There seems to be no end in site for San Jose’s budget woes. On Wednesday, city officials announced that because of market losses pension costs for city employees will jump up as much as 43 percent—$60 million—in the coming budget year. This year retirement expenses were $138 million.
The problem, say officials, is twofold. The first is pension benefits, which have been increased for city employees, most notably at the police and fire departments. Then there is the city’s contribution rate, which once stood at 15.7 percent of the employees’ salaries. This has also been increased steadily, largely to compensate for lost investment earnings. As of this coming July, the city’s contribution rate will be 44.61 percent for firefighters and 45.03 percent for police officers.
Other city employees will not be as fortunate, though city contributions to their pension funds will approach 30 percent by July, compared to just 16.09 percent in 2000. The question now is, what other services will have to be cut to cover the rising cost of pensions?
Read More at The Mercury News.
I wonder if the public employees’ unions, the SBLC and the councilmembers that they put in office recognize what is at risk here. Maybe they truly believe that this is an equitable situation…but even so, they ought to be savvy enough to see that if they refuse to give a little, there is going to be a bad backlash.
All of us have been forced to tighten our belts while city workers are still living like the bubble never popped. And the majority on the Council are unwilling to challenge them.
This is what drives people to vote Republican.
> This is what drives people to vote Republican.
City council elections are “non-partisan”. There will be no “Republicans” on the ballot.
As a matter of fact, I think it’s probably against state law to put party affiliations on the ballot for “non-partisan” elections.
San Jose is a one-party political culture. Everyone running for office is assumed to be and will pretend to be a “Democrat”.
Sham Wow, while the council races are non-partisan, people know what party the candidates are affiliated with. It was a common question to me when I was a candidate. Some would respond “I never vote for Republican,” others would pretend to listen, some would actually engage. “Democrat” and “Republican” are voter shorthand used to stereotype candidates.
25-ish percent of the SJ voters are registered Republicans. One of the county supervisor seats and two of the three major elected offices at the county are occupied by Republicans. One of the SJ city council members is a Republican.
The current races include Republican candidates in City Council Districts 7 and 9 that I’m aware of. A Republican is running for County Supervisor District 1. None of them are “pretending to be a ‘Democrat.’”
Pat Waite sayeth:
> Sham Wow, while the council races are non-partisan, people know what party the candidates are affiliated with.
In deference to your first hand experience, I have to give your assertions serious credence.
Still, my perspective is that the decisive mass of voters is seriously clueless about public policy issues, what Republicans stand for, what Democrats stand for, and the extent to which labels like “Democrat” and “Republican” FAIL to describe the real philosophies of politicians.
Exhibit A is Alen Spector, currently the Democrat/Republican/Democrat/whatever/who cares Senator from Pennsylvania. Does anyone know what Arlen Spector stands for other than Arlen Spector?
My sense is that in Silicon Valley and the Bay Area, the majority of voters essentially belong to the “Costless Do-Gooder Party”: “I want to be a good person and do good for everyone, and I want someone else to pay for it, and I want to be told that I’m a nice person and the government loves me”.
Such people don’t vote on the basis of high political principle; they vote for whoever panders to them the most.
> One of the county supervisor seats and two of the three major elected offices at the county are occupied by Republicans. One of the SJ city council members is a Republican.
At the risk of ruining political careers, could you identify the incumbent Republicans you are referring to? I think I can guess just based on who the Mercury News hates, but it’s always more definitive to see it in writing (or electrons).
Shammy, I suspect you are correct on your analysis of voter thinking/knowledge/behavior.
Current Republican incumbents are Don Gage(County Board of Supes), Laurie Smith (Sheriff), Delores Carr (District Attorney) and Pete Constant (SJ City Council). There are also Republican officeholders up the peninsula and elsewhere in the valley. They just don’t get much notice. And, oh yeah, the Gubernator is rumored to be a Republican.
> And, oh yeah, the Gubernator is rumored to be a Republican.
Oh, REALLY!
