The San Diego Union-Tribune published an editorial on Sunday urging readers to sign a petition currently in circulation that would place a pension-reform measure on the June 2012 ballot. The paper discussed the measure in positive terms, but its reason for supporting the petition was that getting it on the ballot would pave the way for a full debate. That’s fine in theory, but the reality is that if the measure reaches the ballot, it’s very likely to pass with a comfortable margin. But we believe that many who’ll vote for it will have been misled by its proponents. That’s why the debate needs to happen now.
The proposed measure—spearheaded by San Diego City Councilmember and mayoral candidate Carl DeMaio and backed by Mayor Jerry Sanders— would get rid of the city’s longstanding practice of providing a guaranteed pension to newly hired city employees (except cops) and replace it with a 401(k) plan. Current workers would still get a guaranteed pension because it’s a vested benefit protected by law. However, the measure would also put limits on how much of a current employee’s pay can be factored into the formula that defines his or her pension. It makes other changes, but those are the significant features.
DeMaio wants you to keep your focus on outrageously large individual pensions for some current employees, and he wants you to be mad. He want you to believe that the mayor and City Council have been sitting on their hands for the past seven years, refusing to do anything about the problem. Mostly, we believe, DeMaio wants to ride the anger that he’s inciting straight into the Mayor’s office.
The truth is, Sanders and the City Council have made significant progress on the pension problem. In 1996 and 2002, city leaders conspired to dish out to workers retirement benefits that our low-tax city couldn’t afford. Former City attorney Mike Aguirre tried to have those enhanced benefits rescinded but was thwarted by the courts, and his replacement, Jan Goldsmith has decided against continuing to appeal. Left primarily with the option of changing benefits for new hires, Sanders and the City Council have done just that, and the result is that after 2029, the estimated payment that taxpayers have to send to the retirement fund is dramatically reduced and manageable. DeMaio doesn’t want you to know that the long-term problem has been solved. It has.
But there’s still a shorter-term problem. The required payment to the retirement fund will eat up an increasingly larger chunk of the city’s general-purpose budget until 2026, when it dips a bit for three years before plummeting to a reasonable level. So, what we have here is a 14- to 17-year problem. That’s significant, yes, but it’s not never-ending, as DeMaio would have you believe.
The measure attempts to lessen the problem by limiting the amount of salary used in calculating benefits for current employees. Frankly, we don’t take issue with that idea. The problem is, while proponents say the voters can legally do it, the employee unions say they can’t. The unions would prefer to settle that issue at the negotiating table—where the longer-term pension problem was fixed, and where a huge retiree-healthcare problem was recently handled. We agree.
DeMaio will tell you that the City Council and the unions have had their chance at the table, and they can’t be trusted to solve the quandary. So far, the city’s dealt with the rising pension payment by cutting elsewhere in the budget, but that option won’t be available much longer, if at all. Soon, the required payment will dwarf any proposed offsetting cuts. The unions will have to agree to a way to reduce that payment or convince city leaders to sell pension-obligation bonds or lengthen the period over which the pension payment is amortized.
In any case, for us, the poison pill in the measure is the switch to a 401(k). One reason is that it increases costs to taxpayers in the first four years. But it’s also unnecessary. It’s simply part of DeMaio’s fanatical quest to privatize government and raise his own profile. Chances are, your retirement security has been relegated to the uncertainties of the stock market, he says; so, too, should public servants’ retirement security.
Don’t give in to the politics of resentment. Don’t sign the petition.
What do you think? Write to firstname.lastname@example.org.