San Jose Mayor Chuck Reed lost a bid Tuesday to reduce retirement benefits for future San Jose city workers — something voters endorsed in 2010 — when the City Council deadlocked on a split vote.
Reed had urged the council to trim pension benefits for all new city workers hired after July 1 except for police officers and firefighters, and to add a cheaper health plan for current and retired city workers, something aimed at shrinking the city’s retiree health insurance bill by making retirees pay deductibles or higher premiums.
But the council deadlocked on a 5-5 vote. Councilman Pete Constant, a reliable Reed ally, was unable to vote because as a retired city cop, he had a conflict of interest on matters concerning retirement health benefits.
And council members Don Rocha, Nancy Pyle, Xavier Campos, Kansen Chu and Ash Kalra were opposed. Rocha argued the city should wait until after voters decide a broader Reed-sponsored pension measure on the June 5 primary ballot that would reduce benefits for current as well as future employees.
“I truly feel making this decision to impose prior to the election is not the right policy decision,” Rocha said.
Reed’s controversial Measure B on the June 5 ballot limits pensions for future hires but doesn’t define a new plan for them or change health benefits. It would require current workers to either pay more for their pensions or switch to a more modest plan.
Reed pushed Tuesday’s vote on grounds that since voters in November 2010 overwhelmingly approved Measure W allowing San Jose to reduce pensions for future employees, the city has reached impasse with employee unions on a more modest plan for new hires. The city, he said, should take action now to ensure cost savings in the upcoming budget year.
“The voters spoke with Measure W,” Reed said. “I don’t think there’s any doubt about voters’ intent.”
Reed said that if reduced pension benefits for new hires aren’t in place by the start of the new budget year in July, the city may have to delay plans to open newly built branch libraries that have been closed because the city can’t afford to staff them.
The mayor has sought to trim city pensions because San Jose’s retirement costs have ballooned from $73 million to $245 million in a decade, even as the city has shed some 2,000 workers.
“We’ve cut 2,000 jobs out of our workforce,” Reed said. “And when we cut our workforce, we cut services to our people.”
Employee unions said they weren’t opposed to pension changes but that Tuesday’s proposal went too far. LaVerne Washington, who represents a union of administrative assistants and analysts, said a deal breaker in the proposal before the council Tuesday was language allowing the city “to amend, change or terminate any retirement or other post-employment benefit.”
Washington said it was “tantamount to asking us to take a bite out of this poison apple” and would strip new workers of long-held protections for promised retirement benefits.
City leaders said union offers in negotiations fell short, leaving taxpayers on the hook to cover billions of dollars in retirement fund shortfalls.
A vote to reduce retirement benefits for new hires would have been a significant milestone in San Jose’s effort to confront its growing retirement cost problem. Reed needed at least six votes including his own to approve that action, but it appeared that at least one vote he was counting on got cold feet.
Constant’s inability to vote due to a conflict of interest had been known for months and wasn’t a surprise.
The council discusses its bargaining position with employees privately in closed sessions before voting publicly as allowed under state law. Reed clearly had enough votes in those closed sessions to endorse the reduced retirement and health plans that went before the council Tuesday as the city’s “last, best and final offer” to its unions.
But when it came time to cast votes publicly before an auditorium full of angry city union workers, at least one of those votes peeled off.
Rocha, a swing vote who had joined the council majority in endorsing Reed’s Measure B, said after the vote that the proposed pension reductions for new hires will not be long in coming.
“I have a track record that I support these benefit levels,” Rocha said. He added that he wasn’t bowing to pressure from labor unions that had backed his campaign in voting against imposing them now, but felt that with the June election just five weeks away he saw no harm in waiting until after the Measure B vote, which he believes will pass.
Reed said after Tuesday’s meeting that “it shows how important Measure B is to making anything happen.”
Contact John Woolfolk at 408-975-9346.
