After brokering this agreement to remove the bill’s most troubling provisions, the League removed its opposition.
AB 1912 as originally drafted would have imposed substantial burdens and costly unworkable requirements on local agencies by applying retroactive, joint and several liability as well as prospective joint and several liability for all retirement related obligations to any current or former JPA member throughout its existence. By applying joint and several liability, cities debts could dramatically rise and in many cases would have exceed a cities’ annual revenue without being approved by local voters. California’s constitutional debt limit prohibits a local government from incurring indebtedness beyond its ability to repay the debt with revenues from the same fiscal year without two-thirds voter approval.
Compromise Protects Cities and Employees
The most recent amendments to AB 1912 eliminated the joint and several liability provisions (retroactively and prospectively) in favor of a more equitable apportionment scheme. These amendments clarify that this apportionment and financial reporting of liability only applies when a JPA dissolves, ceases operations, or has its contract with the retirement system terminated.
This approach strikes the balance of ensuring that JPA retirees have secure retirement while avoiding the blanket liability provisions in previous versions of the measure. The amendments provide clarity, direction and more flexibility for the member agencies of a JPA to negotiate amongst themselves on the best approach to apportionment.
The League would like to thank Sen. Anthony Portantino (D- La Canada Flintridge) and his staff for being instrumental in helping broker the agreement. The senator, who the Senate PERS Committee and serves as chair of the powerful Senate Appropriations Committee, had strong concerns about the measure prior to the most recent amendments. Every city in the Sen. Portaintino’s district opposed the bill and as a former city council member, he understood the unintended consequences the previous version of the bill would have placed on cities.
AB 1912 is currently in the Senate Appropriations Suspense File and will likely move to the Senate Floor after the Legislature returns from its summer recess in August.