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What's Next For Pension Reform After Passage Of Proposition B?

Proposition B: What's Next?
What's Next for Proposition B?
Michael Zucchet, General Manager of the San Diego Municipal Employees Association Jan Goldsmith, San Diego City Attorney

CAVANAUGH: This is KPBS Midday Edition. I'm Maureen Cavanaugh. Our roundup of primary election results continues, and my guest for the hour is Carl Luna. San Diego City voters approved propositions A and B, two measures local unions worked hard to defeat. Joining us to talk about the fallout of these measures are my guests, San Diego City attorney, Jan Goldsmith. Welcome. Thank you for coming in. GOLDSMITH: Pleasure to be with you. CAVANAUGH: Michael Zuchett is here, with the municipal employees' association. Welcome. ZUCHETT: Thanks for having us. CAVANAUGH: Now, prop B, which ends guaranteed benefit pensions for most new hires won by about a 60-30 margin. Michael, what is it about your message that you think did not resonate with San Diego voters? ZUCHETT: Well, I don't think there was anything too surprising about the results. We have an extreme antipension environment, we had a low turnout election, we had the proponents willing to say anything about it, including stretching the truth quite a bit. And we had corporate interests outspending us 8-one, developers, hotelier, Walmart. So I think that was a pretty tough environment. Of I think the outcome was expected. I do think the only interesting thing is that while voters 2-1 supported the proposition, they rejected Carl DeMaio, effectively, 70% of the voters did anyway, even though he was the main proponent of the initiative. I think there's something in that juxtaposition to be interesting. CAVANAUGH: But to be fair, he was the top vote getter. ZUCHETT: Sure, but those were the same voters who were voting for the proposition. It's just interesting, why would a voter support the proposition that Carl claims ownership of but reject Carl? It's not the only thing that matter, but it was an interesting fact I think in the day. CAVANAUGH: So what happens now? Jan Goldsmith, when do new hires in the City of San Diego stop getting guaranteed pensions from the city. GOLDSMITH: Under proposition B, when the proposition takeses effect, which is when the secretary of state certifies the results and they're returned to the local level for acceptance. But from our standpoint, we received the message from the voters, and the message was that we want pension reform. And regardless of what the campaign was all about, we do know what the will of the voters is. However, the voters I believe did not say we want to punish public employees. I run a law firm that has 320 employs, 140 lawyers, virtually all of them are members of different labor unions. I don't want to lose good people. I don't want to punish them. That's not what the voters said. Of I want to be able to retain and attract good, new employees. So we have to figure out a way to implement the will of the people, but we also have to be fair to employees, and we have to be able to compete with the private sector for good employees. My department, the city attorney's office, is only one department. It's the same issue in all of them. I'm going to send a message to the employees that we're going to try. And we hope that we have the labor unions on board to come up with some different options to accomplish it. CAVANAUGH: Now, let me just ask you again, if I may though, when does this take effect? GOLDSMITH: Prop B takes effect when the secretary of state certifies the results. CAVANAUGH: Timeframe? GOLDSMITH: Some time between the middle of July to early August. CAVANAUGH: Okay. GOLDSMITH: So technically, the secretary of state has 28 days, then it comes back down and has to go to the City Council. There are different time limits within prop B as to what things have been to be done. We'll have an implementation plan, and wee going to be discussing it later this week. A part of that is working with our labor unions. And in 2006, the voters corrected the city to engage in managed competition. And it took four years to implement that. When I took office by early 2009, it had been mired in litigation, and eventually we got it moving. And actually it's been pretty successful. And our employees have won, I think all the bids. CAVANAUGH: Speaking of litigation, I do want to ask Michael, does the union plan legal action on prop B? ZUCHETT: Well, there's legal action already pending have been. But I think a step that the city skipped in his analysis of what's next, and rhetoric about listening to what the people said, in the initiative that passed yesterday, if we're going to listen to the people, we can't cherry pick which parts we like what they said and not like, there's no less than a dozen researchers in the initiative making sure that what's in there complies with the law. Everything in there is quote subject to legal requirement, subject to meet and confer, subject to compliance with the IRS codes, subject to the legally established rights of employees. Soy those determinations need to be made. I'm not aware that the city has already made those determinations. Presumably those would be made in good faith through the negotiation process with the unions, and going to be required in this 89 CAVANAUGH: Is that what you're talking about, Mr. Goldsmith, when it comes to, you know, going through this and implementing it and making these legal decisions as to whether or not this complies? GOLDSMITH: There is language in proposition B subject to legal requirements, and we intend to obey that, obviously. This is requirements to meet and confer on implementation, and we intend to comply with that. But we're -- it also requires that certain things be done to implement it, otherwise you don't get the savings that at least the proponents argue were going to be there. Of it's somewhat of a balancing, but yes, we will comply with the law, and we will analyze