Getty/David McNew

Why do the proposed ballot measures go after the pension system for current workers? Because that's where the money is.

That quote, of course, is credited to the late Willie Sutton (who apparently didn't actually say it) when asked why he robbed banks. Its usage here isn't meant to infer nefarious motives on any of the players involved in possible reforms to public worker pensions -- rather, it's an acknowledgement that a major element in the debate is the unfunded costs of pension promises made, but not yet delivered, to tens of thousands of men and women who work in government jobs across California.

The two proposals unveiled today (press release) by a cadre of Republican heavyweights -- former budget guru Mike Genest, pension crusader Dan Pellissier, former state GOP chairman Duf Sundheim, and former assemblymember Roger Niello -- could be called 'pension tough' and 'pension tougher.'

In 'pension tough,' the trip proposes a system that is modeled on the one unveiled last week by Governor Jerry Brown. His proposal (PDF) would place future local and state workers into a "hybrid" system where a smaller traditional pension would be married to a 401(k) style account. Brown also would require workers to stay on the job longer and would aim to limit their annual pension benefits to about 75% of their former salary.

But where the governor simply says current workers will ultimately have to split the annual contributions to their pensions with government -- and make no mistake, that's not a small issue -- the GOP 'pension tough' initiative would force workers, for the foreseeable future, to pick up the majority of the cost of their pensions.

Here's how it's put in a summary distributed to reporters:

Government employers and their employees will equally share the cost of retirement benefits, except while their pension funds are less than 80% funded using federal standards for private sector pension funds, when employees could be required to pay more for their same benefits and for a share of unfunded liabilities.

Note the section about the funding status of the pension funds -- that's the hammer.

Not only are both CalPERS and CalSTRS currently projected to be less than 80% fully funded for future retiree payments (thus creating the so-called "unfunded liability"), but the initiative says the funds will have to be measured by "private sector" accounting standards -- and those are significantly more conservative than the projections used by public sector pension funds.

That's not all. The initiative further says that until California'a pension systems are funded at a level above 80%, state and local government payments are capped at a smaller percentage (6%-9%) of a worker's salary. "Government employees," says the handout, "would have to pick up the remainder of normal cost until their pension fund exceeds 80% funding."

In other words, government pension payments would go down... worker pension payments would go up... and given how poorly the state's pension funds score on the private sector measurement, that system would be in place for a very long time.

The initiative would allow unhappy current public employees the chance to switch their future retirement packages to the 401(k) hybrid plan -- which would also shrink government costs.

Now for the 'pension tougher' initiative being filed today by the GOP quartet. It offers virtually the same system to existing state and local workers, but its approach for future workers is more intense. The initiative would ban pension funds from having unfunded liabilities... and thus says that a fully "defined contribution" pension (that's a 401(k) style plan) would likely be the only option for state and local workers hired after its presumed passage by the voters.

Yes, this is all presumed. Some would even say speculative... or highly speculative. The fact that the group (technically known as California Pension Reform) is filing two separate initiatives shows that they've not settled on which, if either, is more politically viable. It also shows that part of today's announcement is to get some news media attention and, perhaps, shake loose some coinage from the kind of big donors needed to actually qualify an initiative for the November 2012 ballot.

It also presents a very interesting set of questions about the politics of pension reform over the next 12 months.

Saying that public employee labor unions disliked Brown's pension proposal last week is like saying my Duke Blue Devils dislike the University of North Carolina Tar Heels. They consider it, it seems, a proposal from which to negotiate down to something they think is more fair to their employees.

But placed beside the two initiatives unveiled today, Brown's plan looks downright tame when it comes to current workers -- and that makes organized labor's next chess move hugely important. Already, labor faces the perception that they need to embrace Brown when it comes to pension reform, that as unhappy as they might be with the Guv's initial proposal, he's still largely on their side.

