“No On D” Supporters File Lawsuits
Friday, August 27, 2010
Opponents of Proposition D are hoping to prevent the sales tax/reform measure from appearing on the November ballot. We discuss why the "No on D" supporters are asking a judge to remove the ballot measure. We'll also talk about why advocates for Proposition D think it is crucial city voters pass the measure in November.
TOM FUDGE (Host): I’m Tom Fudge. You’re listening to the Editors Roundtable. Joining me at the roundtable are Teresa Connors, regional news editor for the North County Times, Bob Kittle, director of news planning and content for KUSI, and Tony Perry, San Diego bureau chief for the Los Angeles Times. Well, California political battles are sometimes fought at the ballot box and sometimes fought in the courtroom. And San Diego opponents of Prop D say it’s such a bad idea there’s gotta be a law against it. Today, in fact, Judge David Oberholtzer will hear arguments for and against the proposed sales tax increase that is bound for the November ballot. He actually expects to make a decision in the case this afternoon. Prop D would increase the sales tax in the city of San Diego by half a cent. In return, city politicians who put it on the ballot say they’ll institute 10 fiscal reforms of San Diego finances. What’s wrong with that? Bob Kittle, what’s wrong with that?
BOB KITTLE (Director, News Planning and Content, KUSI-TV): What’s wrong with it essentially, Tom, is that the 10 so-called reforms are nothing. They’re window dressing. They’re things that could’ve been done years ago and, more importantly perhaps they are 10 steps that would have a negligible impact on the city’s fiscal crisis because they do not address the core problem which is the pension plan. The City’s pension plan is as bloated as one can imagine. KUSI’s Steve Bosh reported last night that there were pensioners – there’s one pensioner who’s receiving $300,000 a year in pension. There are 8 or 9 who are receiving more than $200,000 a year in pensions. There are hundreds who receive more than $100,000 a year in pensions, and the pensions that they receive, in many, many cases, are significantly higher than their highest year’s salary. And nothing in Prop D would address this problem. That is the core problem. The city’s – this voracious pension monster is consuming more and more of the city’s revenue each year. It will continue to do so for the foreseeable future if steps are not taken to address it.
FUDGE: Okay, well, I don’t know enough about the measures to argue with you, Bob, but here, I think, in an article in the Union-Tribune it says the ballot measure’s official fiscal impact statement says the reforms alone could save the city three and a half million to $428 million over five years. Additionally, if the sales tax is implemented, it could bring the city an additional $102 million annually. $428 million over five years…
FUDGE: …those are the savings according to the city.
KITTLE: Yes, and that fiscal analysis is absolutely absurd. It is the subject of the second lawsuit. April Boling has filed a lawsuit asking a judge to throw out the fiscal analysis because it is false and misleading. For example, one of the 10 measures requires that the city council adopt a pamphlet, a set of rules, for outsourcing. This is something that should’ve been done years ago. The voters approved this in 2006. It hasn’t yet been done. But the fiscal analysis that was written by the city says that preparing this pamphlet will save $27 million. Well, no savings at all would come from developing this set of rules. Now if, in the future, a city council went ahead and outsourced such things as landscape services and information technology, there could be substantial savings but the ballot measure does not require any outsourcing. It merely requires that the set of rules be adopted by the city council so that the fiscal analysis really is absurd.
FUDGE: But aren’t there pension reforms in that? Reforms that would cause some city employees to get less in terms of pensions?
KITTLE: There is one requirement that the Fire Fighters Union accept a lower pension plan for new hires. The head of the Fire Fighters Union, Frank DeClercq, said, hey, don’t come to us asking for more concessions. We’ve made all the concessions we’re going to make. There could be some savings from that one measure but it would not go to the heart of the problem, which is the incredibly escalating, these galloping pension costs that are going to consume more and more of the city’s revenues and so, in fact, the sales tax increase if the voters do approve it will go right into the pension plan because that is the voracious beast that has to be fed.
FUDGE: And, listeners, if you want to put in your two cents, your half cents—half cent which is what you’ll be paying extra on – when you buy a car, per dollar—give us a call, 1-800 – I’m sorry. 1-888-895-5727. Well, let’s go on down the line here and get some other reaction. Tony Perry, what do you think of what Bob has said and what do you think of this proposal?
