2 California cities vote on public pension cuts

2 California cities vote on public pension cuts

(AP) 2 California cities vote on public pension cuts
Associated Press
As state and local governments across the country struggle with ballooning pension obligations, voters in two major California cities are being asked for answers.

Ballot measures Tuesday in San Diego and San Jose _ the nation’s eighth- and 10th-largest cities _ are among the most sweeping yet to cut pensions for government workers, and the results are being closely watched well beyond California. The propositions are unusual because they not only target new hires but also current employees.

Supporters have a straightforward pitch: Pensions for city workers are unaffordable and more generous than many private companies offer, forcing libraries to slash hours and potholes to go unfilled.

Shrinking tax revenues during the recession are also responsible for service cuts, but pensions are an easy target. San Diego’s payments to the city’s retirement fund soared from $43 million in 1999 to $231.2 million this year, equal to 20 percent of the city’s general fund budget, which pays for day-to-day operations.

As the pension payments grew, San Diego’s 1.3 million residents saw roads deteriorate and libraries and recreation centers cut hours. For a while, some fire stations had to share engines and trucks. The city has cut its workforce 14 percent to 10,100 employees since Sanders took office in 2005.

San Jose’s pension payments jumped from $73 million in 2001 to $245 million this year, equal to 27 percent of its general fund budget. Voters there approved construction bonds at the beginning of the last decade, but four new libraries and a police station have never opened because the city cannot afford to operate them. The city of 960,000 cut its workforce 27 percent to 5,400 over the last 10 years.

Opponents, led by public employee unions, say the measures deprive workers of benefits they were counting on when they got hired. Some workers decided against potentially more lucrative jobs with private companies, figuring their retirement was relatively safe.

Thom Reilly, former manager of Clark County, Nev., and now a professor of social work at San Diego State University, said opponents face a difficult task. He expects the California measures may spawn similar efforts elsewhere if they pass.

The ballot measures differ on specifics. San Diego’s Proposition B imposes a six-year freeze on pay levels used to determine pension benefits unless a two-thirds majority of the City Council votes to override it. It also puts new hires, except for police officers, into 401(k)-style plans.

More than 100,000 residents signed petitions to put the San Diego measure on the ballot.

Under San Jose’s Measure B, current workers would have to pay up to 16 percent of their salaries to keep their retirement plan or accept more modest benefits. New hires would get less generous benefits.

Mayor Chuck Reed, a Democrat, joined an 8-3 City Council majority to put the measure on the ballot.