SAN FRANCISCO (Reuters) – San Diego Mayor Jerry Sanders is pouring fuel on the fire of pension politics in California.

The mayor of California’s second biggest city is proposing to do away with traditional pensions for most new city workers, an effort analysts say will be closely followed by other cash-strapped local governments in and beyond the most populous U.S. state. The proposal has outraged public employee unions.

A ballot measure asking San Diego voters to back the idea is in the works, Sanders told Reuters in an interview, adding that he aims for defined-contribution plans like 401(k)s common in the private sector to replace defined-benefit pensions.

San Diego can no longer afford its pension plan, Sanders said, adding it is not alone in California, where the recession, housing slump and double-digit unemployment have slashed property and sales tax revenue vital for local governments.

“It’s pretty unrealistic to think that we’re going to have defined-benefit plans, at least on a local level,” he said.

Sanders’ plan may be a trendsetter because pension costs threaten to push local governments toward bankruptcy if not contained soon, said former California lawmaker Joe Nation.

“I hate to use the ‘B-word,’” said Nation, now a public policy professor at Stanford University. “But the numbers are just staggering.”

NEW YORK, Dec 1 (Reuters) – Calpers, the biggest U.S. public pension fund, said on Wednesday that it had dropped LaSalle Investment Management as manager of a large portfolio of warehouse and distribution centers and replaced it with GI Partners and Deutsche Bank’s RREEF.

The shift is part of a larger restructuring of its real estate investments, the value of which was pummeled during the U.S. real estate downturn of the past three years.

Under the deal, private investment firm GI Partners will manage the CalEast Global Logistics North American Assets, which have an equity value of $1.9 billion portfolio of property. Menlo Park, California-based GI Partners also will invest in the portfolio, although it declined to disclose the value of its investment.

Calpers also declined to comment.

The portfolio, which includes 47 million square feet of warehouses, light assembly, distribution centers, truck terminals, intermodal centers, and air cargo facilities throughout the United States and Canada, is valued at $3.4 billion, including debt, GI said.

LaSalle Investment Management, a unit of real estate service company Jones Lang LaSalle Inc (JLL.N: Quote, Profile, Research, Stock Buzz), had managed the property for Calpers, the $216 billion California Public Employees’ Retirement System.

Calpers said in a statement Calpers that the portfolio, change was part of a “larger real estate restructuring effort to shift assets to managers who outperformed peers managing Calpers investments during the real estate market downturn.”

, Nov 30 (Reuters) – The city council of Vallejo in California unanimously approved a financial plan late on Tuesday to exit its landmark bankruptcy, which the town declared two years ago in the face of mounting fiscal woes.

Vallejo, a former Navy town located between San Francisco and the state capital of Sacramento, became the largest city in the most populous U.S. state to declare bankruptcy — a rarity for U.S. governments — amid slumping revenue and escalating costs for its work force.

Vallejo’s bankruptcy garnered national attention and revived memories of Orange County, California seeking bankruptcy protection more than a decade earlier, which marked the biggest-ever U.S. municipal bankruptcy.

Vallejo’s bankruptcy filing prompted some analysts to predict similar bankruptcies by local governments across California given the steep economic downturn in the state.

It spurred consumers to cut spending amid a tumbling housing market, hurting local U.S. government revenues, which rely heavily on revenue from sales and property taxes.

Vallejo’s five-year plan tackles $195 million in unfunded pension obligations, creates a rainy-day fund, lowers benefits for new city workers and reduces payments toward retired employees’ health care.

The plan may in coming weeks go before the judge hearing Vallejo’s bankruptcy case, who will scrutinize its details, including how it proposes paying the city’s bondholders, said Howard Cure, director of municipal research at Evercore Wealth Management.

SAN FRANCISCO (Reuters) – The first order of business for rookie Republican governors taking office in the coming weeks will be to make their states more “business friendly” by cutting taxes and regulations.

The second order of business: Grab California companies disaffected with the state’s business climate.

Republicans took at least 56 state legislative chambers and 29 governors’ seats in the November 2 general election, promising policies tilted toward business. That spells bad news for California, which desperately needs companies to add jobs to reduce one of the highest unemployment rates in the nation.

