[Publisher’s Note – We are pleased to offer this column from San Diego City Councilman Kevin Faulconer, which is cross posted with our local partner – San Diego Rostra — Flash]
San Diego Labor Deal Locks in $1 Billion of Pension Reform Savings
By Councilmember Kevin L. Faulconer
The promise of voter-mandated pension reform in California was on the line in San Diego this week. San Diego’s 2012 Comprehensive Pension Reform ballot initiative was overwhelmingly approved by voters last June. Proposition B’s two key reforms closed the pension system to most new City hires by establishing a more affordable 401(k)-style retirement plan and called for a five-year cap on base compensation – otherwise known as pensionable pay – to be negotiated with the unions.
Reaching a five-year labor agreement that protects taxpayer dollars has been my top priority during the past several weeks of intense negotiations with the City of San Diego’s six employee unions and Mayor Bob Filner. A deal that locks in the pension reform approved by San Diego voters will save city taxpayers nearly $1 billion over the next several decades. But Mayor Filner and most government unions were pushing for across-the-board pay increases that would have spent tens of millions of tax dollars more than San Diego can afford.
Through hard work and tough bargaining we were able to get union leaders and workers to finally agree to my proposal. On Monday labor contracts with each union were unanimously ratified by the City Council. The contracts implement pension reform, are fair to employees, prioritize public safety and protect tax dollars – which means more money to invest in San Diego’s roads, police officers and neighborhood services.
This landmark agreement is a win for San Diego. It brings several key benefits for taxpayers.
SAVES NEARLY $1 BILLION OVER 30 YEARS
As the co-author of Prop B, I fought to ensure this agreement locks in the five-year pensionable pay freeze, thereby reducing San Diego’s pension debt by $950 million. By approving the freeze in a multiple year agreement as opposed to one year at a time, the City can immediately realize $10 million in net savings to its day-to-day budget. It also gives the City more budgeting certainty for the next several years.
NO UNAFFORDABLE, DOUBLE-DIGIT, ACROSS-THE-BOARD GOVERNMENT PAY INCREASES
Government employee unions were pushing for 14.5% Citywide pay increases. San Diego can’t afford that, particularly when Mayor Filner is delaying street repair funding. The budget cutbacks and service reductions caused by City Hall’s fiscal mismanagement have taught us that unsustainable employee compensation hikes don’t benefit city workers or taxpayers.
NO INCREASE TO SAN DIEGO’S PENSION DEBT
Without increasing the City’s pension debt, this five-year agreement begins to responsibly restore the 6% compensation cuts that many City of San Diego employees have taken since 2009 to help balance the budget. By successfully implementing the pensionable pay freeze, City employees will receive take home pay they can use today without putting taxpayers on the hook for massive pension payments in the future. Most workers will receive a 5.25% restoration and police officers are guaranteed 7% over the term of the agreement in the form of non-pensionable compensation such as reduced furloughs and lower health care costs.
PRIORITIZES PUBLIC SAFETY
This agreement was constructed to immediately deal with San Diego’s police recruitment and retention problem by giving public safety employees immediate compensation gains. U-T San Diego recently reported that three out of every 10 officers hired by the City since July 1, 2005, have left. Guaranteeing police officers 7% in non-pensionable compensation will help the San Diego Police Department remain competitive. This is an important step in rebuilding San Diego’s police force after years of losing officers to other cities.
This is the first of many actions I’m taking to secure San Diego’s financial future. In the coming weeks, I will call on my Council colleagues and the Mayor to take the next steps, including continuing to cut government waste through government/private sector competition for City functions.
I’m pleased to have unanimous, bipartisan City Council support for this agreement and especially appreciative that Councilmembers Mark Kersey, Scott Sherman and Lorie Zapf stood with me during this process to ensure that taxpayers were protected. Together, we’re delivering results to turn San Diego around and setting a model for other California cities to do the same.
Kevin Faulconer is chairman of the City of San Diego’s Audit Committee and co-author of the San Diego pension reform ballot initiative.