Copyright © 2012 by Mark Gabrish Conlan for Zenger’s Newsmagazine • All rights reserved
Lani Lutar and Todd Gloria
The predominantly Queer San Diego Democratic Club heard an hour’s worth of discussion on the so-called pension reform measure, Proposition B on the June 5 ballot, but it didn’t take the club long to vote a unanimous endorsement against the measure. Sponsored by Republican City Councilmember and Mayoral candidate Carl DeMaio, and also promoted by current Mayor Jerry Sanders, the measure would eliminate guaranteed-benefit pensions for new city workers (other than police officers) and put them on a 401(k)-style investment plan instead. It would also freeze all city workers’ pay for five years.
The club’s debate on the measure featured Lani Lutar, president and chief executive officer of the San Diego County Taxpayers’ Association, arguing in favor of Proposition B and City Councilmember Todd Gloria speaking against it. Liam Dillon from the Voice of San Diego Web site served as moderator and asked all the questions, loosely based on submissions from club members and others in the audience. Dillon also kicked off the meeting with a brief explanation of how traditional defined-benefit pensions work and how the city of San Diego fell millions of dollars behind in its obligations to the city workers’ pension funds.
In 1996 and again in 2002, Dillon explained, “the city decided to take money from the pension system and at the same time they promised employees more benefits in the future.” The crisis led to the resignation of Mayor Dick Murphy in 2004, the loss of the city’s credit rating – meaning it could no longer issue bonds and borrow money – and the passage of Proposition G in 2006, which required voter approval of future pension increases. Also, Dillon said, “In 2008, negotiations with labor unions lowered pension benefits for new city hires.”
According to Dillon, San Diego’s pension payments will continue to increase until 2025, when the city pays off the giant losses the pension fund suffered in the 2008 market collapse. In 2029 the city will finally pay back the underfunding from 1996 and 2002. Even if Proposition B loses, the city will save money not only from paying off these debts but also, Dillon said, from “the less generous pension plans for new employees approved in 2008.”
So why do Proposition B’s supporters think it’s necessary? Because, said Lutar, “Right now pensions are subsidized by taxpayers. Our initiative ends that. As Liam explained, there were a number of key [City Council] votes that gave us an unfunded liability of $2 billion. This is money being taken away from city services, including libraries, roads and public safety. Proposition B saves $1 billion over 30 years, and it reforms pensions for all city employees. It ends pension spiking, by which city employees get more when they retire than they did while they were working. That occurs because of various mechanisms this measure eliminates.”
Lutar also questioned Dillon’s description of the initiative as freezing city employees’ pay for five years. What it freezes, she said, is “pensionable pay.” It doesn’t, she said, prevent the city from offering employees bonuses that put money in their pockets now but don’t add to their pensions.
Councilmember Gloria’s main objections to Proposition B were that it’s not necessary and it’s unfair to the city’s current and future workers. “We have reduced both employee salaries and pensions,” he said. “Proposition B doesn’t do a thing to address the pension debt.” Gloria said that, because of the startup costs involved in shifting from a defined-benefit pension to a 401(k)-style system, the initiative actually “increases pension costs by $54 million over the next three years. If Proposition B passes, we will see extensive litigation and cuts to city services. It will do nothing to stop six-figure pensions” to city administrators.
According to Gloria, the city has already turned the corner on its financial crisis of a decade ago. He noted that San Diego’s current budget has a surplus of $16 million, compared to the $200 million deficits of both Los Angeles and San Francisco. “If we are already in surplus, why on earth would we do this?” Gloria said. “This is part of a broader effort to attack workers and make their lives miserable. If you can believe that, and I hope you do, I hope you will reject it.”
“Councilmember Gloria brought up the issue of a balanced budget,” said Lutar. “If you drive down the street, you’ll know we don’t have a balanced budget in terms of maintaining infrastructure. There’s no question that tremendous progress has been made under Mayor Sanders’ leadership, but to pretend there is no financial challenge facing the city would be an insult.”
“We have done a 182 percent increase in road maintenance since I joined the City Council [in 2009],” Gloria said. “The pension underfunding scheme took place in the first place because the city’s budget couldn’t be balanced.” He also argued that switching new city employees to 401(k)-style pensions doesn’t save the city any money now because the savings won’t kick in for decades, until the newly hired workers reach retirement age.
The entire savings being touted by the supporters of Proposition B, Gloria said, come from the five-year freeze on city workers’ pay – which Gloria says is illegal because it changes workers’ salaries without giving their unions a chance to bargain with the city. He said that if Proposition B passes, the city workers’ unions will sue to have that part of it thrown out – and if they win, Gloria noted, “you get all the upside costs and none of the savings.”
Fielding a question on whether the city had a pension problem, Gloria said, “We have a pension debt problem. We have to pay back the money [former Mayors] Susan Golding and Dick Murphy stole [from the pension fund]. We can’t get out of that debt overnight, but once it’s paid off, the pension costs drop tremendously. 401(k)’s are not cheaper. One clause of the initiative takes pensions away from city employees who commit crimes. That is reasonable but it’s hardly going to save the city any money.” Gloria also said that all the savings in the pension bills up until now have been through the so-called “meet and confer” process – essentially collective bargaining for public employees – and “that’s a much more effective path than going to the ballot.”
Lutar said that though the current City Council has acted responsibly – city employees haven’t had a raise in five years, which would stretch to 10 if Proposition B is approved and its freeze on city workers’ pay survives the courts – “we can’t predict what future City Councils will do. This initiative was put on the ballot by a citizens’ group. It doesn’t increase costs by one cent. If we do nothing, pension costs will increase in the next decade. … The reason the initiative is crucial is we can’t count on this City Council or the next City Council to do the right thing. This is a permanent solution.”
“I love Lani but I want to be tough on her,” Gloria said. “She’s said there’s no cost to adopting this initiative. The city auditor says it will not necessarily bring about savings because all the savings are predicated on future City Councils not giving pay increases to city workers. This is not locking anything in. It has no guarantees, no taxpayer protections, and it does not deserve your vote.”
In a dramatic last-minute move, the club reversed its “acceptable” rating for Congressional candidate Juan Vargas, which it had given in February despite Vargas’ opposition to marriage equality for same-sex couples. The club pulled Vargas’ “acceptable” rating after he provided the decisive vote in a State Senate committee to kill a bill by State Senator Christine Kehoe, a longtime favorite and the first “out” Queer to hold elective office in San Diego, which would have expanded access to abortion by allowing nurse-practitioners and some midwives to perform abortions.
The club also joined the California Democratic Party in endorsing two measures on the June 5 state ballot: Proposition 28, which reduces the number of years a state legislator can serve from 14 to 12 but allows all their service to be in the same house; and Proposition 29, which increases taxes on tobacco products to fund cancer research. It endorsed two Democrats running for judge, George Schaefer for Office 25 and Terrie Roberts for Office 24, and rated Republican judicial candidate Garland Peed “acceptable” largely because he’s running against a Right-wing opponent who’s publicly stated President Obama is ineligible for office. The club designated four campaigns as priority races for June 2012: No on B, Bob Filner for Mayor, Mat Kastrinsky for City Council in District 7, and Dan Roberts for County Supervisor in District 3.