EDITORIAL: The lesson for Nevada in Newsom’s pension veto

It’s often said that an ounce of prevention is worth a pound of cure. When it comes to public pensions, one veto can save billions of dollars.

California Gov. Gavin Newsom recently vetoed a plan to expand pension benefits. The bill would have lowered the retirement age for police and firefighters from 57 to 55. It also would have made the formula used to calculate pensions more generous for some workers. The bill would have reversed cost-saving moves lawmakers made in the 2012 Public Employees’ Pension Reform Act.

Then-Gov. Jerry Brown called that 2012 bipartisan bill “the biggest rollback to public pension benefits in the history of California pensions.” He said it would reduce “costs by up to $55 billion in PERS and billions more in other local pension systems.”

At the time, California’s pension systems faced steep deficits, called unfunded liabilities. In fiscal 2013, California Public Employees’ Retirement System had a $62 billion funding shortfall. The California State Teachers’ Retirement System’s unfunded liability was $74 billion. Pension costs were one of the factors forcing Stockton to file for bankruptcy in 2012.

In a December 2025 report, the Reason Foundation put California’s combined state and local pension debt at more than $265 billion.

One might think these realities would lead California politicians to push new pension reforms, not expanded benefits. But California’s powerful public safety unions vociferously oppose such reform. The Reason Foundation estimated the recent bill could have cost the public more than $11 billion over 30 years. It even found most of the benefits would go to “those who earn more than $160,000 annually.” But the bill passed both houses of the California Legislature with only two Assembly members in opposition.

This is the problem with defined-benefit pension programs. The politicians who voted for this bill receive immediate political benefits. But they are unlikely to be in office when the trade-offs — future tax hikes or budget reductions — come due. This is one reason that Nevada and other states should move away from this type of pension system and toward defined-contribution programs. It is too vulnerable to political pressure to increase benefits.

Fortunately for the taxpayers who fund these systems, Gov. Newsom exhibited a rare bit of common sense and vetoed the bill.

“I still recall — before PEPRA’s passage in 2012 — the alarming forecasts, the fierce criticism of public employees and the growing pressure to eliminate defined-benefit plans all together,” he wrote in his veto message. “This is an era of California history I do not wish to repeat.”

No one should, which is why Nevada lawmakers should take steps to move government employees away from the current defined-benefit pension system.