Mayor: Salary Cuts May Save $760 Million

Salary cuts that were negotiated or imposed on city workers could save San Diego hundreds of millions of dollars, San Diego's mayor claims.

Last week, the city reached agreements with union officials representing firefighters and deputy city attorneys, as well as with the Municipal Employee's Association. The City Council voted unanimously to impose one-year contracts on unions representing police officers and the city's blue-collar workers. The council is expected to finalize The city council those deals on Tuesday.

Sanders -- flanked by the city's chief operation officer, Jay Goldstone, two labor negotiators and some giant blowups detailing proposed budget savings (how much did those cost?) -- said on Monday that last week's contract decisions will generate long term savings for the city.

"The City Council has been praised as courageous ... they deserve every bit of that praise," Sanders said at a news conference at 11 a.m. at his office.

The mayor's forecasts, of course, are based on what happens with the two unions that had their contracts imposed upon them. Will they agree next year? Will the City Council vote again to impose another one-year contract?

Sanders said Monday that by freezing salaries or cutting them, the city would net $100 million long-term savings for the pension fund; that by reducing the interest rate on DROP (deferred retirement option program) accounts and annuities, San Diego will create a $310 million reduction to the city's unfunded liability; and that bu freezing benefits at $740 per month for retirees' health care, the city would reduce it's unfunded liability in that area by $350 million.

In past years, the city's monthly benefit rose about 10 percent a year, Goldstone said. Sanders said the city would spend the next year exploring alternatives to the city shelling out the entire amount for the health care of retirees, which could mean that retired city employees may contribute to health care costs down the road.

Sanders said he was sure somebody would haul the city into court over the health care moves.

"We're certain somebody will challenge it in court," Sanders said, adding that he thought that by getting some of the unions to agree to the concessions, he may be able to avoid the city's efforts being undone in a court room.

Reached for comment, San Diego City Councilman Carl DeMaio said that the statements he made last week after the salary cuts were announced  also apply to the mayor’s announcement on Monday. At that time, DeMaio said that the salary cuts were an important step "but more must be done to reform unsustainable labor costs in the city's budget."

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