Mayor Reed Repeats Budget Warnings to Wall Street Journal

Mayor Chuck Reed sat down with the Wall Street Journal for a Q&A article published today, and the responses were strikingly similar to the State of the City Address he delivered last Thursday.

Again calling San Jose’s unfunded liability for employee pensions the city’s biggest threat and comparing it to “a cancer,” Reed says Gov. Jerry Brown would be wise to focus on state employee benefits and retirement packages rather than Redevelopment Agencies.

The mayor also pointed out that a 10 percent pay-cut across the board for city employees would only account for trimming a third of the city’s $110 million budget.

According to the WSJ writer, the worst San Jose can expect is libraries will close and street lights will be turned off at night. Reed said that was just a start.

“Unfortunately, that’s not the worst-case scenario,” he said. “That’s the most probable scenario.”

At no point did Reed or the interviewer use the word “layoffs,” although they are all but guaranteed.

Having spent the past 10 years as mayor and part of the city council, Reed did accept some blame for approving pension and retirement plans for police and firefighters, which have put the city in its current predicament.

But Reed added that the problem, or tumor, if you will, pre-dates his political career.

“It started long ago and grew very slowly, but now it’s in an aggressive, high-growth phase,” he said. “We need to act now.”

Read More at the Wall Street Journal.

Josh Koehn is the news editor for San Jose Inside and Metro Newspaper. Email tips to josh@metronews.com or follow him on Twitter at @Josh_Koehn.

40 Comments

  1. Go ahead and layoff chuck!!! Your the worst poker player ever. You can call your bluff all you want and threaten to lay of 500 officers. We will not budge on our stance. We will not take any more cuts. so go ahead and show your cards because we’re calling!

    • Recall Reed and Fire Figone?! Sign me up!!
      This city administration has mismanaged the public funds to the point of gross malfeasance. They created the budget deficit…remember its a “structural” deficit. In other words they structured it to be in deficit in order to stick it to their workers and get the public’s support for vilifying police, fire and other employees. The general fund (the one in structural deficit) is only 1/3 of the cities budget funding resources. The other funds are FAT with cash. Don’t believe me? Do your research! Reed and company want to put us and our safety at risk by laying off cops and firefighters so they can fund their pork barrel projects like the land for the new Reed Stadium in an effort to lure the A’s.
      Laying off 250-469 cops, demoting 36 sergeants, laying off 70 firefighters is going to damage this city more than any of us can begin to imagine. Pension reform? Perhaps in a reasoned and rational way…but only after we get rid of the architects of this “structured deficit”!
      Reed,Figone, Oliveria, Constant…. Liar,incompetent,thief and a fraud, respectively.

    • The city charter contains all the rules for recalling the mayor (Sec. 1603) and for removing the city manager (Sec. 1604).  These provisions are in the charter article on elections.

      The Gonzales controversy did not provide the model for this matter…he never was removed as you will recall.

      However, a lot of residents are very disappointed with the failure of the Reed/Figone leadership, and want to see change.  A recall campaign for one and a removal campaign for the other would boost public awareness of the issues, not to mention the transparency that we were promised but not delivered.

  2. Absolute Rubbish.

    Mr. Mayor,

    Had you and the council contributed to the retirement funds as your were supposed to during the boom and recent years, this would never have occurred. The situation we are in is because the city council found it easy to move funds around during years with high stock returns and then stick it to the “Employees” once the crisis came.

    Chuck Reed simply passed the buck down the line until he was able to find an easy scapegoat, cops and firefighters. Cops and firefighters can not strike and can not simply not show up. The mayor picked the easiest target.

    Next time I see the mayor I should ask him why he doesn’t contribute to his retirement. Why doesn’t Pete Constant who is on a retirement system already get his disability yanked because he is obviously faking the injury (see youtube video wrestling mongolian actor), and is double dipping on the tax payers’ dollar?

    Wise up people, you have been fooled.

    • Selena you’ve obvivously done your homework. Pete Constant is the only person in the retirement system that is allowed to double dip by collecting his disability payment and his full salary as a counselmen. Other people in the retirement system collecting disability and an outside income cannot make more than what a top step officer makes. Also did you know that between 1997 and 2004 the retirement fund did so well that the city didn’t have to contribute 79 million dollars.  They should have to account for where that money went when san jose has the worst street in the country.

  3. “But Reed added that the problem, or tumor, if you will, pre-dates his political career.

