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San Jose mayor pitches pension changes in Santa Rosa

By SEAN SCULLY
THE PRESS DEMOCRAT

Cities and counties need to move quickly to stem rising retirement costs before they overwhelm budgets to the point where it becomes impossible to deliver routine services, San Jose Mayor Chuck Reed told the Sonoma County Taxpayers Association on Thursday.

“It has to get pretty bad to motivate people to action (but) if you wait until things are pretty bad,” he said, addressing the organization’s annual dinner, “then it might be so late you have no option but bankruptcy.”

San Jose Mayor Chuck Reed speaks during the 8th Annual CEO Summit at IBM offices in San Jose on April 22, 2011. (Associated Press)

San Jose Mayor Chuck Reed speaks during the 8th Annual CEO Summit at IBM offices in San Jose on April 22, 2011. (Associated Press)

Reed, a Democrat wrapping up his second and final term as mayor, is pushing a statewide initiative that would allow governments, agencies and voters to make changes in the future pension and benefits packages for employees, even those who currently are employed. Courts generally have said that under current law, governments cannot make changes to the pensions of current employees.

He had hoped to have the proposal on the statewide November ballot, but Reed is locked in a legal dispute with state Attorney General Kamala Harris on the official description of the measure. That disagreement could derail efforts to gather enough signatures to put the issue before voters this year.

In 2012, voters in San Jose approved a measure cutting retirement benefits for city workers, the cost of which has soared from $72 million annually 10 years ago to more than $270 million, almost a quarter of the city budget, this year.

A county judge later blocked most of the cuts, saying the state constitution bars altering established contracts, such as pensions and other retirement benefits. Reed’s proposed statewide initiative would make such cuts and changes for current employees explicitly legal.

Reed and his backers argue that state and local officials, beholden to well-funded public employee unions, made unrealistically generous promises to government workers in the first decade of the century. The soaring costs were later compounded by the historic economic downturn starting in 2008, which gutted the investment portfolios of pension funds and slashed state and local tax revenue.

Sonoma County, too, has struggled with skyrocketing retirement costs, with annual pension expenses for the county rising from about 8 percent of total payroll to 19 percent in a decade. The county’s current annual salary and benefits costs top $530 million, with pension costs, including bond debt, at $98.3 million.

Efforts to reduce pension costs started with state legislation passed in 2012 that set lower benefit formulas for future state and local government workers. The county also worked out deals with its unions that raised the amount current employees pay for retirement benefits and changed some details of how pensions payments are calculated.

The deals, most of which were hashed out last year, are estimated to save about $13 million a year, or $170 million from retirement benefit costs over 10 years.

The Taxpayers Association has applauded such changes, but has said it wishes the county would be more aggressive in pushing for concessions from employee unions.

Unions have said they are willing to consider cuts and other concessions as part of the normal contract negotiation process, but they have pushed back strongly against any effort, such as Reed’s, to give governments and voters the power to cut benefits outside of collective bargaining agreements.

“The basic thing is that pensions should not be put to a vote, decided by a vote,” said Steve Stallone, spokesman for SEIU local 1021, the union representing the largest segment of Sonoma County’s workers. “They were established by collective bargaining, they should be decided by collective bargaining.”

Lisa Maldonado, executive director of the North Bay Labor Council, criticized the Taxpayers Association for making Reed the centerpiece of its annual dinner.

“The Sonoma Taxpayers and Reed are a good match because they both use right-wing ideology to spread lies about working people while supporting the special interests and their 1 percent CEOs and managers,” she said.

You can reach Staff Writer Sean Scully at 521-5313 or sean.scully@pressdemocrat.com. On Twitter @BeerCountry.





7 Responses to “San Jose mayor pitches pension changes in Santa Rosa”

  1. RICHARD says:

    Santa Rosa spends too much on police and fire because there are more police and fire fighter than needed.

    Police and fire have undue political influence. Their PACs unduly influence politicians.

    Other city needs go unfunded because too much of our taxes go to police and fire.

    Thumb up 5 Thumb down 3

  2. Northman says:

    Mayor Reed and his ilk are trying to do an end run around contract laws put in place to keep all of us safe.

    Lets talk about unfunded future liabilities. An unfunded future liability is basically a bill or obligation that you or someone else enters into without having a plan or funds to pay for it.

    An example of this is a person that finances a car (promises to pay for not only the car but also the interest) while only having a temporary job.

    Now this is very different from public employees contracts with the agencies that they work for. Employees and employers enter into negotiations in good faith that the other is doing their job correctly. The public agency has investigated their budgets and has a figure of how much they are able to afford and the employees have researched what the current compensation is for the jobs represented. The two sides meet, negotiate and come to an agreement, and everything continues forward. This situation constitutes a FUNDED future liability. The agency has considered the facts of their budget and said ‘Yes, we are able to sustain this budget expense’.

    In order for any agency to call this situation an unfunded future liability is a patent lie, unless the stewards of the public funds (City Council, County Supervisor, State Legislator, Executive Management) have not been doing their due diligence, are incompetent, or have entered into negotiations in bad faith (knowing that they could not deliver on what was agreed to). The first two are unforgiveable, the last one is potentially criminal. If the elected officials and their representatives are unable/unwilling to take responsibilities for their actions, they should/must be run out of town on a rail.

    I do realize that these are all thankless and often low paying (compared to the private sector) jobs, but they are essential to our society. It is imperative that the persons in these positions are not only willing, but capable of making the decisions that affect all of the members of our communities.

    The employees have and continue to live up to their end of the deal and only expect what they have agreed upon. No more, no less.

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  3. R.B. Fish says:

    Put all public salaries and pension benefits on a ballot every 2 years. No salary or pension benefit can exceed revenue/budget. Let the public vote!

    Thumb up 20 Thumb down 13

  4. Follower says:

    Running a large Government agency like a City must be a very complex job, I’m sure.
    But not all complex problems require complex solutions.

    A simple BAN on Public Employee Unions would in a relatively short period of time, solve the pension/compensation problem.

    Just as allowing Health Insurance companies to sell Insurance across State lines along with Tort Reform would have solved the problem of escalating Health costs without spending Billions, soon to be Trillions of dollars gutting our entire Medical system.

    But instead these people seem to think that their “supreme intellect” gives them an insight that is beyond the comprehension of we simple peasants.

    But then again, we KEEP RE-ELECTING them so maybe they’re right!

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  5. Murphy says:

    Methinks the point is that Cities cannot afford the overly generous pension checks they are writing so they are left with one option: layoffs.

    Of course layoffs hurt morale. Of course cuts across the board are draconian. That is why pension reform is so utterly necessary.

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  6. Nancy says:

    Too bad Santa Rosa doesn’t have a Reed as city mayor. At least this guy is doing something about the bankrupt public pension system and out of control public pay.

    The reason San Jose had cuts in police and fire is because the city is bankrupt. They have no money. Nothing new there. Most of the cities in the no so great state of California are broke and living on welfare.

    I say go Mayor Reed and I wish you all the luck in the world. But I fear you are on the bridge of the Titanic. The ship has hit the ice berg and headed down fast.

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  7. Papa ESoCo says:

    There is a problem with Reed and his “Governing San Jose. He gutted Police and Fire Services with cuts; Veteran Cops have left in droves, which combined with layoffs has seen the Crime rates sky rocket. Same with the FD, so many cuts to staff they have skeleton crews and closed stations. While I wholeheartedly agree Public Employee Pensions need to be reined in dramatically, I do not like the “Point Man”.

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