Fiscal Emergency Vote Delayed

Despite calling the city’s unfunded liability a cancer, brought on by escalating and unfunded employee retirement costs, Mayor Chuck Reed has decided to delay treatment options. The City Council will defer any decision on declaring a fiscal and public safety emergency to Aug. 2.

The council was expected to take a vote on the issue during Friday’s special meeting. But with five of the city’s 11 unions agreeing to extend negotiations regarding pension reform to Oct. 31, city staff will now be focusing on potential savings from opt-in pension programs while also looking at a special election in March 2012 as a backup or supplementary plan. Among the opt-in proposals the city will study are ideas put forward by councilmembers Donald Rocha and Pete Constant, the Police Officers Association and the Firefighters Union (Local 230).

The reasoning behind delaying a vote Friday appears to be multi-faceted. Reed reportedly has said the city needs to protect itself from potential litigation by exhausting the negotiation process with its unions. There was also a letter sent from Attorney General Kamala Harris to the city, suggesting an emergency declaration might not be legal. And there has also been debate within the council that the city is setting itself up for years of litigation while delaying any action on tackling the problem of rising pension costs.

(One opinion that certainly did not play a role in delaying a vote was a letter sent from Cupertino Mayor Gilbert Wong to Reed and the council, warning that an emergency declaration would be “rash and ill-advised.” Reed verbally undressed his fellow mayor by asking if the letter was the viewpoint of the city of Cupertino or Wong’s personal opinion. Wong responded by saying it was his own opinion. He probably won’t use city letterhead next time.)

The delay in making a decision doesn’t necessarily mean negotiations will proceed amicably.

Employee Relations Deputy Director Gina Donnelly sent out letters to the six unions that haven’t signed an extension agreement for negotiations in good faith. In her letters, which were all worded the same to the leaders of each union, Donnelly says the city will move forward with crafting ballot measures to address the city’s mounting unfunded liability, which are estimated to be somewhere in the range of $400-650 million by 2015. Both sides currently dispute the basic framework for negotiations. (Click here for the union’s viewpoint, and here for the city’s viewpoint.)

In a memo contained in Friday’s special meeting agenda, Gurza says the city will continue to study opt-in pension plans, but there are several potential hurdles. First, not all employees are guaranteed to opt-in. Second, “employees would be required to irrevocably give up their existing level of retirement benefits and voluntarily choose reduced benefits.” Third, employees who are married would also need their spouses to sign off “because of community property interests.”

At the very least, that last detail could set up some interesting conversations at the dinner table.

Josh Koehn is a former managing editor for San Jose Inside and Metro Silicon Valley.


  1. Chuck Reed is hoping that the unions will eventually balk at his draconian measures and the talks will fall apart.  He is trying to collect ammunition for down the road when he will try and pull the same shenanigans.  Reed is just praying that the negotiations will fail and then he can shrug his shoulders claiming he tried and proceed with his plan all along.

    • It is scare tactics and a way to blame failure of negotiations on unions—despite the fact that unions – at least FFs offered to negotiate and proposed pension reform since the first quarter of this year!

      He could not seek a pension reform vote in November because 1) even if the City’s 10 year old budget crisis now qualifies as an emergency, which is unlikely, the law requires the City to negotiate in good faith before any unilateral action could be allowed and the City has not done so while five unions have offered. 2) Even if successful, the measure will result in a multi million dollar court battle that will take years with little likelihood of success.  If he ultimately loses, he has no leverage at all.  Why would the unions negotiate about anything at that point.  He should take this opportunity to negotiate before he loses the ability to get any concessions because the law could and likely will be determined to be squarely with the unions. Even BK does not authorize the City to reneg on the contracts as was held in the Orange County BK. 3) he’s pretending to negotiate in good faith as “the reality is” points out.

      • is bankruptcy. The law states that a government CANNOT file bankruptcy for the purpose of changing employee’s pensions. He goes from one threat to the next.

        I don’t know why employees are negotiating for pension changes. These are vested rights. They cannot be changed. Why negotiate them away?

    • Like him telling the media, “We’ve tried to negotiate with THOSE unions for four months….”

      When in reality those four months only totaled 12 hours, with the City not negotiating at all…just showing up? They were just going through the motions of trying to make it look like they were negotiating, to the public, but behind closed doors, their arms were folded.

  2. Once a clown always a clown.  Maybe Clown Reed should join the cheer leaders at the airport.  I’m telling you………….recall.

  3. “What the mayor did not calculate, was the service degradation caused by high quality staff and the high number of employees who are leaving the City prematurely.”