    “It started long ago and grew very slowly, but now it’s in an aggressive, high-growth phase,” he said. “We need to act now.

    But he fails to tell them how he was handing out millions like it was candy. Millions of dollars for cars to race in San Jose when we needed that money. I’ll give you one guess as to who the REAL cancer is.

    • ““But Reed added that the problem, or tumor, if you will, pre-dates his political career.”

      NOW he’s trying to point the blame to his predecessors. Let’s see, Reed has been mayor for what, maybe 5 years. How long was he a council member prior to being mayor…4-8 years? That puts him into this mess for the last, almost 13 years and now he is trying to place the blame on those who came before him??????? What a poor excuse of a human being. His predecessors were way far than perfect, but THIS administration mismanaged the taxpayers money and now it’s biting them in the a$$. Of course the crap rolls downhill and there you have it.

      • Hey Chuckles, if it’s un-presidential for Obama to continually blame the prior administration for every ill afflicting the nation, it is just as un-mayoral for you to continually blame past administrations and other council members for the fiscal ills of the city. This is especially true when you own as much responsibility for the ills as anyone else.

  4. This budget problem is a bitch. The employees are right. It’s NOT their fault. It IS management’s fault. It’s management’s fault for agreeing to such gigantic pension benefits for employees.

    • You continually make remarks about how public employees have gigantic pensions, unsustainable benefits, etc.  Can you explain why this was never brought up until last year?  Can you tell us why over the past 10 years or more public pensions and benefits have not been on anyone’s radar, no news coverage, and no sniveling from the private sector?  All I keep hearing is how public employees have such phenomenal benefits but why is it when private sector people were raking in the cash they looked down on public sector employees with disdain. 

      I agree with many others here that it is pure jealousy and envy from some folks that just can’t accept that other people are not feeling the same pain they are.  I’ll make you a wager John that in 5 years your constant whining about pensions will be a distant memory and you won’t so much as make a peep about the city any more.  When the economy bounces back, and it will eventually, private sector employment will once again be viewed as the “smarter” career path and public service will be again deemed as a refuge for the less ambitious by those with their noses back in the air.

      • I’ve been whining about it for longer than that. It’s just that I recognize a Ponzi scheme when I see one. I guess most people are oblivious and that’s why our City, our County, our State, and our Country are in such crippling debt.

        sanjoseinside.com/news/entries/community_budget_meetings

        • Well John instead of all the whining why don’t you get the facts???  You obvivously buy into all the Mayor’s lies about how our pension and benefits are some freebie that your paying for.  The true is that police officer’s are paying 26% of their pay towards their benefits.  26% John you probably don’t pay 26% towards your benefit’s. That’s certainly not free benefit’s.

      • When I was in the private sector, I had MUCH better benefits than in the public sector. It’s just that I loved working with the public more than being in the private sector, so that is the road that I chose. In the private sector, I had matched funds, excellent, excellent health coverage, with the company paying the full premium and no deductible, no copays. I had stock options, a great salary, my first year of employment offered 3 weeks vacation, growing another week off, every 5 years. With the City, I get 16 hours after every 5 years. The private sector is definitely the best place to be if you don’t care about being bored.

  5. If this wasn’t so sad it would be funny. And now the Brain Trust of the City is so embarrassed by San Jose they want to make the airport name even longer and more unmanageable.
    Since most people outside of SJ don’t know the name Mineta or where the airport is located, and they apparently also don’t know the name San Jose or where that it is, now “they” want to add “Silicon Valley” to the airport name.
    Only in SJ would they suggest adding the name of a non-existent mythical place to help boost our name identity.
    I can hear it now—welcome to SJCNYMSVIA. How will that ever fit on a luggage tag? Just change the name to Mayberry Airport.

    • The bastards turned down my recommendation:

      Norman Y. Did We Ever Name Anything After Him Mineta, San Jose—Sanctuary City, Pawn of Major League Baseball, Former Grand Prix Circuit Chump, Home of Silicon Valley’s Janitors—Overbuilt, Cash-Strapped, and Almost International Airport

  6. ” But the seeds of this problem really go back 30 years. I look back at all the decisions made along the way to enhance retirement benefits, each one adding to this problem. ”

    **************

    San Jose’s Mayors in last 30 years

    Janet Gray Hayes 1975–1982
    Tom McEnery 1983–1990
    Susan Hammer 1991–1998
    Ron Gonzales 1999–2006
    Chuck Reed 2007–Present

    (c) RECALL OF THE MAYOR. To initiate proceedings for the exercise of the power of recall of the Mayor, the petition shall be signed by duly qualified electors of the City equal in number to at least twelve percent (12%) of the number of persons eligible to vote according to the last report of registration filed by the County Registrar of Voters with the Secretary of State, which is in effect at the time the notice of intent to circulate the petition is published.