TONY PERRY (San Diego Bureau Chief, Los Angeles Times): Well, I disagree with Bob on the essence of what he’s talking about. I enjoy reading and being envious of people making $100,000 in pension a year, etcetera, etcetera. The average pensioner makes about thirty, gets payment of about thirty. Now, indeed, they also get medical and they also get cost of living. It’s still, compared to the private industry, not bad but it is not as egregious. There is a tendency to look at these large pensioners and they become the welfare mom with the Cadillac and the fur coat, the atypical situation that is pointed to. That said, the way this thing was put together in those last frenetic, crazed 48, 72 hours, is proof anew that if you like law or sausage, don’t watch either of them being made. And they’ve come up with this Rube Goldberg 10 steps and the auditor, if this, then that. Pick one from this column. I just think that it was not a shining hour of how legislation is put together and I really wonder why we’ve been at this for how many years now but yet it came down to a final few hours. And we still don’t have anyone who will stand up, as Donna Frye did 5 years ago, and say, Earth to San Diego, this government needs more money. Instead, she comes up with this placating this Libertarian view and that view and I think the thing is going to collapse. If it survives the court challenge, which seems to me a pretty – pretty strong court challenge. I would never disagree with April Boling on numbers. Nobody crunches numbers like April Boling does, so I would not – I would not ever defy her. She’s probably right on that. And the judge may very well say this thing is too complex, it violates the, you know, one thing rule for these ballot measures.
KITTLE: Yeah, well…
PERRY: It may collapse either legally or at the polls because of its own weight and its own complexity.
FUDGE: Although, the judge, who has not been silent about his opinions thus far, thinks it’s legal. Am I right?
PERRY: Well, he – I read those pieces and he seems to be signaling he wishes it was legal but he wasn’t going to be pinned down. He may let it go but I think he may let it go in such a wounded fashion that he’s really putting a harpoon in it.
FUDGE: And, Bob, what’s the city’s deadline to get it on the ballot? Next week? A week from today.
KITTLE: Well, essentially September the third.
KITTLE: So the judge will have to rule in both of these cases very promptly, and Judge Oberholtzer, as you indicated, is expected to rule from the bench this afternoon whether to block the measure from going to the ballot. Now that’s a very high hurdle for the opponents to overcome. A judge does not want to mess with a ballot measure unless he has to. So I don’t know how that’s going to turn out this afternoon. I think April Boling’s lawsuit, which is a separate lawsuit challenging the fiscal analysis probably has a very good chance of a judge looking at it and saying, look, this is false and misleading and it cannot be attached to the ballot measure.
FUDGE: And she’s bringing a lawsuit and the Libertarians are bringing a lawsuit, I think. We have a couple of callers who want to talk about this but first, Teresa, your turn.
TERESA CONNORS (Regional News Editor, North County Times): Yeah, I just – I think it’s a shame. I think the city has missed a real opportunity to get buy-in from the voters and I agree completely with Tony that it’s a overly complex measure. I agree with Bob that it – it’s very weak. It doesn’t actually ask for real reform. It sort of just a paper – paper list. So I think it’s a missed opportunity.
FUDGE: Well, Mel is calling from Hillcrest. Hi, Mel.
MEL (Caller, Hillcrest): Hi. Well, I know Mr. Kittle had a lot to say about the pension. Everybody has a lot to say about the pension but nobody says how we fix it. So I’d like to ask all of you, how do we fix it?
FUDGE: Uh, lower pensions?
MEL: Yeah, you just pass at work and say your pensions are now lower? Is that how you do it?
FUDGE: Well, there are some legal issues there. The City may have a contract with certain people who are already drawing pensions but for new hires, and I guess this is what they’re doing with the fire department, you can change the rules for pensions. But Mel asks, how do we fix the pension problem. Bob, how would you do it?
