California pension reform delay a credit negative

(Bloomberg) — Postponement of a California ballot measure that could help contain the rising cost of public employee pensions is a “credit negative” for municipalities, Moody’s Investors Service said.

Proponents, led by San Jose Mayor Chuck Reed, delayed the measure until 2016 to improve its chances of passage, even as costs are projected to rise for thousands of local governments that participate in the California Public Employees’ Retirement System, Moody’s said yesterday in a research note.

“Adoption of this pension reform measure would have amended the state’s constitution and provided local governments with a significant measure of additional pension cost flexibility,” Moody’s said.