Emergency and Response

When politicians have bad news to deliver, news they don’t really want anyone to hear, they’ll often deliver it at a Friday afternoon press conference—nobody watches the TV news on Friday night and nobody reads the paper on Saturday. But Mayor Chuck Reed’s announcement last Friday that San Jose is in a “fiscal and public safety emergency” was like a big squirt of gasoline on the smoldering heap of embers that is the city’s relationship with its public-employee unions. And the resulting flare-up did not go unnoticed.

Reed’s pre-weekend chat contained the details of his reforms proposal: hiking the retirement age by five years, cutting retirees’ cost-of-living increases in half and putting a firm cap on retirement contributions. Yolanda Cruz, president of the Municipal Employees Federation, did not hesitate to overreact, comparing life-long Democrat Reed’s proposals to those of the union-busting, Tea Partying governor of Wisconsin, Scott Walker.

Cruz didn’t mention that at the same time that he asked the city’s workers to bite the bullet, Reed vowed to go to voters to ask for a tax hike.

Reed has said he is open to outside suggestions on how to “prevent a disaster,” casually pointing north toward Vallejo, which filed for bankruptcy in 2008—a move that instantly voided all of its union contracts. If the mayor is as flexible as Alex Gurza has been in negotiating with the city’s unions on pay and benefit cuts, lawsuits will likely follow.

Vice Mayor Madison Nguyen and councilmembers Rose Herrera and Sam Liccardo co-signed the mayor’s memo, which seems likely to pass with the help of fellow councilmembers Pierluigi Oliverio (a supporter of standard 401k for city employees) and Pete Constant (a police pension recipient and critic).

None of this, meanwhile, solves the city’s $115 million budget shortfall for the looming fiscal year. Reed’s fiscal reforms would only begin to take shape starting in 2012-13.

17 Comments

  1. Why did it take Chuck so long to come to such an obvious conclusion? From my perspective, the city should have filed BK no later than last year, and got EXISTING labor contratcs, including pensions, into line with fiscal reality.

    If I were a city employee, would I think that sucks?  You bet I would.  But 4900 current city pension recipients are bankrupting the other 940,000 residents of San Jose.  Talk about tyranny of the minority!  Doesn’t anyone other than me grasp the concept that a mere 4900 city retirees are bankrupting the 10th largest city in the USA, the self-proclaimed capital of silicon valley?

    My view is that the failure of the mayor and the council to seriously consider bankruptcy in order to save this sinking ship is at least nonfeasance, and could well be malfeasance.

    Don’t ask Doyle.  He knows nothing. Get outside bankruptcy counsel to provide an opinion.

  2. According to my neighbor (the cop) the city looked into bankruptcy and union busting measures a couple years ago. She says their own outside law firm told them there is no way that would fly legally because the city actually has a ton of money it’s just where they Decide to put it that makes the budget look short. So Reed proceeded to play with the math and manipulate the media (villify employees) and apparently it’s working. not content to just blindly believe such a tale, i asked if she could she show me proof of the city’s budget. She went on-line and showed me the city’s own published spread sheet. Bottom line, I get it. I’ve been a program manager enough years to know how to massage the numbers on paper. It’s not hard.
    So this just leaves me with more questions than answers. But then a huge red flag flys up…in the same speech about fiscal emergency, the mayor talks about an enormous discretionary purchase. A baseball stadium. Are we broke or not? Make up your mind.
    More importantly, why are we buying land when don’t even have a tentative agreement with MLB? Will we sell it off to balance the budget if we don’t get an answer from baseball by July 1st? Just a thought…

    • Mr. White:

      Good for you for asking questions and good for your neighbor for showing you.  I’ll tell you though, all one has to do is read this blog on a regular basis and you will compile a long list of mismanagement and frivolous spending.  Even John Michael O’Conner who is an avid commenter to this blog touts how bankruptcy is the solution, yet he continues to scream about the wasteful spending in the Office of Cultural Affairs. 

      The politicians are playing three-card monte. They want the citizens to take their eye off the ball.  Keep your eye on the ball and watch where the money is going.  It is not all about pensions.

      CAN THE SJI BLOGGERS THROW OUT SOME EXAMPLES OF WASTEFUL SPENDING FOR MR. WHITE? (OR SHADY DEALS)  LET”S START A LIST.

  3. San Jose has a “AAA” Bond rating!(IN ORDER TO HAVE A AAA RATING YOU MUST HAVE MORE THAN $1BIL IN ASSETS!) No way are they going to consider Bankruptcy! Instead lets pay $120 Million for the Convention Center and Millions for a new Sewage Treatment Plant and don’t forget the $6 million on public art at the Sewage Treatment Plant. I know lets go show our support for incompetence and have a picnic and marvel at the Public art that is going to be installed at the Sewage Plant! What a disgrace! I have seen it in other forums and it is really time to support “RECALL!” This City is an embarrassment to live in! Rufus Reed, it is time to step down!

  4. For all the criticism heaped on Reed, nobody has a sound, financially prudent alternative to his proposals. Increased taxes will only further cripple an already stagnant economy. Appears that in San Jo we have lots lots B.S. but few, if any solutions.

    • Not true, Norcalnat.  Many, including me, have suggested changing up the allocations to the Capital and Special Accounts.  Thus far, the politicians have stonewalled us with boldfaced lies, saying that it’s the law that governs the allocations, and they cannot be changed. 

