City’s Deficit Rises Yet Again

There’s bad news for the City Council again. The deficit is up 16 percent and now stands at $116.2 million. The problem, says City Manager Debra Figones, is employee pension costs, and especially the pension costs for retired policemen and firemen. While they were expected to grow by $38 million during the next fiscal year, the estimate has been adjusted and now stands at $53 million. Exacerbating the problem is reduced revenue from business tax receipts, which continues to drop.

This leaves the city with few solutions. Tax increases are unpopular, especially during a recession; city employees and their unions are not likely to agree to further pay cuts; and few people want the city to lay off 150 more workers—what that would mean essentially is that people are losing their jobs to support people (pensioners) who no longer work.

Among the fixes that were voted on yesterday were increasing the tax on the city’s card tables from 13 to 15 percent, allowing the card clubs to increase the number of tables by 25 percent and easing betting restrictions. Police Chief Rob Davis’s concerns about the social cost that gambling could have for the city were echoed by five councilmembers who voted against the proposal. They also pointed out that it would require a ballot measure to increase the taxes, and that this would cost $500,000, while the projected revenue would only be an additional $3.6 million to $5.25 million. Nevertheless, the measure to seek voter approval passed 6-5, with Mayor Chuck Reed casting the deciding vote.

At the same time, the city also voted close down its family camp in the Sierras, citing deteriorating conditions. It is also considering discontinuing the program. As Watch Dog Silicon Valley pointed out, the message that City Council is getting across is “Gambling Good. Family Camp Bad.”

One last measure being considered by City Council is a quarter-cent sales tax increase, which the Mayor claims will generate another $30 million. Yet all three measures taken together would reduce the current deficit by less than one-third, meaning that this year’s budget debates could get pretty heated.
Read More at the Mercury News.


  1. Well, there’s the choices. City employees can balance the budget on their backs by taking pay and benefit cuts, on their fellow employees’ backs by opting for layoffs, or on taxpayers backs by…oops, taxpayers aren’t going to approve any new taxes just to pay pension costs! Like it or not, city employee benefits and pay are going to take a hit.

  2. I went to Family Camp from toddler age through h.s., we never missed a year.  Breakfast hikes, Raft Wars, water snakes occasionally making their way through the swimming area, Family Camp MADE summer.  First, the caregiver there for all those years gets shafted, and now the dining hall is in trouble.  Already it breaks my heart that no one will be singing “The other day/The other day/ I saw a bear/ I saw a bear” this upcoming summer, but if there was ever a reason to raise my own kids in SJ, access to Family Camp would be it.  I hope the City Council won’t give that up easily.

      • Family Camp wasn’t free!  It cost the same as a hotel for 4 people, pretty much, more than some hotels are charging right now.  But it was like neighborhoods used to be, with lots of kids to play with, and opportunities for grown-ups to do some grown-up things once in a while, including pay for some babysitting, with communal dining and inexpensive activities like crafts, movies outside, and all ages dances.  Besides the cost, It takes resident volunteers doing work weekends every spring to get fix up camp after every snowy winter.

        But individuals can’t fix the dining hall themselves, the one communal facility SJFC has.

  3. Only in these tough times do folks start talking about City programs that are unknown to most taxpayers.  I guess it must be these very non-core programs that have prevented the City from providing core services – road repair, neighborhood projects, etc. – for many years.

  4. I am so angry about the vast diversion of taxpayer money to public pensions, I could scream, or cry, or just move far far far away from San Jose!

  5. I’m so tired of the people blaming it on the pension and the employees.  I could just scream or cry or just move….whaaaaa.  Seeee Ya. 

    Blame it on the city management.

  6. Financially responsible organizations do not pay pensions out of current revenues. Throughout the employee’s career money is set aside and paid into a pension fund, and when the employee retires, the money for their pension is there and waiting.

    Unfortunately fiscal prudence is something that was discarded back in the Reagan era, both in the corporate world and in government. Now we are getting the end result of decades of management by irresponsible MBAs.

  7. Pension fund will continue to be the albatross around the neck of San Jose.  It needs to be triaged and replaced (CalPERS).

    San Francisco sent lay-off notices to 15000 workers and will then rehire with the work-week reduced by 2.5 hours per week.  That’s roughly a 6% pay cut.  Wages usually make up the vast majority of public agency budgets.  Is San Jose willing to look at this same kind of remedy?

    Also, the most out of control wages are often exempted from budget cutting and job losses.  I’m talking about at-will executive level positions as well as public safety.  It all has to be on the table or we’re cheating.

