SAN FRANCISCO (Reuters) - There’s no avoiding a ballot showdown over paring public employee pensions in California’s third-largest city, its mayor said on Wednesday.
San Jose Mayor Chuck Reed told Reuters by telephone he has enough backing from city council members to put his plan for cutting about $100 million a year in pension expenses over two decades to city voters next March.
The council is expected to vote on December 6 on advancing the plan to the ballot. That will involve declaring a fiscal emergency for Silicon Valley’s biggest city, whose unionized employees have been tangling with Reed’s administration over its plans to rein in rising pension costs.
Those costs have become a growing concern for local and state governments across the nation as they contend with lean revenues that opened massive budget gaps, requiring steep spending cuts for public services and putting tens of thousands of government workers in unemployment lines.
Reed said he also expects a landslide victory at the polls for his pension overhaul plan.
“It’ll be in front of voters in March and they will give us enough time to get it place to save money for the next fiscal year,” he said. “Anybody who’s done any polling knows it’s 70 percent ‘yes.'”
San Jose has plenty of company in the most populous U.S. state when it comes to pension politics. San Francisco voters, for instance, earlier this month backed Mayor Ed Lee’s plan for tackling the city’s rising pension costs and its goal of saving up to $1.3 billion over 10 years.
Lee’s plan will have city employees put more of their pay toward their pensions, an approach many other local governments across California have been adopting.
Reed’s plan would give current San Jose employees the option of putting more of their pay toward their pensions or accepting less generous retirement packages that preserve what they have already accrued.
By contrast, San Diego Mayor Jerry Sanders is seeking a break from traditional pensions with plan for a ballot measure next June that would put new city workers, excluding police officers, into defined-contribution retirement plans similar to private-sector 401(k)s.
Meanwhile, Riverside County officials have opted against ballot measures aimed at pensions.
As San Jose’s city council on Tuesday received a city manager’s report backing a ballot measure -- to avoid, the report said, having to balance the city’s books by closing libraries and deeper cuts to police and fire department staffing levels -- Riverside County imposed pension changes for roughly a third of its employees.
Riverside County now will give new non-safety employees less generous benefits and have existing non-safety employees pay 3 percent of salary toward their pensions. That will increase to 8 percent in the county’s 2013-2014 fiscal year.
The county’s non-safety employees pay 8 percent of salary to their pensions during their first five years of service. The county pays that share for the remainder of their careers.
The county’s action follows pension changes imposed on its management employees and sheriffs’ department and is aimed at helping close an expected $80 million budget gap, said Bob Buster, chairman of the county’s board of supervisors.
“We’re running out of time,” he said. “If we don’t get savings we could have significant layoffs ... The walls have closed in on us.”
California’s pension politics are also playing out at the state level. Governor Jerry Brown, a Democrat, has unveiled a plan for “hybrid” pensions combining traditional pensions, Social Security and 401(k)-like accounts. He also wants government workers to pay half the cost of pensions and would raise retirement ages for most new employees to 67 from 55.
Republicans are seeking to put a pension measure on the November 2012 ballot. They unveiled two measures and want to put the most promising one to voters. The measures have some features in common with Brown’s plan but would have public employees fund unfunded liabilities of their pension plans.
Reporting by Jim Christie; Editing by Andrew Hay and Diane Craft