      Well, most of us know that’s a load of crap.  I think sooner than later, there will be a mutiny of the first order with regard to this nonsense and, simultaneously, we’ll toss the lying bastards out of office.

    • you obviously do not know how to read…if you took the time to read all the blogs in the different articles (granted, it will be time consuming), you would see that there are many smart people out there, who have good solutions and write them down. However, since this city is run by a bunch of idiots and a lot of the public is stupied enough to trust the politicians and believe the Mercury News, instead of the blue collar workers, it will continue to be the same B.S. So my friend, instead of saying we have lots of B.S. without solutions, you are not taking the time to get all the facts and as a result, sound like you are in the category I mentioned above.

      • > However, since this city is run by a bunch of idiots and a lot of the public is stupied enough to trust the politicians and believe the Mercury News, instead of the blue collar workers, it will continue to be the same B.S.

        Well, one of the reasons I read the Mercury News is that, as far as I know, the blue collar workers don’t publish a newspaper.

        If they did, I suppose it would be called the “I Am Underpaid News”.  And the editorials would probably be very predictible and repetitive.

        • too bad you don’t look any further for facts or truths. For example: did you know that the fire department has been given a 21 million dollar grant? Bet you didn’t since it NEVER got printed in the Merc. Bet you also didn’t know that Mayor Reed is probably going to not accept the 21 million dollar grant-guess SJ is not as hard up for money as they want you to believe. So, go ahead and keep your head in the sand and believe what you want to believe. You too, fit into the above category.

  5. How can an outsider possibly provide a solution to a strategy based on a problem? What Chuck Reed has done is provide the public a politically tailored and fitted perspective to a real problem (the City’s obligation to employee retirement funds) and then turned the public’s outrage in the direction of a convenient scapegoat (its city workers). His strategy has been to make outsiders out of anyone, employee or citizen, who is not part of his little cabal.

    Taking a page out of Chicken Little, the mayor has repeatedly alerted everyone within earshot of the worst case scenario—for each and every aspect of the situation. Basing his projections on a terminally sluggish stock market, ever falling tax revenues, and health care costs gone wild, Reed has created the big scary numbers that no one can ignore and offered-up Draconian measures as the only solution.

    The City of San Jose has a long history of floating its financial obligations in hopes of a better day. The accrual of sick leave benefits, something that is scrupulously recorded and easily viewed in dollars and cents, is just one of them. Not once has this city ever set aside a dime for an accrued hour of sick leave, this despite the growth of its workforce and the annual increase in the cost per banked hour. The story of overtime is much the same, with the City paying down its huge obligations (to a more responsible level) only after its bond rating was threatened. And need I even mention its gross malfeasance in addressing the risks inherent in its fund schemes?

    We see a lot of complaints posted here concerning street repair, park maintenance, tree trimming, etc., all victims of floating—of service obligations, not debt. This “we’ll get to it when the money rolls in” philosophy has been evident for at least two decades, all the while the city splurged on non-essentials, race pandering, and the needs of its high priced developer friends. Parkway trees used to be trimmed on a rotating schedule, a schedule that began stretching thirty years ago—until the service itself was completely abandoned. Our parks and streets saw steady decline throughout the recent decade of unprecedented commercial and residential development, no matter whether markets boomed or busted.

    Suddenly, and conveniently, the philosophy of obligation floating is over: the mayor not only wants to balance this city’s obligations to the penny, he wants to define those obligations using the worst case scenario. This is a financial approach under which neither City Hall, the Convention Center, nor the Arena could ever have been built, and under which few of us could have ever bought a house.

    Nonetheless, floating debt IS the strategy Reed has chosen as he looks to finance a baseball stadium, improved convention center, and a grand transportation station—after he’s sacrificed, bagged, and buried the requisite number of city employees.

  6. It would seem that Mayor Reed,wants what he wants and that is FINAL. There is no negotiatinig with him as the unions have stated. if you watched the last council meeting there was a speaker that said the youth council could be funded with grants and that he (the speaker) had secured them. Why did we not know that this was a valid option? How many more projects could be funded with grants? And.. If I am not mistaken San Jose is Giants territory, wouldnt they have to give up their rights before the Mayor could even build a ballpark, or attract a team? So why is he even talking to the A’s, isnt that putting the cart before the horse? The Giants are never going to give up their fan base to the A’s. This Mayor and Council need some assistance of their own, what a waste of money, but go ahead cut more services to the public Mr. Mayor

  7. Actually what happened was the San Jose Giants minor league baseball team wanted to play at Spartan Stadium but guess what, it was “A’s” territory in San Jose, but the “A’s” gave up San Jose to the Giants so they could play here. Now the “A’s” want San Jose back in their territory. Maybe what they should do is give up Alameda County to the Giants and take San Jose back or is that too logical? Hey Rufus Reed tell us about the $200 million you have stowed away waiting for the “A’s” while you cut Public Safety! That’s the real story!

  8. “Hey Rufus Reed tell us about the $200 million you have stowed away waiting for the “A’s” while you cut Public Safety! That’s the real story!”

    Intrigue! $200 mil?! Please share.

  9. the only way to get to the bottom of this is a grand jury investigation. I have little doubt more than one will step down and smart money would be that more than one would go to jail if the DA did not play politics.  i have a starbucks card for the the first person who can name all of the scandals invovling Reed and the council.