The initial attack from the leading labor group on pension issues is on the authors of these initiatives. "Pot, meet kettle," tweeted Democratic strategist Steve Maviglio. "Schwarzenegger GOPer's Pellissier & Genest, getting $100k+ pensions & airtime, to unveil #capension initiative. #hypocrisy"

That line of attack will also likely include jabs at co-author Marcia Fritz, a leading conservative critic of public employee pensions whose own organization has stirred debate over disclosure of some of financial backers.

The initiatives unveiled today may be the big November 2012 conservative shot at pension reform everyone's been assuming would happen. If so, the debate can now begin in earnest.

11:14 a.m. Update: In a conference call with reporters, backers of the initiatives say they'll make a decision in January about which proposal to push for November 2012, a decision based on polling and the title and summary issued to these measures. They estimate they'll need $3 million to qualify an initiative, and admit that they've not yet lined up enough donors to make that happen.

They also say that the increased pension payments for current workers would be phased in at no more than a 3% increase per year -- thus, they argue there would be no sticker shock for a worker who has to ultimately start contributing a lot more out of their paychecks. The group also says it feels confident that system (higher contributions for current workers, a cap on government contributions) can withstand legal challenge... though that's undoubtedly a huge issue, given how some analysts have interpreted the laws regarding promises made to workers already on the job.

11:30 a.m. The leader of a prominent union-led pension committee invokes the Wisconsin union saga in his emailed response to the initiatives. Dave Low says each is "a sloppy proposal, containing provisions that have already been determined illegal by the Supreme Court. We will continue to work with the Governor and Legislature to craft changes in the state's complex pension system rather than have extremist politically-motivated ballot box measures..."

But finding an absolute answer to that question... well, that's what has landed us in the muddy water.

The reason for that lies, in part, with the way the federal money is being handed out. Some is being given to states to essentially use as they see fit; other parts of the aid package have pretty tight strings attached. And yet other sums won't be doled out until after the state's current fiscal plan expires on June 30, 2010.

All of this means there's still a good bit of number crunching -- and disagreement -- over how much of the DC help can be used towards erasing the state budget's $40 billion shortfall.

If at least $10 billion is available for deficit relief, then almost $948 million in budget cuts and another $1.8 billion in tax increases will disappear. In Capitol parlance, the $10 billion in federal aid would allows the cuts and taxes to be "triggered off."

Now, if we can only find consensus on whether the trigger can be pulled.

A new analysis from the California Budget Project, which advocates for low and middle-income residents, says yes. The CBP pegs California's total of the federal stimulus package at $50.7 billion. And CBP's Jean Ross says there is "sufficient flexibility" in how much of that money can be used to get California to the magic $10 billion number.

But they're not high-fiving each other just yet in Governor Schwarzenegger's Department of Finance. The DOF analysis of late February still holds, says spokesman H.D. Palmer. And that analysis says the deficit relief amount is only $8 billion, with the overall package valued at just under $30 billion.

Expect more numbers tomorrow from Legislative Analyst Mac Taylor, who will present his take on the federal package to the Assembly Budget Committee.

But the real fun comes next week, when the two men tasked by the Legislature to make the official determination meet. That would be the governor's finance director, Mike Genest, and state Treasurer Bill Lockyer.

The actual bill says the two jointly have the responsibility of whether to "trigger off" those budget items. What if they disagree on the analysis? Ummm, well, no one really knows.

And if that's not enough intrigue, consider this: the legislation mentioned above refers only to "federal funds" of at least $10 billion, not specifically the American Recovery and Reinvestment Act at which everyone's looking. Might that mean some additional pots of federal money could be counted?

For now, no one's sure... nor are they willing to venture a guess. But for as much as this is a policy issue, it's got real potential to be a political one, too. After all, powerful constituencies on both the left and right dislike the budget provisions that could be wiped away by a formal declaration that the $10 billion hurdle will be cleared. And we're likely to hear some of those tomorrow, when legislators meet to hear the report from their non-partisan analyst.

First, the angst. The credit rating agency Moody's Investor Services has placed tens of billions in outstanding state bonds on its watchlist, a move that signals the possibility of a downgrade in the state's creditworthiness. That includes not only general obligation bonds, but also the revenue anticipation notes (RANs) that were sold last fall to help bridge the state's cash flow problems. And yes, it could impact the state's need for additional short-term cash flow loans in the coming months.

