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While most of the mainstream media focused their attention on Wisconsin and Scott Walker’s victory Tuesday night, an equally, if not more significant vote occurred in two California cities. Voters in San Diego and San Jose overwhelmingly approved cuts to retirement benefits for city workers. San Diego voters approved “Proposition B” by a 66-34 margin. It was even worse for government unions in San Jose, where Proposition B was approved 70-30 percent. “The voters get it, they understand what needs to be done,” said San Jose Mayor Chuck Reed, a Democrat who has called pension reform his highest priority.
It ought to be. Both cities are being crushed by soaring pension costs. From 1999 to 2012, San Diego’s contributions to the city’s retirement fund skyrocketed from $43 million to $231.2 million, an amount equivalent to one-fifth of the city’s general fund budget that pays for its day-to-day operations. From 2001 to 2012, San Jose’s pension costs vaulted from $73 million to $245, equal to 27 percent of its general fund budget.
Such expenses resulted in onerous tradeoffs. In San Diego, libraries and recreation centers were forced to cut back their hours of operation. Roads were left to deteriorate, and some fire houses were temporarily forced to share engines and trucks. In San Jose, four new libraries and a police station have never opened because the city cannot afford to operate them–even though voters approved their financing with construction bonds at the beginning of the last decade.
The real sea-change occurred in San Jose. Unlike reforms adopted elsewhere, including San Diego, reductions do not apply only to new hires. Current government employees will also see reductions in their benefits, a reality that has union members seething — and suing. Thus, Yolanda Cruz, president of the San Jose Municipal Employees Federation, characterized the approval as “an unfortunate way to spend taxpayer money fighting it in court because we will definitely take it there. Taxpayer money would be better used getting services back,” she added. Unions claim that years of court decisions demonstrate that government employers may never decrease current employee pension benefits without offering something comparable in return.
Mayor Reed counters that argument, noting that San Jose is a charter city with the authority to reduce pension benefits not only for future hires, but for current employees remaining years on the job. And even if the unions win in court it’s a Pyrrhic victory at best. Proposition B calls for the city to take the equivalent savings in pay cuts if that occurs.
Government unions tried their utmost to keep these initiatives off the ballot. The Municipal Employees Association in San Diego filed suit to do so, but was defeated in court. Last month, Association general manager Michael Zucchet attempted to defend the indefensible. “This initiative doesn’t save anything,” he said. “You are basically cutting off your nose to spite your face for pension reform.”
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