    ***************

    ” The City Manager is the chief administrative officer of the city, and must present an annual budget for approval by the city council. When the office is vacant, the Mayor proposes a candidate for City Manager, subject to council approval.

    The council appoints the Manager for an indefinite term, and may at any time remove the manager, or the electorate may remove the manager through a recall election. “

    City Managers for last 30 years

    Francis T. Fox June 1980–July 1983
    Gerald E. Newfarmer July 1983–May 1989
    Leslie R. White May 1989–August 1994
    Regina V. K. Williams November 1994–January 1999
    Del D. Borgsdorf September 1999–February 2006
    Leslie R. White February 2006–June 2007
    Debra Figone July 2007– Present

    The electors of the City do hereby reserve the power to remove from his or her office the person holding the position of City Manager.

    (a) To initiate proceedings for the exercise of said power, the petition shall be signed by duly qualified electors of the City equal in number to at least the same percentage of the number of persons eligible to vote according to the last report of registration filed by the County Registrar of Voters with the Secretary of State, which is in effect at the time the notice of intent to circulate the petition is published, as is required for recall petitions under the provisions of sub-section (c) of Section 1603 of this Charter.

    No person who has been removed from the office of City Manager pursuant to the provisions of this Section shall be reappointed thereto within a period of four (4) years from and after date of such removal.

    City Charter

    SECTION 701. City Manager; Powers and Duties.

    The City Manager shall be the chief administrative officer of the City. He or she shall be responsible to the Council for the administration of City affairs placed in his or her charge by or under this Charter. Without limiting the foregoing general grant of powers, responsibilities and duties, the City Manager shall have the following powers and duties:

    (a) Subject to the Civil Service provisions of this Charter and of any Civil Service Rules adopted pursuant thereto, and except as otherwise provided elsewhere in this Charter, the City Manager shall appoint all officers and employees of the City; and, when he or she deems it necessary for the good of the service, the City Manager may, subject to the above-mentioned limitations, suspend without pay, demote, discharge, remove or discipline any City officer or employee who under this Charter is appointed by the City Manager;

    (b) Except as otherwise provided elsewhere by this Charter, the City Manager shall direct and supervise the administration of all departments, offices and agencies of the City;

    (c) The City Manager shall have the right to attend all meetings of the Council, other than closed executive sessions where the City Manager or another Council appointee is the subject of discussion, and to take part in its discussions, but not to vote. The City Manager shall attend all regular and special meetings of the Council unless prevented by illness or physical incapacity or unless his or her absence has been authorized by the Council;

    (d) The City Manager shall be responsible for the faithful execution of all laws, provisions of this Charter, and acts of the Council which are subject to enforcement by the City Manager or by officers who are under the City Manager’s direction and supervision;

    (e) The City Manager shall prepare and submit the annual budget to the Council in accordance with the provisions of Section 1204.

    (f) The City Manager shall submit a complete report on the finances and administrative activities of the City as of the end of the preceding fiscal year to the Council at a public meeting to be held within three (3) calendar months following the close of each preceding fiscal year. The annual report, which shall be personally certified by the City Manager to be accurate and complete shall contain a statement indicating:

    (1) Whether the revenues budgeted for the preceding fiscal year were actually received, and an explanation concerning any material differences between the total revenues budgeted and the revenues actually received;

    (2) The extent to which expenditures budgeted actually were incurred, and an explanation for any material variance between budgeted expenditures and actual expenditures;

    (3) The amount of the financial reserves of the city;

  7. San Jose Police Union Launches Campaign To Stop Cuts

    “My message to our city leadership is simply this: no cuts to police, period,” officers’ association president George Beattie said at a news conference this afternoon at the vacant Southside Police Substation.

    The facility, Beattie said, is brand new and was paid for with taxpayer funds, but there are not enough police officers to staff it”

    “He called a proposal made to the City Council by the city manager’s office last week to eliminate nearly 350 officers “irresponsible and reckless,” saying that doing so would bring the department’s staff down to fewer than 900 cops and place the safety of residents at risk.”

