San Diego voters will soon be seeing signature-gatherers for a ballot measure that would end guaranteed pensions for new city employees.
The cost-cutting proposal by Mayor Jerry Sanders would replace the current "defined benefits" retirement plans that feature a 401(k)-style plan similar to those in the private sector.
"The notion that all public employees should have a richer retirement benefit than the taxpayers they serve, while now also enjoying comparable pay and great job security, is thoroughly outdated," Sanders told reporters Friday at a City Hall news conference. "What's worse is, it's bleeding our resources at a level that's unsustainable. So what we're going to do is something few larger municipalities have ever attempted -- to slay the sacred cow of defined benefit pensions.
"We'll go directly to the voters and place a citizens' initiative on the ballot to end public pensions as we know them today," Sanders added.
The mayor said his proposal exempts public safety hires, because the city can't afford to lose prospective officers and firefighters to other cities.
In response, organized labor is calling it a "cat-food retirement plan," because the value of 401(k)s could crash during downturns on Wall Street. Leaders of the city's white-collar and blue-collar unions said they were blindsided by the plan because they had been in negotiations with the mayor's office on voluntary, hybrid forms of "defined contributions," or 401(k)-style plans.
They warned that attracting qualified applicants in their job categories will be more difficult.
Politics
"At some point you're going to affect recruitment at the city," said Municipal Employees Assn. President Michael Zucchet. "And certainly I think that implicit in the mayor's proposal of not including police and fire is a nod to that."
Joan Raymond, president of Local 127 of the American Federation of State, County and Municipal employees, said future retirees could be left impoverished by market losses in their 401(k)s, because the city opted its workforce out of Social Security 30 years ago.
"That's why it's important to have something they can count on as their retirement as they get older," Raymond said. "Because otherwise, they're going to end up eating a can of cat food or pushing a shopping cart at the end of their career."
Councilman Carl DeMaio said the change doesn't go as far or as fast as the comprehensive pension reform strategy he's pushing.
"It's pennies on the dollar," DeMaio said. "We're happy to support the defined contribution plan, but you have to do more aggressive pension reforms than what's been proposed today."
DeMaio is looking to put his Road Map to Recovery" before voters, too.
Sanders couldn't predict how much impact the plan would have on the city's pension deficit, adding that a lot will depend on rulings by the IRS and Social Security, and negotiations with employee unions on the city's matching contributions to the 401(k)s.
Meantime, Sanders said he's expecting rapid progress on completing the 10 fiscal reforms attached to Proposition D, the half-cent sales tax hike that voters rejected by a 3-to-2 margin on Nov. 2. He announced that a decision on private "outsource" bids for information technology services is expected by Dec. 6, resulting in a $10 million annual savings, followed by decisions on bids for vehicle fleet maintenance and publishing functions.
The sale of the city's operating lease for the Miramar Landfill is expected in February, the mayor said, adding that franchise-operating offers for the city's airports and golf courses would soon be sought.
Sanders also said the City Council will be asked to eliminate free curbside trash pickup for 14,000 homes on private, HOA-maintained streets, and 14,000 small businesses.