KITTLE: Well, as Mel well knows, you really cannot tamper with the vested benefits of existing workers. But there are several things that can be done and should be done. The first step should be that all new hires go under a defined contribution plan, a 401(k) plan. That is the way we have in the private sector. Secondly, you would offer the existing employees the opportunity to opt out of the expensive pension plan that they are in and go into the 401(k) plan where their pensions would be smaller. But you say why would anyone do that? Well, younger workers, in particular, would do it because their take-home pay would go up by several hundred dollars a month. Let them have the option, let them decide. That would lessen the pension liability significantly. The other side of the equation, Mel, is that while vested benefits cannot be tampered with, there is nothing that guarantees the taxpayers’ contribution to the pension plan. You can have the workers pay more. Under the city charter, they’re supposed to be a 50-50 split, the taxpayers pick up half of the cost and the worker picks up half of the cost. But under labor contracts that the city council has agreed to, the taxpayers still pick up a portion of the workers’ half. That should be eliminated immediately. And, in fact, if you got into a desperate situation, you could have the workers pay more than 50%. That could all be done legally.
FUDGE: We want to hear from the other editors but Hugh is calling from El Cajon. He has something to say on this. Hugh, go ahead, you’re on the Editors Roundtable.
HUGH (Caller, El Cajon): Hi. Yeah, I think part of my answer was already – was just answered. I was going to say that we made guarantees to these people who, you know, served their, you know, working lives to the city to earn those pensions, and in many case, like firemen and policemen, put their lives on the line every day so that they, you know, could earn these pensions and be guaranteed this money. So the idea of just switching it to a 401(k) so their monies can be changed with the whim of the stock exchange doesn’t really sound fair to me. What my point is, though, that, you know, yes, these are vested interests. We have to pay those just like when I buy a car, I have a loan, I have to pay that loan back. So any fix that’s going to happen will have to be, as your editor said, with those who are starting now and making promises or changes that we can actually, you know, live up to later on. But the real issue is how are you going to manage to keep getting qualified people to be your policemen and firemen when you keep cutting back their benefits?
FUDGE: And that’s a good point. Who would like to – Tony, you want to respond to that?
PERRY: I don’t see that as a problem, frankly. Good people will continue to step forward to serve their community, and make a decent salary with a decent pension. The problem of San Diego, of course, is the problem everywhere: contracts. These folks have contracts. There are laws that protect them. And then there’s the city hall culture. Those are three tough things to overcome. Also, let’s be candid, we lost four years in this saga with a city attorney who thought he could go to court and slay this, as Bob says, slay this monster. It didn’t work, so we lost four years and we’re right back at it. It is not easy. You have to also be careful with your language. Everyone talks pension reform, pension reform, pension reform. What they really mean is pension reduction, and the city employees hear that. You say reform, they hear reduction. They’ve got very good attorneys. They’ve got political clout. They’re smart. They will not be guilt-tripped into bailing this city out as they see it, this city that does not like to pay its bills. I don’t see that you can hard-bargain the employees into picking up, you know, the full tab. Indeed, it’s big and it’s getting bigger. It’s a bill we have to pay. We can whittle it down a little bit but we’re not going to be able to destroy it either through lawsuits—we tried that—or, you know, absolute hard bargaining. It’s going to take years to whittle it down. In a certain way, I think we pilloried old Dick Murphy more than he deserved. He said it was going to take a bunch of years and it’s taking a bunch of years.
FUDGE: Tony Perry is with the Los Angeles Times. Our other guests are Bob Kittle and Teresa Connors. Teresa is regional news editor for the North County Times. Bob Kittle is director of news planning and content for KUSI. Teresa, you want to pitch in here? Say something about this?
CONNORS: Yeah, I mean, I think a lot of the problem is political will and the local city councils have to stop being cowered by the powerful unions and be willing to back them into a corner and say, okay, this is what you’re going to get. And in – I mean, some communities are doing – I think a lot of communities recognize that it’s a problem, that they can’t fund the pensions and they are – they’re moving towards it but it’s going to take time.
FUDGE: Let me jump in and just maybe defend one point that was made by our caller. I was driving around San Diego a couple days ago and I was in back of a police car and on the back of the police car it said ‘we’re hiring.’ You know, call this number, go to this website, if you want to join the San Diego Police Department. So they are looking for cops. And I’m wondering if San Diego police officers end up with a lower pension payment than police officers in La Mesa, Chula Vista or Los Angeles, doesn’t that put us at a disadvantage?