    ” The citizens of San Jose do not fully understand what the mayor and the city’s administration are proposing,” he said. “If they did, they would be outraged.”

    http://sanfrancisco.cbslocal.com/2011/02/23/san-jose-police-union-launches-campaign-to-stop-cuts/

    Watch for City Hall counterattack with a Mercury News Editorial broadside against POA and unions while not mentioning the true causes of budget deficits

    HINT:  It is not POA, city employees or resident’s fault but decades of city mismanagement, millions recklessly spent on non core city projects and groups, unnecessary city construction and political insider deals and paybacks

  8. Mayor Reed and Gov Walker sound very much alike don’t they? Anyone hear the audio on Walker tonight? These guys both have one goal, to bust unions so big corporations and governments can have all the power and dictate everything with no balancing voice. Can you all not see that or have you all drank the Glenn Beck funny punch?

  9. John Galt,

    When Chuck Reed joined the city council a top-step cop was making about 73k, so it is beyond question that it was during his council tenure that salaries increased to the rates to which you now object (the timeline is the same for the retirement formula). In addition, the police-fire pension was “fully-funded” back then, meaning it held assets sufficient to satisfy its obligations to its retired and active members without another dime in contributions.

    Mayor Reed did not inherit a sick or broken system. He inherited what was considered a model system, and if it is truly broken today then he and his fellow council members broke it, not the cop on the beat or the firefighter in the station house, neither of whom can do anything more than approve or disapprove a contract offer.

    What Chuck Reed says today to the Wall Street Journal is nothing more than what Chuck says today. He’s proven himself a habitual liar, one who has turned the voters against its public safety workers by branding them as greedy riders on what he’s called a “gravy train.” Today Reed wants you to believe they’re overpaid—that their salaries are more than sufficient for the area, representative of nothing but their own greed and political power. But if you want to know what he really thinks about the cost of living here, and maybe understand why he approved those generous pay raises, take a look at what he had to say less than two years ago:

    —San Jose, Calif., Mayor Chuck Reed calls a family living in Silicon Valley earning $250,000 “upper working class.” That is about what two engineers working at a technology firm can expect to make, but “a family earning $250,000 a year can’t buy a home in Silicon Valley,” he said.—

    http://investorcentric.blogs.nuwireinvestor.com/2009/04/is-250000-year-really-wealthy.html

    I guess we’re supposed to believe that he only said that because his arm was being twisted by a greedy, power-mad public employee’s union official.

    • BS Monitor,

      Politicians say the things they say because they’re politicians. What Chuck Reed says today or what he said two years ago means nothing to me. I EXPECT politicians to lie to me. I KNOW I can’t trust them. That’s precisely why I think the whole concept of allowing public employees to unionize is preposterous and leaves the people who have to cough up the money- the taxpayers- completely unrepresented. Who represents MY interests in this wonderful collective bargaining process? The lying politicians that’s who. The lying politicians who have absolutely no stake in the process other than what will best further their own political ambitions. Usually that equates to endearing themselves to the City workforce. If Chuck Reed, in order to make promises he couldn’t otherwise keep, needed to put my money at risk then that’s exactly what I would expect him to do. That IS what politicians do. So WHY do we tolerate a system that entices them to use not just current taxpayers money as a bargaining chip but tax money five, ten, 20, 40 years down the road? It’s absolutely a recipe for misuse.
      You may choose to believe that Chuck Reed inherited a sound pension system and that he ruined it. But I’ve been watching events unfold over the past decade or so and KNEW that this was nothing but a gigantic pyramid scheme that was destined to come crashing down when the first large wave of employee beneficiaries began to retire under the ridiculously generous terms.
      Recall Chuck Reed. Have Oliverio arrested for stealing campaign signs. Get some different people in there. It won’t make any difference. If you leave that opportunity, that money, sitting right there on the table, SOMEBODY is going to take it. And the odds that the result will be a superior police force are very slim.

    • BS Monitor,

      Whatever Chuck Reed said or didn’t say is irrelevant to me. He’s a politician and politicians say and do whatever it takes to further their own political ambitions. That’s why it’s foolish to give them any more power than is absolutely necessary. By giving them the authority to promise benefits to public employees to be paid up to 40 years in the future is to give them the freedom to waste today’s tax dollars on dubious projects while they use future taxpayer dollars to make promises that can’t be kept and for which they can’t be held accountable.

