City Journal Spring 2014

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Spring 2014
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California

Chris Reed
San Diego’s Union War
City workers and taxpayers face off over pension and budget reforms.
14 November 2012

Last week, voters in America’s eighth-largest city may have put the brakes on reform at city hall. Republican city councilman Carl DeMaio—a libertarian crusader who ran for mayor of San Diego pledging to change how government provides services and pays its workers—lost to veteran Democratic congressman Bob Filner, 51.4 percent to 48.6 percent. Democrats across California made nearly a clean sweep of close races, thanks to President Obama’s coattails, which lifted turnout among young voters. In San Diego, DeMaio’s candidacy was also undercut by his frosty relationship with popular outgoing mayor Jerry Sanders, a Republican, and by his own homosexuality, a topic that Filner brought up repeatedly.

In the aftermath, local Republicans worry that Filner will work with public-employee unions and a rogue state agency, the California Public Employees Retirement Board, to unravel the major reforms that DeMaio, Sanders, and the local business community have already enacted. One of these is Proposition C, which city voters approved in 2006 in a landslide. That measure allowed for “managed competition” between private companies and groups of city workers for the provision of city services. After being stalled for four years by a union-allied, Democratic-majority city council, “managed comp,” as it’s known, is now bringing cheaper government to San Diego. Sidewalk and street maintenance, street sweeping, fleet maintenance, publishing, and the operation of city dumps all went through a bidding process—and city workers won all the competitions. The result will be savings of at least $12 million per year, along with the demolition of the oft-heard union canard that city government couldn’t be leaner.

When Filner takes the oath of office on December 3, he’ll have to decide whether to proceed with managed competition in four more areas, including trash collection, which has a stellar record of successful privatization. During the mayoral campaign, Filner, who spent 20 years in Congress, promised that he would implement laws passed by the public. But it’s troubling that his first executive hire, former councilwoman Donna Frye, was part of the City Council majority that stalled Proposition C’s implementation for four years. Filner has also said that under his administration, public employees would no longer be blamed for the city’s fiscal woes, which stem largely from bizarre city hall decisions in 1996 and 2002 to increase pension benefits while reducing payments into pension reserves.

Filner’s sympathy for public employees has supporters of San Diego’s other sweeping reform worried. Proposition B, adopted this past June by another voter landslide, would give nearly all new city hires 401(k)-style, defined-contribution retirement plans. Only newly hired police would continue to receive defined-benefit pensions. The measure also requires city officials to seek a six-year freeze on pensionable pay of city employees (meaning that pay raises won’t be calculated into pensions), a policy that can be reversed only by a two-thirds vote of the City Council. The freeze would yield long-term savings of nearly $1 billion over 30 years by slashing the long-term costs of retirement benefits for thousands of workers with traditional vested pensions.

It’s difficult to see how Filner could reverse course on Proposition B all by himself. It is city law, after all. But the state’s Public Employees Retirement Board tried to kill the proposal even before it made the June ballot, and it hasn’t given up. The agency is now citing the involvement of prominent elected city officials, including Sanders and DeMaio, in drafting the measure and gathering signatures for its placement on the ballot; this was an unfair labor practice and violated state law, PERB claims. But city officials don’t lose their First Amendment rights just because a labor union is involved.

San Diego isn’t the only California city where PERB and other union allies are trying to protect public employees’ high pay, lavish benefits, and job protections. But for now, at least, ground zero in the war between taxpayers and unions is San Diego. Will voters’ two trailblazing reforms survive, or will they be subverted with the aid of a mayor who promised to honor the voters’ will?

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