The city of San Jose appears to have set itself up for a fierce (and inevitable) legal battle if voters approve the controversial ballot measure the council agreed this week to place on the June ballot. The divided 6-5 vote gave Mayor Chuck Reed the initial victory he has been looking for since May, despite the objections of labor leaders who earlier this week pleaded with the council for more negotiations and a request to settle reform at the bargaining table as opposed to the ballot. Residents, city workers and retirees flooded the council’s chambers during discussion of the pension measure and debate lasted as long as 3 hours.
Unions deemed the pension measure unnecessary and premature and have called on the council to hold off on the issue until further talks can occur. Notably, the city did put off the declaration of a fiscal emergency because new figures indicated the city’s retirement bill would be smaller than projected and its budget shortfall fell from $80 million to $25 million. Council members who voted against the measure, as well as other opponents, have pointed out that the legal costs the city is likely to incur from the measure’s passage are alone reason enough to think twice before putting the issue before voters.
Labor leaders contend the measure is simply unlawful, but Mayor Reed has emphasized that savings are necessary as costs continue to balloon. Here are key proposals from the measure, according to a fact sheet disseminated by the mayor’s office:
- “New Employees would be placed in a new, lower-cost, hybrid retirement plan; New employees would pay for at least 50% of the total cost of the new plan and the City’s contribution would be capped at 9% of an employee’s salary
- Current employees would be given the option to either: a) pay more to keep their current retirement plan or b) opt-in to a new, lower-cost retirement plan
- Retirees would have their Cost of Living Adjustments (COLAs) temporarily suspended during a fiscal and service level emergency
- Disability retirement rules would be reformed to prevent abuses
- The City Council would be prohibited from enhancing retirement benefits without voter approval”
Mercury News points out that “Employees argue that forcing them to pay more toward existing pension benefits and suspending promised cost-of-living raises to retirees violates their legally ‘vested rights.’ Reed said such provisions are needed to ensure significant savings over the next couple of years and avoid further layoffs.”
You can see the full text of the ballot measure here. ABC News filed the following report: