October 10, 2013 / 12:16 AM / 6 years ago

San Jose, Calif., mayor to file statewide pension reform measure

STANFORD, Calif., Oct 9 (Reuters) - The mayor of San Jose, California’s third biggest city, said on Wednesday he would file a statewide ballot measure within days with election officials that would give local governments authority to trim pension benefits for current employees to help reduce spending on retirement benefits.

Mayor Chuck Reed told a conference at the Hoover Institution at Stanford University that the measure would not advocate specific pension reforms but would instead propose giving local officials the power to rein in pension spending by allowing them to lower future retirement benefits.

The measure would propose a constitutional amendment for a statewide vote ideally next year, Reed told Reuters after his presentation to the conference.

“I’d like to do November of ‘14,” he said.

Reed, a Democrat, last year successfully spearheaded a measure in San Jose, the 10th largest U.S. city, that would allow city workers to keep pension benefits they had earned but require them to pay more toward their pensions to keep up the same level of benefits. If they don’t pay more, future benefits are reduced.

Local governments in California may devise less generous pension benefits for future employees but state law makes it difficult to reduce benefit levels for current public employees.

Reducing pension benefits for future employees will save local governments money over the long run but they can only curtail pension spending immediately by trimming retirement benefits for current employees, Reed said.

Pension spending has become a rising concern at the state and local levels across the United States in recent years and has been a top issue in the high-profile municipal bankruptcy cases of Detroit and the California cities of Stockton and San Bernardino.

In San Jose, city employees are challenging the city’s measure in court, underscoring the challenge local officials in California face in cutting pension costs for their existing work forces. The costs have been on the upswing over the past decade and, according to Reed, forcing cuts to services.

Reed said he expects a number of mayors to back his measure but declined to say which ones.

California Governor Jerry Brown, also a Democrat, signed legislation last year that raises minimum retirement ages and reduces pension benefits for new public workers, moves he said will save billions of dollars. Critics said state officials could have been more aggressive with pension reforms.

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