After a grim warning from Mayor Chuck Reed that next year’s budget deficit could be as much as $100 million or more, the San Jose City Council on Friday narrowly voted to add a voluntary “opt-in” pension to the cost-cutting proposals that could be discussed at the negotiating table with the city’s 11 unions.
The 6-5 vote on June 24 also sets the requirement of saving $186 million on retirement costs, moves the city closer to a November ballot measure that would require voter approval for pension raises and opens the door for negotiations to be public. Councilmembers Ash Kalra, Kansen Chu, Xavier Campos, Don Rocha and Nancy Pyle voted no.
The vote to approve a memo from the mayor and signed by Vice Mayor Nguyen, and Councilmembers Pete Constant, Rose Herrera and Sam Liccardo, came after a staff analysis, 90 minutes of public testimony, a closed-door session and lengthy debate by council members.
The “opt-in” proposal would allow members of city employee unions to sign up for a voluntary pension plan that would provide less in retirement but could give them more in their paychecks. But those who didn’t sign up would have to contribute more to the pension fund. Calculating the cost savings to the city is difficult, explained employee relations director Alex Gurza, because of the unknowns – how many employees might opt in from which unions, their ages and years of service.
Calling the council direction “a sledgehammer that’s punishing our employees,” Kalra unsuccessfully tried to convince the council to delay going to the voters until June and use the estimated $2 million in savings from a November election to restore police officer jobs. He also predicted costly legal challenges to a ballot measure.
Reed repeated why pension reform was mandatory.
“We shrunk out workforce by 800 jobs last year,” said Reed. “Next week our workforce will shrink by another 500 jobs. Today is the last day of unemployment for hundreds of really good people. This has all been driven by skyrocketing pensions costs.”
He and other council members also thanked the remaining 5,300 employees for taking a 10 percent cut in wages and benefits that saved 400 jobs.
Recognizing that pension reform is vital to cutting costs and saving city services, speaker after speaker asked the council to work out issues at the bargaining table instead of the ballot box. Among them were a group of young South Bay Labor Council members who camped out at City Hall to show solidarity with city employees.
“We slept on concrete because we passionately agree that collective bargaining is the best way to deal with financial issues, “ said Anna Schlatz. “We ask you to protect collective bargaining and not undermine it, which these proposal do.”
Willow Glen resident Bill Mishler gave the city a personal check for $365.25 as an “unconditional dollar a day for San Jose” and urged others to do so. He also favors tax increases to bring in revenue.
“Instead of a ballot measure that would take away rights, “ he said, “let’s have a ballot measure that responsibly and modestly raise taxes. We can pay a little now or pay a lot more latter.”
“Your time is up,” Reed said to Mishler, “but you can give the check to the city clerk.”
The council also approved summer polling to weigh the chances a ballot measure has to pass and voted to allow negotiations in open public meetings if a union requested it and the city’s negotiating team agreed. The council deferred to the Rules Committee the issues of declaring a fiscal emergency and drafting language for a ballot measure. Negotiations with the city employees will continue in July.