San Jose Mayor Chuck Reed called on city unions to agree to significant cuts in retirement benefits to help fill a $110 million gap in next year’s budget and save the city from laying off hundreds of police and firefighters and closing libraries and community centers.
Confident that public opinion is on his side, Reed said if pension reforms don’t emerge at the bargaining table, “the voters will certainly make the changes at the ballot box.”
“Fiscal reforms are strongly supported by our constituents who put us in office, pay the bills and are fed up with cuts in services,” Reed said at his fifth State of the City Address on Thursday evening.
Last November, voters overwhelming approved measures that limit what arbitrators can award in contract negotiations and allow the city to cut pension benefits.
San Jose’s biggest growth in expenses is from retirement benefits, especially those negotiated years ago with unions representing police and firefighters. The annual cost of retirement benefits has increased by $90 million in the past 10 years, and in five years will increase by $400 million a year.
“We will soon pay more for retirement than we do for salaries,” Reed said.
While his remarks were followed by applause from the audience in the renovated Civic Auditorium, Reed’s proposal unveiled Thursday night will not be popular with union members who believe Reed is asking for too much and that by working together city leaders and employees can come up with better solutions.
“The solution is not to renege on promises,” said Sgt. Jim Unland, vice president of the Police Officers Association. “You can’t just snap your fingers and take away something.”
While not being specific, Unland said police union negotiators are “looking at creative solutions” and wanted to avoid layoffs.
Last year, one fourth of the city’s workforce agreed to a 10 percent cut in pay and benefits. Police officers agree to a 4 percent cut, saving the jobs of 70 officers. Firefighters did not agree to concessions, and the city laid off 49 firefighters.
In balancing next year’s budget, Reed’s proposed reforms include:
• Increasing the age for full retirement to match that of Social Security
• Eliminating automatic annual increase in pension benefits
• Increasing the share that employees pay for benefits
• And make changes that would save costs of worker’s compensation, disability retirements, sick leave payout, vacation buybacks and overtime pay.
On a positive note, Reed said San Jose has a lot to be thankful for in the area of public safety: San Jose remains one of the safest big cities in the U.S., has one of the lowest homicide rates among big cities and has reduced gang violence through the Mayor’s Gang Prevention Task Force, which has become a national model.