    Open up partnership for progress program where parks, buildings, and programs can be aided with non-city workers.  Parks kept open with volunteer maintenance, etc.  Create job core type program to rehabilitate infrastructure using semi-skilled labor (out of work folks paid on for temporary worker positions.)  Make it a pilot program and trump it as a role model for future federal stimulus efforts.

    • > San Francisco sent lay-off notices to 15000 workers and will then rehire with the work-week reduced by 2.5 hours per week.  That’s roughly a 6% pay cut.  Wages usually make up the vast majority of public agency budgets.

      I will bet that at the end of the day this will simply be a sneaky way for the unions to attain a 37.5 hour work week AT FULL PAY!

      The unions will find some sympathetic judge to agree that the city is obligated them to pay them their “full salary”, yet the union employees have proven that the same work can be accomplished in only 37.5 hours.

  8. San Francisco has 15,000 city workers for a population of 800,000 people. San Jose has about 6,000 city workers for a population of over 1 million people. I would say we are definitely doing more with less.

    Since you seem very knowledgable on this subject, where do you suggest the city cut jobs? You mentioned public safety. The San Jose Police department has 1,200 officers compared to 2,500 for the San Francisco Police department. Maybe, since you think volunteering is a good idea, which I agree it is, you could become a reserve (volunteer) police officer to augment our already short staffed police department.

        • San Francisco is a City AND County.  Therefore, they run the health and hospital system and other county functions in addition to the city.  Therefore, you can’t compare employee numbers between the counties.  You could take the total number of Santa Clara County employees and prorate those numbers by the fraction of population in San Jose vs. the entire county and then add that to SJ’s employees to make a real comparison.

          I suspect San Jose is still running lean on employees even after doing that calculation.

      • Just went to the NYPD website. After 5 years a NYPD officer makes $91,000 a year with NO overtime. They also get 27 paid vacation days a year, unlimited and fully paid sick time, and fully paid medical insurance. SJPD gets far less vacation days, accrues sick leave at the rate of 7 hours a month, and pays big money for there share of what medical plan they choose. NYPD officers can also retire a full 10 years EARLiER than SJPD officers. Your statement is total hyperbole. Go to the NYPD website yourself if you don’t believe it.

  9. It continues to be amazing how inaccurate information is posted here as fact. Opinions based on fact are one thing, opinions based on wrong info are worthless and many here seem to specialize in wrong info.
    Makes for entertaining reading, though.

  10. Voters get to say Yes / No on all government employee pension plans increases in San Diego, Orange County and San Francisco since 1889 not elected politicians

    Many police and firemen in California can retire with full benefits at age 50, but in San Francisco it’s age 55.

    The surge from an historic stock market crash, which punched big holes in pension investment funds, is creating concern that pension benefits approved in better economic times are not “sustainable” and need to be cut for new hires.

  11. San Jose pensions are legally binding contracts that will NOT and can NOT be cut without agreement from BOTH city and unions – Get over it   New employee pensions will not impact budget for 20 years

    Why would they agree to cut pension when 40%  employees will retire n next 5 years and requires 50 + % union vote?  NOT going to happen

    Why would they agree to pension cuts that would be lower that most or all California cities and lose high value employees to other cities and make recruitment / retention impossible unless most other cities also cut ?  NOT going to happen

    Why would they agree to cuts when they see many millions spends on non basic services and tax subsidies?  ?  We all know very long list that city continues to spend taxes on.  Unions will NOT not take pension cuts until non basic services are heavily cut

    • Question: What’s particularly fascinating about pension obligations being legally binding on the city and, therefore, the city residents? 

      Answer: it’s so damned easy to move to a well-run municipality like Santa Clara or Campbell or Sunnyvale, and escape the highway robbery altogether.  Not that I would ever do such a thing!

    • > San Jose pensions are legally binding contracts that will NOT and can NOT be cut without agreement from BOTH city and unions – Get over it   New employee pensions will not impact budget for 20 years

      Legally binding contract?  Legally binding on who?

      Keep in mind the wisdom of the French Revolution (inspiration for the American Revolution):

      “The voice of the people is the voice of God”.

      If God says your “legally binding contract” goes away, it goes away.

      And the Gods are not happy.

  12. Keep in mind these massive “legally binding” obligations are not a promise to pay, but a promise to take from someone else.

    As history has shown many times over, at some point the people will not allow it to be taken any more.

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