Has anyone ever asked him to confirm this rumor?
Maybe he’s one of those new hyphenated Republicans: a Girlie-Man-Republican.
Democrats and Republicans are both responsible for 2 foreign wars and US and California financial mess by not controlling government spending, banks, stock brokers, mortgage, investment banks and insurance companies who pay off both parties to not tax or regulate them Congress voted to bail them out with taxpayer billions Legislature wasted billions
Now they both Congress and Legislature will raise our taxes higher to ” fix ” problems they created
California sends $1 to Washington and gets back 78 cents and our worthless California Senators and Representatives who use the ” were in minority excuse for years, now controlling majority, like dummies vote to give other states California taxes
Vote ALL incumbent politicians OUT – ” they fooled you once shame on them, if they fool you twice shame on you”
Vote for individuals – not worthless party hacks
As evidence that public employees don’t like when folks mess with them, notice which incumbent on the City Council is NOT endorsed by the POA:
http://protectsanjose.com/blogs/2-poa-perspectives/219-support-poa-endorsed-candidates
We don’t need more service cuts. Enough is enough!
Our electeds need to hear loud and clear that voters have had it. This is summed up in a simple message:
FIX IT or GO VALLEJO.
> We don’t need more service cuts. Enough is enough!
Please let me know what government services you are using so I can get to work on getting THEM cut.
Visualize a world without you sucking out of the public trough.
You can’t possibly be as ignorant as your posts would indicate, can you?
Unless you are living in a secret cave somewhere, even you are using city services—garbage and recycling, police and fire, streets (never ride in a car or a bus?), parks, community centers, etc., etc. If you really want them all cut then you have a flawed understanding of government and no amount of attempted discussion with you will yield any results.
Enjoy your life in the cave.
> Unless you are living in a secret cave somewhere, even you are using city services
> —garbage and recycling,
When I first moved to San Jose, unlimited garbage pick-up was 12 bucks a month.
Now, its 6 or 8 times that AND I’m REQUIRED to be a garbage sorter and rag-picker for the city.
police and fire,
> police and fire pensions are OUTRAGEOUS!!!! The city of San Jose requires two years of college for police officer applicants AND gets 150 applications per position. Other cities require only a high school diploma and get by just fine.
San Jose is WAY, WAY over-paying police and firemen.
> streets (never ride in a car or a bus?),
HAH! This is a laugh. San Jose scrimps on streets because it’s putting all it’s money into union salaries and pensions.
> parks,
In the last three years, the city removed all the playground equipment in the parks in my neighborhood and replaced it with brand new fancy yuppie-fied playground equipment at enormous cost. The old jungle gym, swings, and slides were JUST FINE!!
> community centers, etc., etc.
The new Almaden Community Center has a fancy wooden floor gymnasium, an exercise room, and a dance studio. There are PRIVATE BUSINESSES that offer these facilities. What the hell is the City of San Jose doing competing with private businesses?
The City of San Jose WASTES taxpayer dollars by the boxcar by gold plating the services it offers AND by offering services it SHOULDN’T BE OFFERING.
I’m tired of all the blame being put on pensions. I’m tired of ALL the blame being put on the working stiffs of this city. No one seemed to care how the city was dishing out money to every Tom, Dick and Harry during the boom years. And the complainers we hear now were too busy counting their stock options and seeing their retirement (401k) rise and rise. Now that it is in the toilet they feel the need to attack the pensions of others. The well maintained pension plans of others.
I pulled the following from the comment section of the Murky news:
“contribution holiday”. Yes, you will never read it in the press but many years that the fund has exceeded the assumed rate of return the city has chosen not to make their contribution to the fund and has used that money to pave streets, paint graffiti, keep libraries open, city art projects and for anything else they wanted. The employees during the good years keep paying every two weeks into the fund. If the city would have not taken their contribution holidays the funds would be over funded today.
It is something to think about. Fix the Mismanagement.
There have notbeen contribution holidays in San Jose – CHECK your facts! CalPERS maybe, but not San Jose!