it before we take a step, we'll analysis each step to make sure that it complies with the law ZUCHETT: Just to answer your question, is there going to be more litigation, in that is right, that's up to the city and its interpretation, what it thinks can be implemented legally, how it intends to implement the rest, and we'll decide whether further action is necessary or not. But basically this initiative invites the Courts to weigh in before it's implemented, and if we need to go there, we'll certainly go there. GOLDSMITH: There's already 5†cases pending. Our office has been careful in pension matters. We understand what a vested right is, and we've been careful from the very outset. We've won pension litigation because we haven't overstepped that boundary. Proposition B however is being placed in our charter, which is our city's constitution. The Court of Appeal just came down, I think two weeks ago, with a written decision basically saying the City of San Diego must obey the terms of its city charter. It is the city's constitution. So yes, it's going to be a little tricky, but proposition B does not envision litigation temperature envisions being able to implement it in a legal manner complying with state and federal law. CAVANAUGH: Carl? LUNA: My big question at this point is how much of prop B can really make it into reality until after the November election, and based on its outcome, you have a divided council and mayor, how problematic its implementation becomes. GOLDSMITH: Well, I will say that the provision having to do with pensionable pay freeze is not envisioned until the next go-around of negotiations, that would culminate hopefully in MOUs with our labor unions July of 2013. But there's time on that, and that is very, very quick tricky to implement. And frankly, prop B just gives instructions to our negotiator. It doesn't say it must be implemented. With a 2/3 vote of the City Council, they can overall that. But pensionable pay restriction would allow for alternative forms of compensation. You could have performance based bonuses to calculate your pension, that would be able to put money in our employees' pockets. Something like that is going to take a long time to put together. CAVANAUGH: With the loss in Wisconsin last night in the recall election of antiunion governor Scott walker, it was a bad night for labor. You lost on A and B here, what are you planning to do to try to change that trend? ZUCHETT: I think we're going to go in the corner and curl up and cry for a while. [ LAUGHTER ] ZUCHETT: No, I think trying to draw national implications to this or Wisconsin or anything else I think goes too far. Obviously there's sort of an antipublic employee, antipension politics in the air in the country. But every city is very different and very fact-specific. For instance, San Diego, if you compare us to San Jose, our fiscal -- which had the other initiative that passed last night, it's just apples and oranges. And I think that's going to play into when a court reviews this what happens, because our factual basis here is very different than it is in other places. And I think ultimately this initiative is going to fall because of its legal failings. CAVANAUGH: Well, I want to thank you both very much. Thank you for coming in after a very long night, again. GOLDSMITH: It's a pleasure. ZUCHETT: Thank you. CAVANAUGH: And Carl, we are expecting a phone call from the winner of the 52nd congressional race, Brian Bilbray got the most votes there. He won 41% of the volt. But he's an incumbent. Is that actually good news for Brian? LUNA: Not particularly. Because the anti-Bilbray vote, the solid more democratic vote was about as much as what he got. This is in a lower turnout election. Come November, he's going to have a harder time turning out that majority of the vote than he had in his old district to be sure. CAVANAUGH: We have joining us right now the person who we believe came in second in the 52nd congressional district race, Scott Peters. Welcome, thank you for coming in. PETERS: Thanks for having me. CAVANAUGH: One of the things that I let Deborah Silar get away without asking here, the fact that this is a squeaker between you and Lori SaldaÒa. Has this been confirmed that you are the second runner up, so to speak in this race? PETERS: Well, I read that in the KPBS report, so -- [ LAUGHTER ] PETERS: No, technically there are still some provisional ballots to be counted but I've never had an easy one. So I've been through this before. And we'll wait to see till everything is voted. But we feel good about where we are. CAVANAUGH: So you have not necessarily declared yourself the Victor in this race? PETERS: No, I think we're proceeding on that assumption though. CAVANAUGH: It was I think surprising to some people that this was so close between you and Lori SaldaÒa. Of I'm wondering, do you think that your hard-fought campaign with SaldaÒa is going to hurt your chances in November? PETERS: No, actually I think to give Lori credit, she ran a tough campaign. And there was a lot about it we didn't like, but she made us much tougher for November and gave us a preview of the kind of thing we can expect from the incumbent. I think it'll be stronger. When this is all settled out, I think we'll be talking to Democrats to remind them that the real goal is to defeat the incumbent, and I think they'll be on the team. CAVANAUGH: You recently let your campaign more than a million dollars out of your own funds. How much are you willing to spend on this race? PETERS: We've said all along that we want to bring the resources that are necessary to take out this entrenched incumbent. Brian has been there for 12 years. I don't like investing my own money, but we found in the face of an incumbent, and when there's two Democrats in a primary, that's something we had to do. Upon I raised the most money except for Brian in this race. And I had to add a little bit too. But the money just buys you advertising. We ran a race based on my