City Still Wants Pension Reform Election
Posted by Comments (28)on Friday, December 2, 2011
With San Jose’s budget shortfall coming in at far less than the $80 million expected, the City Council will defer any action next Tuesday to declare a fiscal emergency. New projections put the shortfall at around $25 million. However, Mayor Chuck Reed still wants an election next year to reform employee pensions.
The preferred election date for the ballot measures would be June 5, 2012, according to a memo sent out Thursday by Reed and councilmembers Pete Constant, Rose Herrera, Sam Liccardo and Madison Nguyen.
City Manager Debra Figone released her own memo Thursday, which also called for any action to declare a fiscal emergency to be deferred due to the surprising new numbers. But she cautioned that the city’s financial future is still uncertain. Below is the majority of the city manager’s analysis on the situation:
“Unfortunately, current retirement costs are still unsustainable. Even with the projected decrease in the dollar amount of the Annual Required Contribution for pensions in the Police and Fire Department Retirement Plan, the City’s contribution rates are projected to increase from 50.4% to approximately 60%. The fact that we will be paying approximately 60% of pay towards pension only is in and of itself unsustainable, and it is important to note that this does not include the cost of retiree healthcare benefits.
“Pending verification of the projections from Cheiron, this positive news will lower the projected budget shortfall for Fiscal Year 2012-2013. We will provide updated information as soon as possible, however at this time, it appears that the projected deficit could drop from $80.5 million to somewhere in the $25 million range. Just as we noted in the Fiscal and Service Level Emergency Report released last week, these new numbers continue to be a snapshot in time. As these numbers are reviewed and additional information becomes available, changes to the 2012-2013 Preliminary General Fund Forecast will likely be necessary and will be incorporated into the formal 2013-2017 General Fund Forecast that is scheduled to be released in February 2012.
“While the fiscal and service level emergency report analyzed potential future service reductions, we have already reduced services to a level that is unacceptable. Accordingly, the City Council has provided direction to restore services to the January 1, 2011 levels. As shown in the Fiscal Emergency Report, 28% of City positions have been eliminated in the last 10 years—a staggering 2,054 positions. Over this ten year period, the City has absorbed a General Fund shortfall of $680.3 million. A majority of these position cuts have taken place within the past three years. This shows that the cuts made thus far are unacceptable and our goal should be to reduce costs to be able to restore these very important services to the community.
“Because these numbers and the forecast are now in a state of flux, I am recommending that that City Council delay consideration of the fiscal and service level emergency declaration.”