The San Jose City Council narrowly approved placing a pension reform measure on the June, but declined, for now, to declare a fiscal emergency.
After three hours of discussion and public comment, the council voted 6-5 on Tuesday, December 6, to put a measure on the June 5, ballot that would allow cost-saving changes in retirement benefits that were negotiated with 11 city employee unions. The council also invited employee unions to return to mediation to work on changes in proposed ballot measure language.
Judging by the reaction of the crowd and testimony from employees on Tuesday, it’s not clear how many union representatives would take up the offer. During public testimony, dozens of city employees asked the council to delay voting on a ballot measure, take another look at union reform plans and continue discussions without the threat of an election.
“We offered to roll back pension in a thoughtful and legal manner,” said Nancy Ostrowski of IFPTE Local 21. “The city ballot measure will ensure that everyone that retires in San Jose after a full career will be given a fake gold watch and an application for food stamps and affordable housing.”
Voting against the measure were Councilmembers Xavier Campos, Kansen Chu, Ash Kalra, Nancy Pyle and Don Rocha. Each questioned why the action needed to be taken today when the deadline to get on the June ballot is in March.
“Putting it on the ballot in June is not a decision we have to make today,” said Kalra. “Having more time to work on ballot language can improve upon it and comprise with employees.’’
He also raised the potential costs of legal challenges to a ballot measure even if voters approve it. Campos agreed.
“Why would we decide something now that’s not what we want and actually cause us to spend more money defending ourselves in court?” he asked.
In an earlier unanimous vote on Tuesday, the council backed off from declaring a fiscal emergency because of a projected drop in pension costs for police officers and firefighters that could lower the estimatedbudget deficit from $80 million to $25 million.
But Mayor Chuck Reed and other council members maintain that long-term pension reform is still critical to preserving city services. Pension costs have grown from about $70 million 10 years ago to $245 million this year, about 20 percent of the city’s general fund.
“We have two objectives,” Reed said. “Make sure our employees and retirees receive the benefits they have earned and accrued to date. The second objective is that residents and taxpayers receive the services we’re obligated to provide for them.”
The city has faced 11 years of budget deficits forcing employee layoffs, reducing branch library operations to three days a week and outsourcing community centers to private operators.
‘What we need to think about is how we move forward to today,” Liccardo said.
The retirement reforms included in the revised ballot measure would not cut retirement benefit accruals that existing employees have already earned for past years of service, or cut current payments to retirees, a December 1 memo states. The reforms would:
• Require existing employees to pay a larger share of the cost of their benefits
• Allow existing employees to choose lower cost benefits
• Provide a hybrid retirement plan for new employees with a cap on the City’s cost
• Temporarily suspend future cost of living increases for retirees in the event of an emergency
• Reform disability retirement rules to prevent abuses
• Require voter approval of future increases in retirement benefits.
Matthew Mahood, president and CEO of the San Jose/Silicon Valley
Chamber of Commerce was one of the few speakers who backed the June ballot measure.
“This city council cannot kick the can down the road any longer,” Mahood said. “You didn’t create this crisis. You inherited it. Address the problem head on and protect city essential services.”