record they built at the city and the port, and the endorsements that I had from CityBeat to the UT, and a number of elected officials. CAVANAUGH: Carl? LUNA: I thought it was interesting that Mr. Peters, you had a very big TV buy. Lori SaldaÒa did the ground game. What do you think it's going to be like in November when a massive amount of national money comes pouring into this campaign? Is it going to change the way you campaign? PETERS: This will be a little more straightforward. This primary system is new, and I was getting shot at from all eyes. LUNA: You were the Nathan Fletcher of the race. PETERS: I guess. He probably had the same experience. But Brian was mailing to Democrats telling them to vote for SaldaÒa, it was pretty clear he wanted to face her. And she had got some national money from out of town from this progressive group to attack me, I didn't agree with the attack, but they did. And that had a big effect. The race in November is much more straightforward. You have an incumbent who's been there, part of a Congress that's not getting anything done. I'm a democratic, I bring a different perspective, but also an approach of working across the isle to get things done, and in this district, are it's those independents who are going to make that decision. I think they're less partisan than the primary electorate. And I think we've got a great shot. CAVANAUGH: Which issues are you going to focus on for the general election? PETERS: We have to talk about jobs and the economy. And this whole idea that we would fight again over the debt ceiling, it would be funny if it wasn't coming at such a tough time. Congress needs to get its act in order. We need to start working together to solve problems for the American people. CAVANAUGH: I want to thank you very much, Scott Peters for coming in and speaking with us, PETERS: Thanks for having me Maureen, good to see you Carl. LUNA: Good to see you too. CAVANAUGH: We move to the incumbent Congressman, Brian Bilbray on the line with us now. Congratulations. BILBRAY: Great to be with you. CAVANAUGH: We were just talking about you for a moment before you got on the line. You won 41% of the vote. Is that what you expected? BILBRAY: Well, that's exactly what I expected. I it was funny sitting here listening kind of shocked with practically 1 in ten San Diegans unemployed that somebody running for office could say that a million dollars was a little extra just thrown in. I guess a lot of people function at different levels, but that concept of somebody referring to a million dollars upfront personal contribution as being just a little extra thrown in kind of was shocking for me. CAVANAUGH: Before we had this top-two open primary in California, as an incumbent, you probably wouldn't have had to extend much effort or much expense in this primary election. How different has this primary been for you Congressman? BILBRAY: It's really been kind of exciting that you have ten candidate, a brought perspective of a lot of different people jumping into what is basically an open seat. And I think it's what the system really needs. I think it's one reason why I like the idea of the open primary. It sort of shakes up the system. I think we'll see if it does anything in Sacramento. But I think that it's -- maybe the rest of the country will be looking at this. And I think you're going to see other states try to see how it works out. There is an interesting new kind of reality there. And anybody that tells you they knew what was going to happen in this election in my opinion either did not understand what they were saying or wasn't willing to tell the truth. Because I don't think anybody did. I think it was kind of a brave new world, and new turf, and I think it was exciting. But sadly, it's done in a backdrop where we've got massive unemployment, massive debt. I was kind of excited to see the initiatives. . The people of San Diego City really showed that they were willing to make those tough but fair decisions with the initiatives both A and B overwhelming passing. And I think that puts not only the new City Council and mayor on notice but I think it puts somebody like Mr. Peters who was actually engineered the retirement program that the voters just overwhelmingly overthrough. LUNA: I've got a question for the Congressman. Unfortunately he's had the opportunity to have two districts redistricted almost out from under him. This is a different district than the district you were running in before. Does this mean you're going to have to reposition yourself toward a more moderate stance or an independent stance, put yourself in opposition perhaps to some of the agenda of the more conservative members of House of Representatives? BILBRAY: Well, I think it's got to be a little tough in a range of 1-1 hundred when you're at 53 to get too much more in the center of the line. But that wasn't a conscience decision. It was just basically you vote the issues. And sometimes you get confronted with people that stand in the way. Right now, I'm battling both sides over issues like bringing a trillion dollars of American money back to create American jobs, and you've got the Republicans who do not want to give research and development and construction a priority, and you've got the Democrats that seem more worried about making sure they get every cent of taxes out of somebody that's never going to it pay taxes like Irwin Jacobs' foreign income. And both sides aren't doing what it takes that could bring back this money and help stimulate the economy without borrowing from China and stealing from our grandchildren. That's the thing the people of San Diego are looking if. I was born in this district, and I represent most of this area even as a nonpartisan. I think it's one of those opportunities to keep the base that -- what you learned when I was very young. Results matter, partisan bickering didn't. CAVANAUGH: We've got to end it there. Congratulations on being the top vote getter BILBRAY: Thank you very much.

