Filner Brings Pension Plan Into Focus

Photo by Annie Lane

By Andy Cohen and Annie Lane

Longtime Congressman and current candidate for Mayor of San Diego Bob Filner discusses mayoral race in an exclusive in depth interview.

On Friday mayoral candidate Bob Filner sat down with the OB Rag to discuss a wide range of topics, including sharing details on a pension plan that he has been promoting that as of yet has not been formally presented for examination.

The plan is an alternative to Prop B, the pension alternative plan developed and promoted by fellow mayoral candidate and current city councilman Carl DeMaio, outgoing mayor Jerry Sanders, and city councilman Kevin Faulconer.  The “Comprehensive Pension Reform” plan that has been aggressively promoted by DeMaio calls for all new city employees to receive retirement benefits in the form of 401(k) style plans instead of a defined pension benefit package as is currently the norm.

According to the city’s Independent Budget Analyst, the $963 million Prop B is estimated to save San Diego over the next 30 years will come entirely through the 6 year pay freeze it imposes on city employees and not through the shift to 401(k) plans as the proponents of the reform plan claim.  However, the reform plan does not guarantee that workers’ pay will remain frozen for the entire six years, since according to City Attorney Jan Goldsmith the pay freeze can be overridden by a 2/3 vote in the city council.  Should the council override the pay freeze, then the city would not realize the entirety of the pension savings from Prop B.

There are other potential problems with Prop B, says Filner.  “The only savings come from the so-called salary freeze, but that’s negotiation.  You cannot mandate that in a referendum.”

“We’re gonna have 10 years of litigation probably as a result because it’s unclear whether it’s legal or not because they didn’t do the meet and confer” with the unions, Filner said.  State law requires salary and benefits packages to be collectively bargained.

“Second, it’s unclear whether it meets the standards for Social Security.  They may have to put new employees on Social Security.”  Currently municipal employees are not entitled to Social Security, as they receive their defined pension plans instead.

“And if you put new employees on Social Security, it’s unclear whether you can do that without putting old employees on Social Security.  Then it’s unclear whether they’d have to make up for all the back payments they didn’t do for all the years they worked for the city.  It could end up costing the city billions of dollars,” he said.

Instead, Filner wants to negotiate a new five year labor agreement with city employee unions.  The current projected debt on the pension system is based on a 4% annual increase in salaries.  By negotiating a five year agreement with much smaller increases, he says, the city can realize significant savings in its pension plan.  He would also cap pension payments at $99,999, eliminating the six figure pension payments to the handful of workers that DeMaio has been so critical of.

“All these horror stories that DeMaio and others tell about these $250,000 pensions are management people.”  The average union worker, he said, receives annual pension benefits of around $29,000.

Additionally, Filner proposes a $1 billion bond issue at interest rates that are 2% lower than the city currently pays on its debt, which he says will save the city $550 million over the next 10 years.

“It’s not unknown,” he said.  “People refinance their house and get a lower interest rate.  That brings down the annual payments and the debt immediately.”

The bonds would be issued for 30 years, as opposed to the current city debt which is issued on a 15 year basis.  Extending the payments over a longer period of time reduces the payments.  “If we have that $550 million now, we start fixing potholes, do the repairs, do the maintenance, and you fix things now and you don’t have to buy new ones in 15 years.”

“You’re going to save money if you keep up with the maintenance and the repairs as you have them.  In the long run I think it’s a lot cheaper,” Filner said.

Filner says the pension cap and the bond issue could be done immediately upon assuming office and without a referendum.

Unclear if Convention Center expansion needed

The current plan to expand the convention center is “wrong on several grounds,” says Filner.  “This is the most blatant giveaway of public money I’ve ever seen,” he said.  “The hotel guys are voting right now on whether there should be an increase in the transient occupancy tax,” referring to the plan DeMaio brought to the city council that places the control of any increase in the transient occupancy tax in the hands of the Convention and Visitors Bureau, which is controlled by the hotel owners.

The plan would effectively place the convention center—a publicly owned asset—under the private control of the hotel owners, most of which are multinational corporate interests not based in San Diego.

“Why do hoteliers vote on it?  This is a tax,” he insisted, while noting that while it won’t come out of local residents’ pockets, it still belongs under public control.  “That would be $35 million a year for 30 years that would be controlled by out-of-town interests.  And they get to control how the money is spent.”