Manny, the city taking a “contribution holiday” is as silly as paying out excess returns as a bonus to retirees. Actuarial calculations are based on long term trends, but there are ups and downs within those trends. Excess payouts and “contribution holidays” invalidate the long term assumptions of the actuarial calculations.
People are not attacking “the well maintained pension plans of others.” Had said plans been well maintained, there would be no reason for taxpayer intervention to fix the problem.
Good point. Something that has been well known for a few centuries—when signing a contract with someone to pay an agreed-upon sum at a known point in the future, how to calculate the present value of the contract over the intervening time period.
Sorry Pat, but you contradict yourself. The plans were well maintained, but also subject to the same market ups and downs, just as the best fund managers in the world found out. As an executive with a high tech company, you probably made an unjustifiably high amount of money in the dot-com boom, and you are now suffering during this downturn. Perhaps it is you that should have managed his money better.
@no return – there are market up and downs for fire and safety pension plans. in a down market taxpayers make it up.
That is because in the up markets, the city has taken the excess that the fund made, rather than let it reinvest into the fund. If it had been left alone for its intended use, rather than pet projects, this would not have happened.
No return, in the up markets,two things happen. “Excess” returns generate pension bonus payouts to retirees, and the city looks at the remaining excess and says “woo-hoo, we don’t have to put as much aside.” In down markets, the city says “WTF?”
Manny Labor says ” I’m tired of all the blame being put on pensions. I’m tired of ALL the blame being put on the working stiffs of this city.”
What money was ” the city was dishing out money to every Tom, Dick and Harry during the boom years. ’ – Who got dollars – names, dollars given and why? How much in total – a few dollars, a million or many millions?
Where can we see amounts by year and pension funds that the city took out of employee pension funds?
How much are we talking about a few million, 100 million or more?
What would the pension fund look like if city had left all city contributions in or so small doesn’t matter?
Why does city taxpayers get stuck with making up all of pension shortages from investment losses rather than both employees and city ( taxpayers) share making up losses?
Any idea what other city employees contribute to their pensions – heard Oakland, Palo Alto etc employees give $0 and many cities pay 100% while San Jose employees give 2-5 times more than few other city who have employee contributions?
San Jose city management staff who get high 75-90% pensions does not tell public what real numbers are and continues to put out misleading, confusing or partial information in direct violation of California Constitution and taxpayers rights to know where taxes are spent
Thanks for answers, so we can have good discussion with facts rather than what SJI is known for – insults, accusations, misinformation and bashing people by usual suspects using multiple names
Taxpayer(s):
You ask the questions that I seek. I too don’t know where to find specifics. I comment here because I believe there is another part of the equation. I comment here because I would like others to have a two-sided dialog and perhaps someone might be able to provide facts. I agree that facts provide for a good and meaningful discussion. Perhaps we need to have these questions answered by the representatives that we elect.
So I will continue on with my comments in hopes that it will spur a meaningful discussion. I will try to provide facts but I’m afraid all I have right now is my thoughts derived from what I have read and heard.
In regards to my opinion on pensions; I have located a document from the PEW center that deals with pensions and the “Trillion dollar gap”. I have not read the entire study but have pulled a few comments from the intro. (None of which directly mentions San Jose).
“While recent investment losses can account for a portion of the growing funding gap, many states fell behind on their payments to cover the cost of promised benefits even before the Great Recession. Our analysis found that many states shortchanged their pension plans in both good times and bad, and only a handful have set aside any meaningful funding for retiree health care and other non-pension benefits.”
“It will continue to rise significantly if states do not bring down costs or set aside enough money to pay for them.”
“Retirement benefits are an important part of how states can attract and retain a high-caliber workforce for the twenty-first century—and the bill coming due for these promises is an increasingly crucial issue affecting states’ fiscal health and economic competitiveness.”
Another article with specifics to San Jose:
http://www.sfpoa.org/Journal/Counsels-Corner.asp?i=481
“retain a high-caliber workforce” – Manny, you’re kidding me!
