By Doug Porter / Words&Deeds / March 26, 2019
A conservative scheme to build their cause by demonizing municipal employees has ended, likely costing local taxpayers tens of millions of dollars. The promised savings will now evaporate, plus 7% interest, unless you believe the people who say there will be a minimal cost. (ProTip: Don’t).
On Monday, California’s Fourth District Court of Appeal ordered the City of San Diego to financially compensate about 4,000 employees who don’t have pensions, thanks to a 2012 voter-approved measure called Proposition B. The initiative replaced pensions for new employees with 401(k) plans, shifting the burden of stock market slumps away from the city, which previously made up for losses in the pension system.
It didn’t have to end this way. All former Mayor Jerry Sanders had to do was to call a meeting and pretend to negotiate with the unions representing city workers. The fact he didn’t proves the malicious political intent underlying this pension reform measure.
[Portions of this article originally appeared in my August 6, 2018 San Diego Free Press column]
The city and labor unions negotiated changes reducing pension costs a few years prior to Prop B, and union leaders sued because the city skipped the process in 2012.
The U.S. Supreme Court let the original ruling against the city stand without comment, rejecting an appeal contending Sanders was exercising his First Amendment right of free speech.
As it stands now, Prop B remains in place. The city or its labor unions need to sue, starting a potentially lengthy legal process leading to the ballot measure being invalidated.
Keep in mind that San Diego is the only city in the state not providing traditional pensions for its employees.
From Union-Tribune coverage:
“The big fork in the road is invalidation, because without invalidation you can’t put people back into pensions because the language from Proposition B will still be in the city charter,” said Michael Zucchet, general manager of the Municipal Employees Association.
The City Council does not have the legal power to remove Proposition B from the charter. That can only be done by a court or by another citizen’s initiative or ballot measure.
Alternatively, another ballot measure can be put before voters. The problem with this approach will be achieving a political consensus, namely one promising fiscal prudence without screwing city workers.
The original measure emerged from a concurrence of political trends on the right. Pressure on the city’s bottom line caused by ever increasing pension payments gave economic conservatives an opportunity to craft a solution.
Libertarians and their fellow travelers saw an opening to weaken unions as an institution and reverse the ascension of a branch of government.
The primary selling point for Proposition B was that the City’s employee unions represented a threat to future financial stability. It should be noted it was the city, not its employees, who gave short shift to pension payments over the past few decades.
Visions of greedy union bosses swilling cocktails at the 19th hole of a luxury golf course, and lowly librarians soaking the taxpayers were the basis for selling the “only” solution to the pension crisis.
In fact, the origins of the pension crisis date back to the 1970’s, starting with local governments portion of property tax revenues after the passage of Proposition 13 shrinking by 40%. Corporations were the big winners, thanks to loopholes overlooked in the rush to cut taxes for homeowners.
By the time the state’s temporary surplus funds to localities ran out, taxpayers were sold on the idea they were getting the same services from local government for less taxes. “Creative financing” and “cost recovery” were the tools used by localities to soften the impact, meaning that formerly free or low cost services were seen as revenue centers.
For the balance of this article, please go here.
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