“That TOT money is supposed to go into the general fund and the city council decides how it’s going to be spent, and it’s generally spent on promoting the city.”  He also noted that many of the bigger hotels such as the Marriott and Hyatt have their own convention facilities and compete directly with the convention center for some events.  “It’s ludicrous to think that they’ll promote the bigger facility over their own.”

He said that he believes the plan will be found illegal by the city attorney.

Filner also does not believe that the California Coastal Commission would approve of the plan due to the fact that it would wall off another section of the waterfront.

“It’s just unclear to me whether it’s necessary” to expand the convention center, Filner said.  When asked about San Diego’s inability to attract the largest convention events due to lack of space, he said that he wasn’t sure it was worth the investment.  “There’s not very many of these big ones.  Economically, it’s not clear to me that if you had the ability to attract three or four of these big ones that it’s worth hundreds of millions of dollars of taxpayer’s money; whether that’s ever going to be returned.”

“There are other ways to expand,” he said, “such as if you used an enclosed stadium as part of the expansion, which would bring down the cost of both.”

Investment in San Diego’s neighborhoods

Some of the $550 million Filner says his pension plan would save could also be put into a ”Neighborhood Investment Corporation.” In its simplest form, it involves using community redevelopment funds and going into the various neighborhoods that make up San Diego and identifying at least three infrastructure or community needs.

“Usually they’re low cost; they’re not millions of dollars,” Filner said. “So I want to go in and say, ‘We’ve neglected you too long. Here you go.’”

Rescuing the beach area fire pits from the grips of extinction would fall into this category.

“Fund it,” Filner said. “We’re not talking about tens of millions of dollars. It’s a public obligation that everyone enjoys.”

On the issue of homelessness, Filner says it’s something that needs to be faced instead of repeatedly swept under the rug as is currently the case. He would bring into action many of the ideas and legislation he supported in Washington, which would not only provide physical shelter but mental and emotional security as well.

“We’re going to confront this,” he said. “It is an affront to our humanity that we have homeless.”

This could be done, he says, by purchasing empty buildings for sale like the Holiday Inn downtown. He called the plan housing first theory and, if instituted, says it could get homeless veterans off the street within five years.

“That takes almost half the homeless off the street, and I’m down to a more reasonable level,” Filner said. “We can do this.”

Port expansion a priority

The port represents “the single biggest potential for middle class jobs that exists in San Diego that has not been realized,” insisting that San Diego must expand its port capacity.

Referring to a Congressional trip he took to Denmark over a decade ago, Filner told a story about a meeting he had with Maersk, the largest shipping conglomerate in the world.  At the time they were looking for a new U.S. West coast headquarters.  He asked if they had considered San Diego, and was shocked at the response he received:  “San Diego has a port?”

The results of a meeting he facilitated between San Diego port officials and Maersk representatives was equally shocking to him when the port officials essentially decided that they were not interested in accommodating the shipping giant.  “A decade ago the port administration decided they were not going to have commerce.  That was a policy decision,” he said.

“They wanted hotels and a very beautiful clean bay.  They had enough money, so they decided they didn’t need commerce.  They didn’t want commerce.  It’s dirty.”

Filner says that he would make expansion of the port one of his biggest priorities, although he was unable to offer any specifics on how and where it could be expanded.  The attitude of the port district is different today, he says, and they are actively looking to expand.  “If we want it, we can do it,” he said.

He added: “We have got to look at our economic base and diversify, and that’s how we do it.”

The candidate didn’t go into detail about the possible effects an expansion would have to the natural wildlife habitats that line the bay, or the plans he would put into place to protect them.

Filner says he is giving this mayoral bid everything he has.

“I’m not holding back anything,” he said. “You cannot take this election for granted.”

In fact, when referring to the televised debate hosted by KPBS the day before, Filner says he feels pretty good about his current standing.

“I think I won that, hands down,” he said. “If people watch that, I win. But not everybody watches.”

“There is going to be national attention to this election when I’m in the runoff,” Filner said.  “The storyline for the last few years has been about the conservatives and the cost cutters, and the Scott Walkers breaking unions.  And I’m saying that government has a role to play.  Government is just all of us doing together what we can’t do separately.  And we can do it efficiently, responsibly, and cost effectively, but we have to do it together.”

“We’ve had basically a Republican city for five decades, but what if a progressive Democrat wins it and shows that we can solve the pension problem without throwing the employees under the bus?”

“I think we can do it.  I think people in San Diegans are ready for a progressive mayor.”