Fire Station Policy and Airport Workers’ Pay

City Hall Diary

Last week, the council voted on two noteworthy items: a citywide fire station policy and pay for airport personnel. The most important item was the new citywide policy for the closure and consolidation of fire stations. Up until now, San Jose did not have a policy of how or when a fire station could be closed or relocated. The lack of a process was not good for the city. Closing a fire station in any neighborhood of our city that diminishes response time and/or reduces the ability to muster an effective force of fire personnel in the instance of a large fire, natural disaster or terrorist action is bad public policy.

The council unanimously adopted the new policy that was authored by Mayor Reed, Councilmember Chirco and me.  This policy provides a framework for how and when the city can close or relocate a fire house.  The new policy is important because it includes a comprehensive community process and uses quantitative data from the San Jose Fire Department before any change can occur to an existing fire station.

Public safety is a core citywide service; and yes, it is expensive.  However, the public is dependent on the city to provide safety services. There is no alternative to funding public safety except with city funds. In fact, all of San Jose’s property tax and sales tax revenues combined do not cover the cost for police and fire. So we must continue to be creative on how we prioritize funding for public safety along with sewers, roads, libraries and parks.

The other agenda item was about including approximately 400 airport personnel under the City of San Jose’s Living Wage. Several people spoke about the struggle of the working poor and having to work two jobs. The labor unions organized the workers and framed the debate well. Their moral argument is certainly a just one. Who does not sympathize for those struggling to make ends meet? The real dilemma, however, is that San Jose has invested over $1 billion in an airport. It is my responsibility as a council member to make sure that investment pays off.

The airline industry has been in turmoil since September 11, 2001. The price of jet fuel has risen from 70 cents a gallon in 2002 to over $3 today. Year after year passenger count has decreased locally, statewide and nationwide. Technology, like web meetings, is reducing business travel. Eight airlines have gone out of business since end of 2007 and the industry as a whole will lose billions again this year.

San Jose alone is losing flights and market share and we have a higher domestic Cost Per Enplanement (CPE) for the airlines then San Francisco or Oakland.  We are reliant on Southwest Airlines for 50 percent of our traffic, which is risky. No organization wants half of their revenues coming from one source, since it brings too much risk should the relationship end. I cannot, on the one hand, say let’s issue a billion dollars in bonds, and then pass regulations that may negate our investment.

Part of the issue was not only a 50-percent wage hike, but that the workers have to pay for parking. I would like to find a way to provide free parking for workers at the airport. Parking was brought up to me when I met with union officials regarding this issue. They told me that paying for parking was a hardship for the workers and I agreed.

As an employer, when I give employees a raise, it is not just the dollars that end up in their checks but the payroll taxes that go along with it. For example, employers pay Social Security, Medicare, State Disability Insurance, Federal and State Unemployment Insurance and Employment Training Tax on top of any increase in compensation.  However, if the airlines paid for parking, then that is less than the total aggregate output of the wage increases and payroll taxes. Free parking would be a direct benefit to the workers because it negates the out-of-pocket expense and the workers are not taxed on it as it is not included in their paychecks.

The direct hidden cost to the city is that we would now hire a new fulltime city employee to monitor how much these privately employed airport workers get paid. So would you rather hire a fulltime librarian, or someone to monitor how much private sector employees get paid? Would you rather open your branch library an extra day every week, or hire someone to push paper?

I was the only council member that voted “no.” However, that is OK. Groupthink is dangerous. Alternative points of view are what democracy is about.

13 Comments

  1. JMOC,

    It’s not PO’s fault.  He has been drinking the water (ie cool aide) in that building. The water moves you from clear thinking to zombie “go with the process” thinking.

    Never use the water fountian in that place!!!

  2. When the City goes out of it’s way to make sure that contractors pay more than the market dictates, it is abdicating it’s primary responsibility to the public.
    Also, when all the property tax revenue and sales tax revenue is gobbled up by police and fire it is a clear indication that the City is paying policemen and firemen (especially firemen)WAY too much.
    Groupthink IS a good thing to avoid and I appreciate your lone “no” vote. Beware though, because when you express original thought amid a sea of groupthinkers they will be quick to dismiss you as a “contrarian” or a “naysayer”.

  3. Pierluigi,

    Why is San Jose’s Cost Per Emplanement (CPE) so high compared to Oakland and San Francisco?  How can you justify investing a billion dollars if San Jose is always going to be at a competitive disadvantange (raise or no raise for the workers) to the other airports?

  4. A creative person would use this as an opportunity to rid San Jose of its airport.  This would free up 1000 acres that could be developed in a manner that enhances the city and county, not ruin it, as the airport currently does.

    Of course, the keyword here is creative, versus incompetent.

  5. #1

    Hello John,
    Residents want to know if their primary fire station is going to be closed.  They consider fire and medical response a core deliverable from the city.  Prior to this policy residents got more notice of a duplex being built in their neighborhood.

    #4
    Hello Steve,
    The CPE is the airlines’ cost of landing fees and terminal rents they pay to the Airport.  The basic formula is:

    landing fees + terminal rents divided by enplanements

    The airline agreement sets the methodology for calculating landing fees and terminal rents.  Those calculations take into account all airport revenues, operating and maintenance costs, and debt service.

    For lowest CPE an airport would be old and high volume. High CPE would be new airport and low volume. Overtime as bonds are paid off San Jose CPE would go down.

    #6
    Moffett Field would have been perfect location to move airport 20 years ago. However large resistance came from Mtn View and other cities on even bringing up the subject.

  6. Ah, “Process”, the mantra, the Holy Grail of all public officials.  Too much process is what slows government and private industry to a standstill.

    Pierluigi, how quickly you were converted to the dark side of process. I am saddened that you succumbed so quickly to the process mode.

  7. #9

    Why does San Jose charge more per plane than other airports?

    Because the airport, due to its location and unnecessary existence, is an albatross around the necks of San Jose residents.  It exists because of short-sighted politicians, and individuals who think an airport is a necessary part of any city. 

    The fact of the matter is people come to this area for reasons other than the airport.  Even if it did not exist, or was in Hollister, people will still come here.  The hotels will still have guests, businesses will still thrive, and we will still go on vacations. 

    The biggest difference is if the airport was elsewhere downtown San Jose would be a better city with more opportunity for growth.  Now it is doomed to be a more expensive version of East San Jose.

  8. #4 is a good question.  Why does San Jose charge more per plane than other airports?

    It’s one thing to say that it’s a complex formula based on revenues, costs, and debt service.

    It’s another to think about those revenues, costs, and debt service, and figure out what is different. 

    Are our revenues lower?  Are our costs higher?  Did we take on proportionately more debt? 

    In any case, three cheers for taking a 10-1 vote.  We need more people willing to do that.

  9. It is a shame the city hires people to oversee what private companies pay. I would much rather see the Cambrian library open on Sundays. Keep voting the in the interest of the neighborhoods.

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