Hey Brother, Can You Spare a Tax Break?

A small delegation of Orange County officials – including Chairwoman Janet Nguyen and CEO Tom Mauk – traveled to Washington D.C. this month to lobby the Internal Revenue Service for help on the lastest twist to the county’s pension woes.

Facing more than a $2 billion unfunded liability in the county retirement system, officials earlier this year unveiled a program that would establish a tiered benefit for new employees and allow current workers to opt out of the pension system.

The stumbling block at the federal level is that IRS rules don’t allow workers to opt out of such pension programs without hiking taxes on the whole system. County CEO Tom Mauk said those rules are intended for private pension plans and county officials want the IRS to adjust the rules for public sector plans.

“We made headway in the respect we got the people back here (at the U.S. Treasury Department) to understand that pension reform in California is a major policy issue,” Mauk said.

County union officials have been working with county lobbyists over the past six months in DC to get the message through.

Both sides prefer the IRS to change its rules instead of having to pass special legislation.

“Our representatives in Washington, DC have indicated to us that it’s extremely promising that the IRS will be approving our plan very soon,” said Nick Berardino, general manager for the Orange County Employees Association.

Mauk said the budgetary savings over the revision are uncertain. Berardino pegs it at hundreds of millions over the next decade.