Ohio Republican Governor-elect John Kasich said he plans to tap his old Lehman Brothers ties to pitch California venture capitalists on relocating their high-tech start-ups.

“More of the same is not acceptable to the business community in California,” Kasich told Reuters.

Voters in the Golden State this month gave control of their governor’s office and legislature to Democrats, who must now contend with how the newly redrawn U.S. political map may further challenge California’s economy.

It has for years lost businesses to other states, led by both Republicans and Democrats, with more affordable land, labor and energy, less regulation and lower taxes.

SAN FRANCISCO (Reuters) – California faces a $25 billion deficit through the next fiscal year, its budget watchdog said on Wednesday, just weeks after leaders of the most populous U.S. state closed a $19 billion gap and days ahead of a planned sale of some $10 billion of state debt.

The state’s Legislative Analyst’s Office said in a report that incoming Governor Jerry Brown and lawmakers must tackle a projected deficit of $6 billion in the current fiscal year and a shortfall of $19 billion in its next fiscal year.

“Similar to our forecast of one year ago, we project annual budget problems of about $20 billion each year through 2015-16,” the report added, noting that those estimates may be understated.

California’s government has seen its revenue plunge in recent years due to the combined effects of the housing slump, mortgage crisis, turmoil in financial markets and a double-digit state unemployment rate. Analysts see a long recovery for the state that lags the national recovery.

Separately, the state controller said that California’s October revenues were 4.6 percent, or $232.3 million, above estimates in the state’s recently enacted budget.

State Treasurer Bill Lockyer’s office does not expect the report by the Legislative Analyst’s Office to affect its planned sale of roughly $10 billion in tax-exempt revenue anticipation notes next week.

Lockyer spokesman Tom Dresslar said state fiscal problems were disclosed in the prospectus for the sale of the short-term debt, which will have May 2011 and June 2011 maturities.

SAN FRANCISCO (Reuters) – Jerry Brown is a man with a too-rosy plan for bringing order to California’s messy finances, say investors who see the budget process blueprint by the front-runner for governor as hopelessly optimistic.

The next governor is likely to face a budget gap of at least $10 billion, making the state’s finances a top priority for the winner of California’s gubernatorial race November 2. Lawmakers and Governor Arnold Schwarzenegger this month closed a $19 billion budget gap.

Republican Meg Whitman is trailing Democrat Brown in the polls by a small margin. The former eBay Inc chief executive has a 40-plus page playbook on how she would manage the most populous U.S. state’s government. Brown, the state’s attorney general, has a nine-point plan running to eight pages.

Its highlight is a budget process he would start months earlier than usual. Brown also proposes to “personally engage” all legislators on budget matters rather than just leaders of the legislature, and to hold on-the-road town hall meetings.

The result will be a consensus-driven budget, said Brown, California’s governor from 1975 to 1983.

The municipal debt market, whose investors and finance professionals keep a close eye on California since it is the nation’s biggest issuer of municipal bonds, is not impressed.

“He’s just barking in the wind,” said Marilyn Cohen of Envision Capital Management in Los Angeles, who called Brown’s plan “way too touchy feely.”

SAN FRANCISCO (Reuters) – California’s attorney general said on Thursday he has asked a state court to appoint a monitor to oversee the finances of the City of Bell, California, which has been embroiled in a scandal over the excessive compensation of some of its former top officials.

Attorney General Jerry Brown’s move came as eight current and former Bell officials, including its former city manager, who had a salary of nearly $800,000, were being arraigned on Thursday on public corruption charges.

Brown also said he has subpoenaed testimony from officials in Vernon, California, about pay and pension benefits for some of its top officials, including one who received more than $1.6 million in a single year.

Brown, who is also the Democratic nominee for governor, said in a statement that “independent scrutiny is essential in restoring public trust” in Bell and Vernon, which both neighbor Los Angeles.

“The public has suffered from raiders who plundered the city treasuries,” Brown said. “The people deserve to know that the guilty individuals will be held accountable and that their tax dollars will no longer be siphoned into exorbitant salaries.”