Those cash flow problem seem particulary troubling to the agency's analysts. "We will be acutely focused on liquidity," says the Moody's report.

"This is more evidence of how urgently our state needs its legislators to act to resolve our fiscal emergency," said gubernatorial budget director Mike Genest in a written statement. "Holders of California bonds should not be penalized by a downgrade which diminishes the resale value of the bonds, just because agreement has not yet been reached."

Meantime, Democratic legislative leaders say they're confident that some federal assistance is on its way in the near future. In a conference call with reporters this morning, Assembly Speaker Karen Bass and Senate President pro Tem Darrell Steinberg said meetings with the state's congressional delegation during the inaugural festitivities were positive.

They said exact dollar amounts weren't a focus of the talks, though a $10 billion figure for the state continues to be out there and the leaders said it's a reasonable guess. Bass and Steinberg said the most likely help would come in funding for low-income health care services, education (including higher education programs), and public works/infrastructure projects.

And they think California's needs will be hard for either Congress or President Barack Obama to ignore. "There is great concern that if California gets deeper into trouble," said Steinberg, "the country will get deeper into trouble."

Legislative leaders and Governor Schwarzenegger are expected to reconvene to talk about the budget crisis tomorrow here in Sacramento.

With Monday's joint legislative meeting on the state's fiscal crisis seemingly failing to thaw the frozen partisan fight on budget solutions, Governor Schwarzenegger today unveiled a ticking budget deficit clock and announced the current year shortfall has now grown to $14.8 billion.

That's up $3.6 billion since his estimate of $11.2 billion was released about six weeks ago. And the clock he unveiled in classic Schwarzeneggerian style today (and which will sit outside his Capitol office) is ticking away at $470 every second.

The governor called the Legislature's performance in dealing with the fiscal crisis "shameful," and pledged to stay in Sacramento as long as it takes to strike a deal. "I will do anything to move the agenda forward," he told reporters this morning.

Advisers say Schwarzenegger has summoned legislative leaders for a Big Five meeting tomorrow, and plans to give them a new... and worse... estimate for the deficit facing California between now and July 2010; current estimates have put that problem at $28 billion.

The new projection, according to gubernatorial budget director Mike Genest, accounts for both missing revenues and higher-than-expected state expenses. That's a departure from the November projection, which we were told was just the revenue side of the equation.

One lingering question of late around the Capitol has been whether Schwarzenegger can, or will, reach out to rank-and-file legislators to solve the problem, rather than relying on Big Five leadership meetings which have clearly produced zilch in results. You may remember the guv once said he doesn't particularly like Big Five meetings.

I asked him whether it's time to change his approach, and he said he would. You can hear that below.

Also worth noting from today's news conference -- the not-so-subtle dig that Schwarzenegger took at his fellow Republicans. When asked by a reporter about GOP demands that Democrats approve a set of business friendly proposals before taxes are even discussed, the GOP governor said such proposals have never been presented in leadership negotiations.

"None of those things were discussed," he said. And then he went even further: "It's always very vague, and nothing specific." And if anyone still missed the point, Schwarzenegger kept going: "I have felt many times that Republicans did not come [to meetings] prepared, and Republicans have not been specific of what they need."

The Senate began its micro examination of fiscal issues this morning, by convening the first budget subcommittee hearing, but it's clear the governor wants to up the ante. And in his ongoing struggle to balance the carrot with the stick when it comes to the Legislature, there was nary a whiff of the orange vegetable to be found this morning.

[update: Unsurprisingly, Republicans don't seem impressed. The official written statement from Senate GOP Leader Dave Cogdill reads, in part: "Bullying the Legislature to adopt tax hikes won't make the ticking clock the governor unveiled today go away, in fact it will only make our budget problems worse. Raising taxes doesn't solve the underlying problem of California's budget, which is the state spends more than it takes in."