San Diego City Attorney Jan Goldsmith said the "Comprehensive Pension Reform" initiative, Proposition B, which was overwhelmingly approved yesterday by voters, is legal and that the city has an obligation to implement it.

"How you implement it has to be in a legal manner," he said. "We're going to be working on some options and will discuss that later in the week."

The measure would provide most new city hires, excluding police officers, with a 401(k) instead of a pension. To hold down future pension costs, Proposition B would also seek to impose a five-year pay freeze on current employees.


Changing that freeze would require a two-thirds vote of the City Council.

"We're going to defend it, we're going to implement it, and we're going to implement it in a legal manner," Goldsmith said.

Michael Zucchet, the general manager of the San Diego Municipal Employees Association, which opposed the measure, said the city's determination that the measure is legal is "news to us."

"Up until yesterday they were saying it wasn't their initiative and made no legal determination about the initiative," he said. "Apparently, something changed overnight."

Zucchet's white collar union is already in litigation with the city of San Diego over the measure.


Five cases are pending over Proposition B, four in front of the Public Employees Relations Board, or PERB, Goldsmith said. PERB is suing the city of San Diego on behalf of the white collar union.

SDMEA first filed a complaint with PERB in February, contending the ballot initiative should be disqualified because city leaders engaged in unfair labor practices. A judge refused to issue a temporary restraining order that could have kept the measure off the June ballot.

Goldsmith said his office doesn't "think very much of" the basis for that litigation.

"Let's keep our eye on the ball," he said. "The voters said very clearly that they want pension reform, and they want it in this manner and they want us to implement it."

Goldsmith said he has 320 people in his office who work for the city, and he does not want to lose them to cities with better employment benefits.

"We want to find a way to implement this legally, which we think we can do, we want to implement it in a way that allows us to attract and retain good employees and is not harmful to our employees," he said.

Goldsmith said that will happen at the bargaining table.

He said he expects the proposition will take effect in mid-July or early August.

Zucchet said the most likely outcome is that a court will determine what's legal.

"That's anyone's guess as to how long that might take," he said.