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San Diego Voters Approve Cuts To City Pensions

Aired 6/6/12 on KPBS News.

Voters overwhelmingly approved a measure to cut retirement benefits for government workers in San Diego on Tuesday.

Chart

Proposition B

Above: Current results for Proposition B, City Of San Diego Retirements Benefits. Hover over the chart sections to view more information.

Former Mayor Jerry Sanders and other supporters of Proposition B to change city pensions.
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Above: Former Mayor Jerry Sanders and other supporters of Proposition B to change city pensions.

— Voters overwhelmingly approved a measure to cut retirement benefits for government workers in San Diego on Tuesday

In San Diego, 66 percent voted in favor of Proposition B while 33 percent were opposed, with more than 66 percent of precincts reporting. To hold down future pension costs, Proposition B seeks to impose a five-year pay freeze on current employees.

It would provide most new hires, excluding police officers, with a 401(k) in which a retiree’s income depends on how well their investments perform.

Supporters had a straightforward pitch: Pensions for city workers are unaffordable and more generous than many private companies offer, forcing libraries to slash hours and potholes to go unfilled.

"We believe people are tired of having services cut back because of big pensions," San Diego Mayor Jerry Sanders, a Republican who is being forced from office by term limits, said recently.

Shrinking tax revenues during the recession are also responsible for service cuts, but pensions are an easy target. San Diego's payments to the city's retirement fund soared from $43 million in 1999 to $231.2 million this year, equal to 20 percent of the city's general fund budget, which pays for day-to-day operations.

As the pension payments grew, San Diego's 1.3 million residents saw roads deteriorate and libraries and recreation centers cut hours. For a while, some fire stations had to share engines and trucks. The city has cut its workforce 14 percent to 10,100 employees since Sanders took office in 2005.

Opponents, led by public employee unions, say the measures deprive workers of benefits they were counting on when they got hired. Some workers decided against potentially more lucrative jobs with private companies, figuring their retirement was relatively safe.

"This is part of a broader effort to attack workers and to make their lives miserable," San Diego Councilman Todd Gloria said during a debate on the San Diego measure.

Opponents also argue that San Diego workers are not enrolled in Social Security. In the 1980s, employees voted to opt because they were promised a good pension and health care in retirement. Michael Zucchet with the Municipal Employees Association, the city’s white-collar union, said those benefits have been slashed or eliminated over the years. He said to make more cuts when workers have no Social Security to fall back on raises a red flag.

"So the deal that was cut with employees, so to speak, and the reason they were willing to give up Social Security is now gone," he said. "Add that to the fact that Proposition B intends to take away even a defined benefit pension, and there’s really some grave fairness issues here."

If Proposition B passes, the city may be required to re-enroll in Social Security.

Proponents of the measure say it would save nearly a billion dollars over 30 years. Lani Lutar, president and CEO of the San Diego County Taxpayers Association, which supports the measure, said there are several parts of the measure that save money. She said the measure's rule that all new city hires will receive 401(k)s instead of pensions may mean the city pays more money at first, but it will result in long term savings.

"It accelerates the payments, so it's like paying your credit card debt down a little faster," she said. "That doesn't actually result in any new costs, you're just paying your debt down faster. And in fact, again, without Proposition B over a 10-year period, pension costs would increase by $100 million.”

But Zucchet maintains the majority of the savings would come from the proposed five-year pay freeze, which he said isn’t even guaranteed because you can’t negotiate labor contracts through the ballot box.

"The only thing that could save money… is if you freeze pensionable pay for the next five years - as employees have already done essentially for the last seven years, I might add - there are savings. But this initiative doesn't do it, it's the future actions of the City Council that would do it."

Investigative Newsource has found supporters of Proposition B have outspent the opposition committees more than six to one according to the most recent financial statements filed with the City Clerk.

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