      This whole notion of unionized public employees is a farce. There’s no clash of interests across the bargaining table as there is in private industry because the government is a monopoly with no competition and no incentive to turn a profit. The taxpayer whose money is being used as a bargaining chip has no seat at the table in this ‘collective bargaining’ process. These unions are government organized as an interest group to lobby itself to do what it always wants to do anyway- grow. Neither Reed nor any other councilmember has any direct financial stake in the ‘negotiations’.

      Pay people fairly but make them be responsible to make the daily tough choices to provide for their own health and their own retirement.

  10. Brown’s budget proposals are ridiculous, because a few members of the opposition will not vote for the budget and Californians will not vote for higher taxes, and very possibly, permanent taxes. So what is Brown’s real budget? This budget is an insult to the intelligence of the people of California.

  11. I’m tired of listening to never ending finger-pointing from both sides. What I want to see from the union folks is a proposed solution that allows the city to keep public safety at current (or improved) levels AND solves the budget issue.  No more complaints about how horrible the mayor and city council are without also providing a way out of our current budget mess.  What are you cutting or how are you raising enough revenue to pay for the underfunded pension benefits?

    • …a nearly 18% reduction in manpower from the PD and paying about $1000 PER paycheck into the retirement plan in addition to paying more for every aspect of our health care doesn’t cut it for you?

      • Nobody wants to see reductions in public safety. The question was how do we keep it as-is… and solve the budget problem? If you’re not happy (which is understandable) with the mayor/city council’s proposals – what’s the alternative solution?

        • Apparently there isn’t one, according to chuckles. Apparently even a 10% concession from us over and above what’s already been given back won’t save public safety positions in a police department which has already seen a nearly 18% reduction in manpower over the last couple of years.

    • Even if ALL the City workers agreed to the requested 10%, there would still be a huge shortfall in the budget (read the article).  All the City Departments have had budget cuts for the last 10 years, so there is no other way to cut money except for salaries.  (G)Reed would like you to think that the fault lies in the Unions, but the City in fact hired the workers and agreed to their pay and benefits.  Binding arbitration has been rarely used in San Jose.  When you buy something and the ill comes, do you balk and tell the company to reduce the price?  Of course not… but San Jose does.  Every Community Center and Library should be shuttered before a single cop or firefighter is let go… the County has both services available to citizens.

  12. As long as San Jose’s media (including Metro) keep running butt-kissing articles about Reed, we signal that we too can drink the Kool-Aid.

  13. Of course you will get a large editorial from the Mercury News! As I mentioned before, the Mercury News is in cityhalls pocket do to the large financial bailout the city gave to the Mercury News. You will start to see a lot more union bashing by the request of Figone!

  14. what the mayor is doing would be like the president blaming the troops for the budget mess the nation is in due to the war.  instead of the US contractors who made the policies in Iraq so that only US contractors could bid on projects.

  15. City Hall Insider

    ” do to the large financial bailout the city gave to the Mercury News.”

    Please tell us where, when and how much so we can see the documents  

    Thanks It would explain why Merc has been so negative against city employees

  16. Reed did accept some blame for approving pension and retirement plans for police and firefighters, which have put the city in its current predicament.

    if it was a mistake, FIX IT, we don’t have/want to leave with this forever.

  17. The citizen’s of san jose need to realize that the mayor’s proposed cut’s in the police dept. will put them all at risk of becoming victim’s.  It will be impossible to police a city of one million people at those staffing levels.  The city’s own projections were for the department have a staffing level od 1800 officers by now.  Remember that all city employees are paid out of the general fund which is only 26% of the budget.  Ask yourself how that 26% of the budget can be breaking the city.  It’s pretty obvivous that the mayor wants you to turn your anger about the budget towards police and fire rather than asking the city counsel how they spent the other 74% of the budget which has put the city into this budget deficit.  What about all the money they constantly spend supplementing other agencies in the city.  Look at team san jose which has constant been bellow thier projected earnings and constantly receiving subsidies from the city even after three grand juries recommeded change in their operations.  How about the San Jose Grand Prix???  Millions were spent subsidizing that race and the city attorney didn’t even have a soild contract to keep them from up and leaving but the city attorney still has a job.  Citizen’s need to look at how the majority of the budget is being spent not the 26% on the general fund.

  18. Recall Mayor Reed.  He not only lied once but he repeated and expanded his lies, Showing no remorse like a pathological liar. If any one of us lied to such a degree at our job, we’d expect to be fired.  I doubt he will resign honorably, so a recall is unfortunately necessary.