“We must stop this death spiral of increasing pension costs and decreasing numbers of employees,” wrote Councilmembers Nguyen and Herrera in an op-ed published last week by the Mercury News. Nguyen and Herrera explained their reasons for supporting Mayor Reed’s push to confront the city’s runaway pension problem. In terms of the pension problem, the residents of San Jose also get it.
San Joseans can see the results of the structural budget deficit problem all around them; from the poor condition of city streets to the cancellation of public events, the grounding of the police helicopter, and the closing of city park restrooms. Cuts to city services can be seen firsthand in every San Jose neighborhood.
Ten years ago, San Jose’s annual retirement costs were around $63 million. This year, the figure is $250 million! As a result, hundreds of city employees will lose their jobs, and city residents will endure yet another year of diminished service levels.
Is the City of San Jose headed for bankruptcy? Councilmembers Nguyen and Herrera contemplate the possibility. “In bankruptcy court, the judge has the power to slash pension benefits to keep a city out of insolvency—and that’s exactly what we’re working to avoid…wouldn’t it be better to slow down the rate of growth of pensions than to lay people off?”
Projections from the mayor’s office estimate that San Jose’s retirement costs, under the “best case scenario” will soar to $400 million in fiscal year 2015-16. Something’s got to give…a lot.
In a recent letter to the Merc, San Jose resident Don Barich expressed the view that more and more San Jose citizens are coming around to. “While no one wants to see anybody lose their jobs, public sector pension and retirement plans are threatening community programs. Is San Jose going to let a few thousand union members hold one million citizens, taxpayers, and businesses hostage?”
The City of San Jose may not be bankrupt, but it is certainly broken. For the past 12 years, corrupt leadership, an undedicated press and an apathetic citizenry have ruled the day. Here we live, in one of the wealthiest regions of the country, yet the city government cannot afford to deliver even basic city services.