(/sites/default/files/uploads/2012/06/PublicPensions.gif)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.”
As the above explosion in pension costs reveal, Mr. Zucchet, like most of his fellow unionistas, has lost touch with fiscal reality. Jon Coupal, president of the Howard Jarvis Taxpayers Association, illuminated the impetus behind the landslide vote totals. “The appetite for pension reform in California is huge,” he contended. Voter Howard Delano, aged 60, echoed that sentiment. “It’s out of control,” he said after voting. “Nobody gives me a pension.”
And much like Wisconsin, union supporters were outspent by those advocating reform. In San Jose, government employee unions led by the American Federation of State, County and Municipal Employees (AFSCME) spent more than $440,000 in order to defeat Measure B. Business and taxpayer groups ponied up $682,000 to get it passed. In San Diego, business groups backing Proposition B outspent union supporters by an 8-to-1 margin. Also like Wisconsin, a petition drove the effort in San Diego, where more than 100,000 residents signed up to put the Proposition B on the ballot. In San Jose, an 8-3 City Council majority got the measure before the voters.
Progressives and their enablers have consoled themselves with the idea that, in both Wisconsin and California, being decisively outspent is what led to their defeat. But this is a misleading claim. The reality is that the wages earned by union political operatives don’t get counted as funds being spent on a campaign. Yet even if unions were thoroughly outspent, that is hardly a comforting rationale: it means more and more Americans are fed up with government employee unions and are willing to spend money to say so.
The specifics of Proposition B differ in the two cities. In San Diego, a six-year freeze on pay levels used to determine pension benefits has been instituted, with a two-thirds majority of the City Council votes required to override it. All new hires, except for police officers, will be into 401(k)-style plans, instead of the current defined benefit plans wreaking havoc around the nation.
In San Jose, current employees get to keep pension credits already earned, but must pay up to 16 percent more of their salary to continue that benefit, or they can opt for a more modest and affordable plan for their remaining years on the job. Future hires will have to pay half of their pensions costs. Furthermore, voters get to approve future pension increases, “bonus” pension checks to retirees have been suspended, and disability payments will be limited to those with injuries that prevent them from working. “It’s novel but it’s certainly not radical,” said Mayor Reed of the reforms. “Mayors across the country are very interested. We’re at the leading edge but we’re not alone.”
That may be an understatement. It is one thing to see government union power curtailed in a state like Wisconsin, where both Democrats and Republicans have been in control of state government at various points in time. In the ultimate progressive stronghold of California, where unions have run roughshod over the interests of taxpayers for decades, vote totals such as these, aimed at curtailing their power, are unprecedented.
In other words, something truly profound has occurred. All of the so-called current wisdom regarding government unions and their ability to sway politicians with massive campaign contributions and/or thuggish tactics is no longer current. In the space of a single evening, the aura of invincibility government unions have long enjoyed has been irreparably damaged. It’s as simple as taxpayers beginning to realize that government should provide services to all of its constituents, not just the privileged few–who have long viewed those privileges as entitlements or rights. This toothpaste isn’t getting shoved back in the tube anytime soon. Reform in Wisconsin alone could be construed as an anomaly.
Voters in San Diego and San Jose have made it a trend.
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