San Jose’s Pension Initiative will be a National Bellweather
San Jose union officials are celebrating a decision last week by the Sixth District Court of Appeals, which struck some city-drafted language from a June ballot measure designed to reduce pension benefits for newly hired city workers and require existing workers either to pay more for their current pension plan or switch to a lower-benefit plan. But the three-judge panel’s unanimous verdict will do little to affect the ultimate outcome of the pension measure and much to remind the public of the lengths to which the state’s public-sector unions will go to resist any reform—and keep voters from having a say.
“How much more taxpayer dollars will be wasted defending this flawed ballot measure?” asked Robert Sapien, president of the city’s firefighters’ union, in a plaintive cry ridiculous even by the low standards of political campaigns. Taxpayers had to pay to defend the measure because the unions kept challenging it in court. After four such attempts, virtually the entirety of the measure withstood judicial scrutiny.
The union “victory” amounted to legal nitpicking. The judges concluded that the word “reform” was too biased. “By combining this charged word with ‘pension’ in the title, all in capital letters,” the panel maintained, “the city council has implicitly characterized the existing pension system as defective, wrong or susceptible to abuse, thereby taking a biased position in the very titling of the measure itself.” That’s a bit dramatic. Seeking political advantage, cities do indeed add titles and summaries to ballot initiatives, but San Jose’s effort didn’t seem over the top here. And the titles on these measures are always printed in all capital letters, so it’s not as though the city’s drafters inserted the word REFORM in the midst of lower-case text, the way overheated spam e-mailers send out those WAKE UP, AMERICA! blasts. People from every political persuasion trying to change a policy describe their efforts as “reform,” and the word has a rather benign and neutral meaning. Nevertheless, the ballot initiative’s new introductory title is “Pension Modification.” That, too, will appear in all caps.
The second part of the court’s objection—the inclusion of language stating that the measure is designed to “protect essential services”—is more understandable. The judges argued that such language belongs more appropriately in the ballot arguments in favor of the initiative. The city’s language is straightforward and truthful, however. City officials are trying to protect services now in jeopardy in large part because of a 350 percent increase in pension costs over the past decade. Pensions now constitute more than 20 percent of San Jose’s general-fund budget. With these changes to its language, the initiative for pension reform—er, modification—will now go to the voters in June. In the heated world of San Jose pension-modification politics, every voter will surely know what’s at stake when voting for or against Measure B; only the most unaware city voters will have to rely upon the ballot wording to know their position on it.
For various reasons, San Jose is more of a pension bellwether than other California cities. Not only is San Jose the state’s third most populous city; it’s also run by a Democratic mayor who argues that pension costs run amok are endangering liberal programs. Most important, San Jose is confronting what the good-government Little Hoover Commission calls the “elephant in the room”—the pension benefits of current public workers. As the commission explains: “Adding a ‘second tier’ of lower pension benefits for new hires, for example, will not deliver savings for a generation, while pension costs are swelling now as Baby Boomers retire. . . . Public agencies must have the flexibility and authority to freeze accrued pension benefits for current workers, and make changes to pension formulas going forward to protect state and local public employees and the public good.” San Jose argues that its charter specifically allows it to address pensions for current employees; court decisions have prevented other cities from tackling these costs.
The court battle underscores an unavoidable California reality: union officials have the deepest pockets to challenge pension-reform measures in every jurisdiction every step of the way, and they’re determined to deny the public the chance to vote on pension-related measures. San Jose will be a closely watched case. The unions will challenge the measure in court if it passes, based on the changes-to-current-benefits argument—a longstanding precedent holding that the U.S. and California constitutions forbid the reduction of promised pensions. Pension-receiving judges will have the final word.
On the plus side, reformers—call them “modifiers” if you like—have won the rhetorical battle. As cities careen toward bankruptcy, even Democratic officials now must contemplate pension reform.
Steven Greenhut is vice president of journalism at the Franklin Center for Government and Public Integrity.