Is the taxpayer really getting their money’s worth?
About my “Every Tom, Dick and Harry” comment…well I can’t remember how much was spent and I can’t find articles for them all but it has added up.
Tom received $6 million from the RDA, millions of dollars spent downtown from the RDA, I think millions spent on failed Grand Prix, millions spent on convention center tent, I heard a million spent on city hall street art (not sure), tax breaks (aka lost money) to affordable housing developers, millions in new city hall over runs and I’m sure the list goes on.
My point one more time is this. The pension system might need some tweeking but to place all or most of the blame on the retirement system of the employees that make this city run is wrong.
Notes:
http://www.bizjournals.com/sanjose/stories/2003/09/08/story1.html
http://www.sanjoseinside.com/sji/blog/entries/mcenerys_6m_san_pedro_square_gift_includes_car_jewelry_and_toys/
I can’t answer all your questions, but it is true that employees in other cities do not contribute anything towards their retiremet, while in San Jose, police officers pay about 16% of their gross paycheck into their own retirement fund.
Manny, the RDA funds, could not have been used for funding employee pensions, unless maybe it was for RDA employee pension funding. By law, the RDA funds have to be spent for redevelopment projects.
Some of the other projects you mention also flow to or from restricted funds that could not be used to fix the pension liability problem.
That liability is probably significantly understated based on the way the required current balance is calculated.
I got a laugh out of the “Tom received $6 million for the RDA” comment, though. Very clever!
Thank you Pat for explaining that to me. I suppose I knew that these funds are allocated to certain projects. However, I really don’t understand where the money comes from and who decides on how much money goes to the RDA and to the General Fund. In times like this shouldn’t we have all our tax dollars used to stop the bleeding? Or better yet shouldn’t the city have a general fund, a rainy day fund and anything left over during goods times could go to the RDA fund. And by the way, I agree with the RDA (sort of). I think (during good times) anything spent to bring people and tax dollars to the city or to make the city a better place is well worth it. That is if the rate of return is worth it and all other obligations are met.
Thanks is advance for explaining this to me. I
RDA funding comes from the incremental increase in property taxes on RDA funded improvements. That’s part of the reason for friction between the city and the county…the city (via RDA) captures the increment, leaving nothing for the county.
“I think (during good times) anything spent to bring people and tax dollars to the city or to make the city a better place is well worth it. That is if the rate of return is worth it and all other obligations are met.” —totally agree!
why are city pensions insulated from the risk of loss in value of the pension fund? No private sector pension fund/401k/etc. is so insulated.
When the market tanks, all us private sector worker bees eat the loss. The same should be true for public sector worker bees.
Who allowed them to get a guaranteed rate of return. I WANT NAMES!
Manny Labor – Pat Waite & JMO know about RDA’s wasted millions
RDA area property values increase as RDA pays to fixes streets, buildings, government property that property owners and city neglected for years with increased property taxes going to RDA to pay back bonds
Improving blighted RDA areas is supposed to increase business jobs, sales tax, business fees which increases general fund revenues as it does in other RDA cities but San Jose wasted millions / billion on RDA projects and economic development that did not pay back RDA money invested or generate new businesses:
1) decades money losing city property projects ( REP, Hayes Mansion, Convention Center, Mexican Heritage, SJ Arena, parking lots – require tens millions year general fund tax subsidies and bailouts increase city budget deficits
2)tens millions year tax subsidized downtown promotion – Grand Prix, sports, festivals, parades from RDA and General Fund give tens millions in increased profits to promoters, sports owners and politically correct non profits run by well paid family, former officials and political friends
3) Property owner, developer, corporate or sports tax subsidies and credits increase profits but San Jose does not get increased taxes or business jobs to increase general fund revenues
Decades gross political diversion RDA millions by past Councils and wasted spending to political friends and contributors did not increase city businesses and tax revenues like other RDA cities which along with excessive pensions is why San Jose has 10 years of budget deficits