PERRY: I don’t see a connection between quality policing and how much they make. There’s a whole bunch of other factors that involve leadership, that involve the culture of the police department. And while the labor unions might like to make that connection, it just – I think you cannot prove it any more than you can prove that the salaries of teachers equals good teaching. There may be a sort of ethical obligation to pay our people who, as one of the callers said, risk their lives, handsomely, as best we can, but I don’t think you can prove that if they pay a little less or if they – their pensions are a little less, they’re going to flee in droves and we’re going to get incompetents driving those cars.
FUDGE: Bob Kittle.
KITTLE: Yeah, Tom, I agree with Tony. I don’t think young rookie cops are mercenaries. They’re not in that job to make money and a fat pension and retire at age 50. You ask a 22-year-old why he wants to become a cop and he has much – many other motives than the fact that he might be able to retire with a big pension one of these days.
FUDGE: Well – well, but…
KITTLE: That’s not how you recruit young people to become cops.
FUDGE: But, Bob, what if a 22-year-old is asked the question do you want to work in Chula Vista or you want to work in San Diego, and in Chula Vista they’re going to get a lot better benefits package?
PERRY: San Diego’s the major leagues if you’re a police officer or you’re a firefighter, and a lot of people like to work in the major leagues even if it isn’t as remunerative as the suburbs.
FUDGE: Well, it’s time for us to take another break. You’re listening to the Editors Roundtable. I’m Tom Fudge. And we’ll be back with our editors in a moment. We may discuss the pension just a little bit more but pretty soon we’re going to get into the subject of San Diego troops in Afghanistan and the realism of Obama’s desire to set a date to start withdrawing those combat troops. So stay with us and give us a call on that subject if you want at 888-895-KPBS.
FUDGE: I’m Tom Fudge. You’re listening to the Editors Roundtable on KPBS. My guests are Teresa Connors, a regional news editor for the North County Times, Bob Kittle, director of news planning and content for KUSI, and Tony Perry, San Diego bureau chief for the Los Angeles Times. Our call-in number if you would like to give us a call, 888-895-5727. Before we leave the subject of Proposition D, which would raise the sales tax in San Diego by half a cent if it gets to the ballot and if it’s approved, let’s imagine that it doesn’t get to the ballot or it’s not approved by voters. What are the financial consequences for the City of San Diego? They’re talking about a $70 million budget gap. Who wants to comment on that?
KITTLE: Well, let me…
FUDGE: Bob Kittle.
KITTLE: Let me say, Tom, that Mayor Sanders and Donna Frye have been threatening the voters to say if you don’t approve this tax, we’re going to shut down the fire department, we’re going to cut back police. It’s sort of the Washington Monument syndrome. When the Park Service is told, well, you’ve got to cut your budget by 5% they say, okay, we’ll close the Washington Monument because it’s the most popular attraction in Washington. But the reality is that until the economy recovers, the city is going to have to cut services in a lot of areas with or without this tax increase. This tax increase really will be absorbed by the increases in the pension – in the pension demands. That – This year, we’re contributing – the taxpayers are putting $232 million into the pension plan. In 2002, we were only putting in $15 million. That number of $232 million rises to over $500 million in the years ahead. Those – Unless something is done about that, those demands will – the pension demands will continue to devour a larger and larger share of our tax dollars. And regardless of whether this tax is approved, there are going to have to be cuts in other services to pay for pensions.
PERRY: $70 million out of a $2.2 billion budget, let’s put it in context, a lot of money but not sometimes as frightening as it might be. We’re going to have cutbacks. We’re just going to have to find money everywhere and the people are probably going to be sent down the road back to the hiring hall, or—and I know that this is not attractive—we may have to do what poor people have done always: make payments. Somebody may have to float, attempt to float, pension bonds which stretches the payments out, and a lot of people driving cars that they couldn’t afford without multi-year leasing and sales programs, and we may get to that. None of it is a happy, happy situation. That thing which they’ve been threatening, as Bob suggested, for years may, indeed, come to pass although their credibility, I think, has been shot a bit because of a lot of crying of wolf over the years.
FUDGE: Okay. Well, pensions, big problem, huge problem for San Diego and for cities and states all over the country of course.