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California Pension Cuts: San Diego, San Jose To Vote On Sweeping Changes

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CALIFORNIA PENSION CUTS
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SAN DIEGO — Early returns show voters overwhelmingly approving measures to cut benefits for government workers in two major California cities.

In San Diego, 69 percent are in favor of Proposition B while 31 percent are opposed. Nearly 16 percent of precincts are reporting.

The margin in San Jose is even wider, with 78 percent in favor of Measure B and 22 percent opposed. Nearly 21 percent of precincts are reporting.

San Jose Mayor Chuck Reed issued a statement thanking voters for commitment to fiscal reform.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.

As state and local governments across the country struggle with ballooning pension obligations, voters in two major California cities cast ballots Tuesday on sweeping measures to curb retirement benefits for government workers.

Ballot measures in San Diego and San Jose – the nation's eighth- and 10th-largest cities – 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.

"We believe people are tired of having services cut back because of big pensions," said San Diego Mayor Jerry Sanders, a Republican who is being forced from office by term limits.

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.

"This is part of a broader effort to attack workers and to make their lives miserable," San Diego Councilman Todd Gloria said during a debate on the San Diego measure.

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 ones who are actually paying the taxes will never see these benefits in their lifetimes, so there's not a lot of sympathy in the public," he said.

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.

"It's my No. 1 priority because it's the biggest problem we face," he said. "It's a problem that threatens to our ability to remain a city and provide services to our people."

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