Overwhelming Support for Pension Reform in San Diego, San Jose

Overwhelming Support for Pension Reform in San Diego, San Jose
June 7, 2012

Steve Stanek

Steve Stanek (sstanek@heartland.org) is a research fellow at The Heartland Institute and managing... (read full bio)

Wisconsin wasn’t the only place government unions took an election-day drubbing in June.

Voters in two major California cities overwhelmingly approved cuts in future retirement perks for local government workers.

Most of the national headlines on the June 5 election results focused on Wisconsin Gov. Scott Walker (R), who handily survived a recall challenge that had been led by government employee unions. The unions were angered at legislation Walker backed and signed into law to restrict collective bargaining and end the forced collection of union dues. Thousands of Wisconsin government workers have stopped paying union dues. Membership in the state’s chapter of the American Federation of State, County and Municipal Employees (AFSCME) has dropped 45 percent.

More Than Two-Thirds Support

Also on June 5 more than two-thirds of voters in San Diego and San Jose backed separate measures to reduce future pension benefits for their local government employees.

Labor unions in both cities have already gone to court to stop the reforms. They argue the reforms are illegal because court rulings say government employers may increase but never decrease retirement benefits for current workers. One lawsuit also claims San Diego's mayor should have negotiated with the union over the initiative.

In San Diego a ballot initiative to give new hires 401(k)-style plans similar to those that are common in the private sector had the support not only of two-thirds of the city’s voters but of the mayor and other local government leaders. The measure also would freeze for five years the portion of current workers’ salaries that is used to calculate future pensions.

San Diego Councilman Kevin Faulconer, who backed the measure, said government employee pension reform “cuts across partisan lines, cuts across demographic lines.”

He said the city’s pension costs already approach nearly one-quarter billion dollars annually and will soon top $300 million. These pension costs are under-cutting the city’s ability to fund basic services. City residents who see government workers retiring earlier and with better benefits than most people in the private sector receive have come to realize the harmful impact of these government pensions, he said.

‘Want No Better, No Worse’

“The voters are tired of their taxpayer dollars going to expensive pensions while services are being cut and, in some instances, tax increases are being proposed,” said Lani Lutar, president and CEO of the San Diego County Taxpayers Association, which helped draft the initiative.

“Pension reform is supported across party lines. Most people are familiar with a 401(k)-style retirement plan, and want to see public employees getting the same type of benefits, no better and no worse. There is a very clear understanding by the public that the current defined benefit pension plans are unsustainable.”

She said she was not surprised by the overwhelming support for pension reform because numerous surveys had shown pension costs are “the number one concern of voters.”

“The initiative was the only way to ensure comprehensive, real reform which would become permanent law,” Lutar said. “The greatest challenge in the process was overcoming the labor union tactics to try to block signature gathering efforts. The labor unions knew that once the measure qualified, it would pass, so they targeted the signature gathering efforts in every way imaginable.”

‘Desperate for a Solution’

In San Jose, where 70 percent of voters cast ballots in favor of pension reform, Councilman Sam Liccardo said “residents were desperate for a solution.” He noted most city officials who supported reform are registered Democrats who ordinarily back government unions. He agreed with Faulconer that pension costs have become so burdensome most people no longer care about political party labels. They care more about stopping the pension costs spiral.

"I want to thank the voters of San Jose for their commitment to fiscal reform and to creating a more sustainable future for our children and grandchildren," Mayor Chuck Reed told reporters as election returns showed overwhelming support for the pension measure.

The San Jose pension reform allows current workers to keep benefits they have already accrued but requires them to pay more for future pension benefits or choose lower benefit levels if they do not pay more. Other reforms include requiring future hires to pay half the cost of a pension.

 

 

 

 

 

Steve Stanek

Steve Stanek (sstanek@heartland.org) is a research fellow at The Heartland Institute and managing... (read full bio)