The battle over pensions is going to the ballot in San Jose after a city council vote Tuesday. The only roadblock: state legislators from the area friendly to public employee unions are trying to derail the pension reform by demanding an audit of the city’s pension debt.
Mayor Chuck Reed has been fighting to put San Jose on a better financial footing by introducing pension reform. Projections are the pension debt could reach $650-million a year in San Jose in a worst case scenario. Union leaders claim that estimates of the city pension debt are exaggerated. Union officials say the estimate is hundreds of millions of dollars out of whack and they want the state to investigate.
But the San Jose budget is already in trouble. Whatever the long term numbers are, it will only make matters worse. Paying the cost of pensions eats into the funds for services the city provides. Annual pension costs from the city general fund have jumped up more that three times in the last ten years, from $73 million to $245 million. City workers have been laid off and newly built public buildings remain closed.
San Jose could set an example for the state and local governments on how to deal with this issue if the proposed reforms are implemented.
Voters should be part of the conversation on pension reform. They are asked to pay the bill, as the increase in the San Jose general fund budget for pension costs attests.
As noted in a previous post, unions are putting on pressure to prevent reform measures from reaching local ballots.
A judge turned back an effort in San Diego to derail a pension reform plan after public unions filed a complaint over fair labor practices. In San Jose, the unions have turned to friends in the state legislature to disrupt the reform effort.
The legislators left no doubt the goal was to delay the citywide vote. Assemblyman Jim Beall was quoted in the San Jose Mercury News arguing that the city should “hold off until state laws and pension reform efforts are conducted.”
Mayor Reed said, “Our city hall unions know very well that there is strong voter support for pension reform. They’re doing everything they can to keep it off the ballot.” But Reed said he would accept an audit from an impartial party.
San Jose doesn’t have to look too far to the city of Stockton to see a city that teeters on bankruptcy. Reed wants to take action before his city ends up in a similar predicament. The city council did the right thing in moving ahead with the election.
Now we’ll see if the legislature interferes.
Joel Fox is the Editor of Fox & Hounds and President of the Small Business Action Committee