a
tougher fight because they are complicated, people don’t
necessarily grasp the long-term impacts, and they may not trust
ideology-driven analysis. And if they don’t grasp the outcome of a
ballot initiative, they’re probably likely to vote no.