    We have been blogging this and telling people that this was going to happen…and it is happening. We’ve had the top experienced people in our department, leave. What it has left is the middle and lower experienced people. It’s going to get worse if fiscal anything is passed without employees agreeing to any type of change. He has really messed up this city and you still have citizen saying “Go Reed”. They just don’t know what they are in for. We’ve been trying to tell them, but they think we are just blowing smoke. Like you said, if people were smart, they would chase this guy out of town and save their city. I’m a middle level experienced employee but I have just enough time in that I can leave. So I’m jumping ship, too!

  4. Reed regardless of labor’s ranting and threats will never successfully be recalled.

    He correctly reads voters concerns about declining city services, the latest is San Jose has worst streets in county.

    Majority voters believe that city employees took advantage of labor’s past political control of Council to get excessive benefits and pensions that city can not afford so support Reed’s call to reduce pensions

    Next Mayor has already been chosen by Reed and his insider political friends, Mercury will endorse with main campaign issue being defeating labor candidate so that past city tax spending abuses will not be repeated and city can attract new businesses

    Labor’s mayor and Council candidates will suffer more embarrassing landslide campaign defeats by voters until labor runs candidates who understand voters concerns not only labor’s issues

    • Seriously—“Majority voters believe that city employees took advantage of labor’s past political control of Council to get excessive benefits and pensions that city can not afford so support Reed’s call to reduce pensions “

      Labor has no ability to “take advantage” of politicians.  Politicians take the position that most helps them. How do you think the benefits packages came to be—the politicans—including your favorite Mayor Reed – voted for it. 

      The bigger quesiton is how did those politicians (including Mayor Reed) not save for the future during some of the best economic times this country ever saw and instead ran a deficit for the last 11 years.  Had the politicians planned for the future, and the known expenses of the contracts they approved, we would not be in this mess. Reed and his cronies are responsible—not labor. 

      Finally—define “excessive.”  No one on any of these blogs understand the benefits package and the amount of money the employees contribute (double or triple some years over social security) and/or the fact that many do not contribute to social security nor does the employer.

      Seriously if you want to continue to vote in leaders who blow with the breeze then go for it.  The City will decline even faster. Who would want to invest in SJ when the Mayor is declaring fiscal emergencies based on fiscal actions he promoted!

  5. 1. The Attorney General told him publically what every employee and legal expert including his advisors already knew, it’s illegal.  Then his absurd statement regarding the Attorney General “they do not understand what we are trying to do”. Clearly they do, break the law.

    2. There’s no fiscal crisis.  The unfunded liability is a political scam to grab money from the employees.  The pension fund is healthy by all accounting standards at over 85% funded, it gained hundreds of millions in profits this year alone in investments, not including contributions from the employees, after all obligations paid.  The ending balance is in the billions and there’s no outstanding bill due.  The annual revenue is in the billions, if the unfunded liability were paid today it would only equate to 4% of the budget, but again it’s not due.  It’s political trickery like a magician’s shiny coin.  If the City were in a real fiscal crisis then there would be red tags on all City assets like City hall and the Airport and the mayor would be conducting council sessions in the streets not in closed sessions.

    3. What the mayor did not calculate, was the service degradation caused by high quality staff and the high number of employees who are leaving the City prematurely.  A City manager ill advising and staying lock step in this strategy which is directly related to the increase in crime and murders.  You had a couple of thousand dedicated employees including some of the best trained public safety staff jump ship easily finding jobs in other agencies and industries because they were educated before they came to San Jose and then received additional training and experienced in San Jose.  Their dedicated service and experience belongs in San Jose. 

    The mayor and his administrators went too far claiming a false fiscal crisis in order to squeeze its employees and wasted millions of tax payer’s dollars on legal opinions and consultants.  All over America politicians are being recalled.  If San Jose and its residents know what’s good for San Jose, they will chase this guy out of town before he kills services completely beyond repair, which already may be the case with public safety.  There’s plenty of revenue and a very healthy pension fund to provide quality and safe services to the residents of San Jose and to have a smoothing strategy for pension obligations over 15 or 30 years not the reckless and irresponsible five being proposed.

  6. “Reed’s original ballot proposal relied on the declaration of a fiscal and public safety emergency. As the state attorney general’s office noted this week, San Jose does not qualify for an official fiscal emergency: With a triple-A bond rating, it is not on the brink of bankruptcy.”

    Everybody TRIED to tell him.

