SAN JOSE, Calif.—Faced with the rising $105 million budget shortfall and skyrocketing cost of retirement benefits, San Jose city councilmembers approved Mayor Chuck Reed’s budget message and began accepting labor union contracts.
“It’s a difficult thing to do, but we are making progress,” said Mayor Reed to The Epoch Times at the city hall rotunda on Wednesday following the contract signing of three additional unions. The fire department was the first to strike a deal with the city on Tuesday.
As of Wednesday 5 p.m., four of the eleven unions have signed a contract with the city council and accepted the requested 10 percent reduction in total compensation for the fiscal year. The three organizations agreeing to the changes on Wednesday include the Association of Engineers and Architects, IFPTE, Local 21 (AEA) Unit 41/42/43; the Association of Maintenance Supervisory Personnel (AMSP); and the City Association of Management Personnel, IFPTE, Local 21 (CAMP). The city states that these unions represent 623 full-time employees and 11 percent of the city’s workforce.
The amount of cost savings generated from the 10 percent pay reduction is roughly $38 million if all the unions accept the request.
“It’s very possible that we could get that full $38 million in concessions,” said Councilmember Sam Liccardo told The Epoch Times. But he added, “It’s going to take a lot of work to get there by the June 30 deadline.”
Reductions in pay are only part of the Mayor’s plan to close the budget gap, and the entire council recognizes that the 10 percent cut is not enough.
“Thirty percent cut in pay… We are not asking for that, but that’s the magnitude of the cost that we are looking at next year,” said Mayor Reed, alluding to the reductions needed to get the fiscal crisis in order and maintain city services at current levels.
“I think future concessions are unavoidable, future cuts are unavoidable, future layoffs are unavoidable… We are going to have to do all of the above. And we have to make some serious changes in the retirement benefits to get some control over the costs,” said Mayor Reed.
The Mayor warned that if retirement benefits are not reformed, city services will seriously dwindle. “Otherwise we are going to be just slashing services and be unable to [maintain] the kind of services that people ordinarily expect from a city. We are putting all of our money into retirement benefits. Retirement costs are about fifty percent of payroll this next fiscal year,” he said.
The city projects the total cost of retirement benefits to exceed $400 million by 2015. The Mayor added that at this time “the amount of money we are putting into retirement is more than we are paying people to work.”
This is a grim reality that San Jose and many other cities across the nation are facing. At this point, the sense is that most of the 11 labor unions are very aware of the seriousness of the budget crisis.
It was clear Wednesday that John Mukhar, President of AEA; Cay Denise Mackenzie, President of CAMP; and Dale Dapp, President of AMSP agreed to the concessions in recognition that their members are civil servants and have the desire to do what is right given the budget shortfall.
The fear is that the city will be transformed into an organization that provides very minimal services to its residents.
Liccardo mentioned that there are a few retirement reforms on the table including the second-tier package for new employees, reducing the benefits of current employees who have not yet accrued the retirement package, retaining an employee retirement package for the first 10–15 years but reducing the benefit going forward, extending the retirement age, and reducing the cost of living retirement pay adjustment from its current fixed 3 percent.
Even if the labor unions sign the 10 percent reduction in pay contract, the Mayor pointed out that further negotiations about the retirement benefits for current employees and future employees can still continue.
Mayor Reed also said, “We don’t negotiate with those unions for people who are already retired… We will deal with that in a separate way.”
The Mayor and city council voiced non-acceptance to any further reduction in services to the public and approved Mayor Reed’s 2010-2011 March Budget Message which lays out future cuts, various cost reduction recommendations, and future investment strategies at Tuesday’s council meeting.
“You are going to see this city drastically change,” said Councilmember Pierluigi Oliverio during the meeting.
The March Budget Message, which is available on the Mayor’s webpage, details $232 million in potential annual cost reductions.
“We could do it; the math is possible. But the politics, the legality, and all those things have to be dealt with… So whether or not we can achieve that remains to be seen,” said Mayor Reed in response to the cost reductions.
The potential layoffs would include 62 police, 38 positions due to community center closures, 13 positions due to one fire engine company elimination, 21 positions due to library hour reductions, 26 senior nutrition program positions, 9 park rangers, and 3 sexual assault investigation unit staffing positions.
In the coming months leading up to the June 30 budget deadline, many more details will surface about changes to the city.
