photo courtesy of nyaltnews.com
Voters in San Jose and San Diego said enough’s enough!
They overwhelmingly passed ballot initiatives designed to balance local budgets by cutting retirement benefits for city workers.
Supporters had a simple message—Pensions for city workers are unaffordable and more generous than many private companies offer–forcing potholes to go unfilled, library hours to be slashed and much more.
In San Jose, it was a landslide. 70% of voters passed Measure B, 30% opposed, notable numbers in the nation’s 10th largest city. The measure 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.
Further south in San Diego, voters favored Proposition B with 66% of the vote, while 34% opposed. Under Proposition B, current workers have to pay up to 16% of their salaries to keep their retirement plan or accept more modest benefits. New hires would get less generous benefits.
The mayors of both cities pushed the pension reforms hard, saying the measures were essential to keep their cities budgets from seeing red.
In fact, in both cities pension payments have exploded over the last several years. Pension payments in San Diego eat up about 20% of their operating budget. In San Jose, it’s 27%.
To cover the high costs, thousands of public-sector employees were laid off causing a huge effect on city services that deteriorated after being neglected.
Opponents—mainly public employee unions—argued that changing the pension systems now was unfair and would not do much to help the cities save money.
A day after voter approval, police, fire and other unions in San Jose announced they are taking legal action against Measure B, saying the city ballot measure “unlawfully modifies pension benefits for city employees—San Jose’s Police Officers, Fire Fighters and other workers will file multiple lawsuits to enjoin the City from implementing the unlawful changes to employee pensions, health care and disability benefits.”
Other cities and states were keeping a close eye on Tuesday’s pension reform votes. Now that these two cities set the stage, you may soon see other cities and states follow their lead with similar ballot initiatives.