  7. 13 Comments so far on this thread.
    12 of them made by pussies who never use the same name twice in a row.
    And it MUST be a coincidence, but ALL of them are anti-Reed and pro-union.

    • There is no way that that these anti-Reed posts could all be from different people.  They must be from the same person posting under a different name or anonymously.  It is virtually impossible for any sane person not to worship the ground Reed walks on like you do.  These posts must come from some disgruntled city worker who is an aberration, an outcast, an anomaly sitting in some dank dark cellar posting by candlelight with tin foil on the windows probably on a stolen city laptop.

      Now, if all these posts praised Reed, then of course they would be from different upstanding citizens of San Jose.  Obviously anybody who agrees with you and Reed is on the right side of things and clearly that would be nearly everybody except that small handful of delusional city workers. I mean really, just because there are 11 unions for city workers and the vast majority of the 6,623 City of San Jose employees belong to a union doesn’t mean every single one of them isn’t tickled pink with Reed and his minions.  There is no way more than one union member would come on San Jose Inside and express their opinion right?

  8. > With a triple-A bond rating, it is not on the brink of bankruptcy.”

    So, the unions believe that the city’s bond rating is now a matter of collective bargaining.

    The city should pay more for unions, the city should sacrifice its bond rating, and the taxpayers should pay high interest rates.

    I’ll take the opposite position. 

    The city should cut union wages and benefits until the average credit score for union workers falls to the average credit score for American workers, INCLUDING the twenty percent of American workers that are unemployed and underemployed because of union monopoly power.


    • There is more than enough money to pay pensions

      But it has been sent secretly overseas to european banks by the fed



      We as a society are being bankrupted by the fed

    • Bronco you are brilliant. But then you’d also have to lower the standards of education, training and professionalism to the level of the average worker too. That would be sad. Can you imagine if the detective investigating the rape of your daughter was as apathetic and lazy as the average DMV employee or clerk at the grocery store? Yeah how about we hire the kid who changes your oil to be the paramedic who tries to defibrillate your heart when you have a heart attack. Or we could grab the nearest busboy and have him be the principal at your child’s school. Ooh, better yet let’s go grab an assembly line worker but him or her incharge of disbursing funds to the community based organizations. Just place blind trust and a checkbook in their hand any hope for the best.
      Yeah it’s easy to say let’s all make what the “average” person makes but the fact is you the public demand a higher than “average” level of professionalism and service. You gripe about things now based solely on money. Always remember, “You Get What You Pay For.”
      Look no further than New Orleans, Philadelphia or New York City to see how corruption flourishes when you grab any old “average” person to handle important things such as public safety. If you reduce compensation good candidates will go elsewhere and you will be left with the bottom of the barrel. Do you really want the guy with a GED, and questionable morals coming to your home while you are at work because a neighbor saw a thief break-in?
      Be realistic

  9. Our country has so much in common with Argentina
    Fab wealthy country but now in hock w loans and broke
    If you ask someone from Argentina, where money now should go
    The answer is police dept
    Argentina has so many carjackings
    That is our future as we are paralleling them into decine

    Police above all


    Art can go, airport can go, safety,no!

  10. JG and BB…Thank you so much for contributing such meaningful and thought provoking monologue to what is a significant issue. To the former, I love how your default position has increasingly become the ad hominem attack and the red herring. It is interesting to me how you apparently believe that, because people whom you believe to be union members disagree with you, their thought and opinions – regardless of their basis in law – can be casually dismissed. Or, do you dismiss them simply because they don’t agree with you. It seems to me that you have pretty much set yourself up as the arbiter or final authority on all that is legal or moral and that any who disagree with you cannot possibly have a valid, lawful or moral point of view.

    Speaking to BB, I really don’t know what to say. I have yet to read a post of yours which is thoughtful, thought provoking, or founded in facts or the rule of law. Really, all you seem to advocate is an equal distribution of misery, no matter the fact that the people you seem most inclined to malign are those who’ve dedicated their professional lives to the mitigation of misery, helping people and serving others.

    As conservative as you two claim to be, in the final analysis, your arguments can be boiled down thusly: everyone should suffer to the degree that you two have arbitrarily decided is appropriate. And, speaking as a person who has some pretty conservative inclinations, I am embarrassed by the lack of quality, the callousness and the lack of civility you two display. There may be times you two might actually make a solid point, but you’ve both so thoroughly poisoned the well against you that you’ve made of yourselves caricatures of all the valid criticisms of the more right-leaning crowd and in doing so, abandoned any chance of being seen as credible, thoughtful or meaningful commentators.

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