In addition to local and state investigations of Bell, the U.S. Securities and Exchange Commission is investigating bonds issued by the city, which has a population of roughly 40,000.

Last month, state Controller John Chiang’s office said it had found Bell had issued $50 million in general obligation bonds under a 2003 measure to build a sports complex without a documented plan and timeframe for how to use proceeds or an apparent need for the money.

SAN FRANCISCO (Reuters) – Jerry Brown is a man with a too-rosy plan for bringing order to California’s messy finances, say investors who see the budget process blueprint by the front-runner for governor as hopelessly optimistic.

The next governor is likely to face a budget gap of at least $10 billion, making the state’s finances a top priority for the winner of California’s gubernatorial race November 2. Lawmakers and Governor Arnold Schwarzenegger this month closed a $19 billion budget gap.

Republican Meg Whitman is trailing Democrat Brown in the polls by a small margin. The former eBay Inc chief executive has a 40-plus page playbook on how she would manage the most populous U.S. state’s government. Brown, the state’s attorney general, has a nine-point plan running to eight pages.

Its highlight is a budget process he would start months earlier than usual. Brown also proposes to “personally engage” all legislators on budget matters rather than just leaders of the legislature, and to hold on-the-road town hall meetings.

The result will be a consensus-driven budget, said Brown, California’s governor from 1975 to 1983.

The municipal debt market, whose investors and finance professionals keep a close eye on California since it is the nation’s biggest issuer of municipal bonds, is not impressed.

“He’s just barking in the wind,” said Marilyn Cohen of Envision Capital Management in Los Angeles, who called Brown’s plan “way too touchy feely.”

, Oct 19 (Reuters) – Surging capital inflows threaten Asia’s economic stability, the World Bank warned on Tuesday, a day after U.S. Treasury Secretary Timothy Geithner sought to draw the venom from a global row over currencies by vowing not to devalue the dollar.

The World Bank buttressed the argument made by China and others that U.S. policies are sending a wave of cash flowing into higher-yielding emerging markets, undermining their export competitiveness and pumping up inflation and asset bubbles.

“We are seeing an effort by developing East Asia to deal with the large amounts of liquidity driven in very large part by the monetary policy easing in the United States,” Vikram Nehru, the bank’s chief economist for Asia-Pacific, told reporters in Tokyo.

Nehru, presenting a semi-annual report, urged policymakers to learn the lessons of the 1997/98 Asian financial crisis, when an influx of footloose global capital inflated property and equity prices, only for them to collapse when the money flows reversed.

“The authorities in East Asia need to take adequate precautions to ensure that they do not repeat the same mistake twice in slightly over a decade,” the report said. [ID:nTOE69I02D] <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

Currency tensions map: r.reuters.com/jec96p

PDF report on currencies: r.reuters.com/gez77p Related stories

/WASHINGTON (Reuters) – Treasury Secretary Timothy Geithner vowed on Monday that the United States would not devalue the dollar for export advantage, saying no country could weaken its currency to gain economic health.

“It is not going to happen in this country.” Geithner told Silicon Valley business leaders of devaluing the dollar.

Geithner broke his silence on the dollar’s protracted slide ahead of this weekend’s meeting of finance leaders from the Group of 20 wealthy and emerging nations in South Korea, where rising tensions over Chinese and U.S. currency valuations are expected to take center stage.

“It is very important for people to understand that the United States of America and no country around the world can devalue its way to prosperity, to (be) competitive,” Geithner added. “It is not a viable, feasible strategy and we will not engage in it.”

Answering audience questions before the Commonwealth Club of California in Palo Alto, he said the United States needed to “work hard to preserve confidence in the strong dollar.”

Geithner, normally reluctant to publicly discuss currency and market movements, has not uttered the so-called “strong dollar mantra” — a refrain he helped create at Treasury in the 1990s — since February.

On Friday, the dollar index hit a 10-month low against a basket of major currencies, while the greenback has been plumbing fresh 15-year lows against Japan’s yen .