Joel Fox is the Editor of Fox & Hounds and President of the Small Business Action Committee

Despite Governor Arnold Schwarzenegger’s success in negotiating some concessions from state unions on the pension front, heated action in the battle for pension reform is happening in California’s cities.

Yesterday, initiative petition signatures were filed in San Francisco to require thousands of city employees to contribute 9% of their salaries towards their pensions and health care plans. Currently, many (but not all)  contribute nothing. The initiative would also boost public safety workers contributions to 10% of salaries. Police and firefighters just saw their contributions increased to 9% by voters in the June election.

Interestingly, the initiative’s proponent is an outspoken liberal public defender. Jeff Adachi is leading the petition drive because his office has been cut 40% in recent years.

In Los Angeles, former mayor Richard Riordan has reached out to city unions to try and negotiate concessions. Riordan is working in an unofficial capacity to save the city. He recently warned that the city was on the path to bankruptcy if it did not change the way it did business, including changing the rules on city workers pensions and health care costs.

Carl DeMaio, San Diego City Councilman, has been leading the charge to reform the pension system since that city’s own bout with bankruptcy. DeMaio has seen both successes and setbacks.

Oakland is facing a potential ballot measure to require police officers to contribute to their pensions, the only city union that does not do so now.

Other city officials are waking up to the burden retirement and benefit costs are putting on their yearly budgets. Cities are reacting to the canary in the coal mine: Vallejo. That northern California city declared bankruptcy when it couldn’t meet its obligations.

City officials understand the stark realities for which Vallejo suffered. Cost of employee benefits is eating away the revenue the city needs to provide services to its citizens. The cities were not created to offer their workers cushy retirements while cities cannot fulfill basic needs and obligations.

In many cases, city benefits to their workers exceed what the state offers to its workers.

With cities leading the way, the state will fall into line. While the state cannot technically go bankrupt, paying off pension and health care obligations will certainly cut down on the services the state provides.

Taxpayers at all levels of government will be asking about every call for a tax increase: Exactly what are we paying for? Is this new revenue to provide services or to pay off pensions and health care obligations that the taxpayers themselves don’t receive?