“It’s a very tragic but simple decision we need to face, which is we don’t have enough revenue. The only option is to cut. A very painful decision is what awaits us,” concluded Liccardo.
“It’s a difficult thing to do, but we are making progress,” said Mayor Reed to The Epoch Times at the city hall rotunda on Wednesday following the contract signing of three additional unions. The fire department was the first to strike a deal with the city on Tuesday.
As of Wednesday 5 p.m., four of the eleven unions have signed a contract with the city council and accepted the requested 10 percent reduction in total compensation for the fiscal year. The three organizations agreeing to the changes on Wednesday include the Association of Engineers and Architects, IFPTE, Local 21 (AEA) Unit 41/42/43; the Association of Maintenance Supervisory Personnel (AMSP); and the City Association of Management Personnel, IFPTE, Local 21 (CAMP). The city states that these unions represent 623 full-time employees and 11 percent of the city’s workforce.
The amount of cost savings generated from the 10 percent pay reduction is roughly $38 million if all the unions accept the request.
“It’s very possible that we could get that full $38 million in concessions,” said Councilmember Sam Liccardo told The Epoch Times. But he added, “It’s going to take a lot of work to get there by the June 30 deadline.”
Reductions in pay are only part of the Mayor’s plan to close the budget gap, and the entire council recognizes that the 10 percent cut is not enough.
“Thirty percent cut in pay… We are not asking for that, but that’s the magnitude of the cost that we are looking at next year,” said Mayor Reed, alluding to the reductions needed to get the fiscal crisis in order and maintain city services at current levels.
“I think future concessions are unavoidable, future cuts are unavoidable, future layoffs are unavoidable… We are going to have to do all of the above. And we have to make some serious changes in the retirement benefits to get some control over the costs,” said Mayor Reed.
The Mayor warned that if retirement benefits are not reformed, city services will seriously dwindle. “Otherwise we are going to be just slashing services and be unable to [maintain] the kind of services that people ordinarily expect from a city. We are putting all of our money into retirement benefits. Retirement costs are about fifty percent of payroll this next fiscal year,” he said.
The city projects the total cost of retirement benefits to exceed $400 million by 2015. The Mayor added that at this time “the amount of money we are putting into retirement is more than we are paying people to work.”
This is a grim reality that San Jose and many other cities across the nation are facing. At this point, the sense is that most of the 11 labor unions are very aware of the seriousness of the budget crisis.
It was clear Wednesday that John Mukhar, President of AEA; Cay Denise Mackenzie, President of CAMP; and Dale Dapp, President of AMSP agreed to the concessions in recognition that their members are civil servants and have the desire to do what is right given the budget shortfall.
The fear is that the city will be transformed into an organization that provides very minimal services to its residents.
Liccardo mentioned that there are a few retirement reforms on the table including the second-tier package for new employees, reducing the benefits of current employees who have not yet accrued the retirement package, retaining an employee retirement package for the first 10–15 years but reducing the benefit going forward, extending the retirement age, and reducing the cost of living retirement pay adjustment from its current fixed 3 percent.
Even if the labor unions sign the 10 percent reduction in pay contract, the Mayor pointed out that further negotiations about the retirement benefits for current employees and future employees can still continue.
Mayor Reed also said, “We don’t negotiate with those unions for people who are already retired… We will deal with that in a separate way.”
The Mayor and city council voiced non-acceptance to any further reduction in services to the public and approved Mayor Reed’s 2010-2011 March Budget Message which lays out future cuts, various cost reduction recommendations, and future investment strategies at Tuesday’s council meeting.
“You are going to see this city drastically change,” said Councilmember Pierluigi Oliverio during the meeting.
The March Budget Message, which is available on the Mayor’s webpage, details $232 million in potential annual cost reductions.
“We could do it; the math is possible. But the politics, the legality, and all those things have to be dealt with… So whether or not we can achieve that remains to be seen,” said Mayor Reed in response to the cost reductions.
The potential layoffs would include 62 police, 38 positions due to community center closures, 13 positions due to one fire engine company elimination, 21 positions due to library hour reductions, 26 senior nutrition program positions, 9 park rangers, and 3 sexual assault investigation unit staffing positions.
In the coming months leading up to the June 30 budget deadline, many more details will surface about changes to the city.
“It’s a very tragic but simple decision we need to face, which is we don’t have enough revenue. The only option is to cut. A very painful decision is what awaits us,” concluded Liccardo.
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