Posts

City of San Jose's Capitulation to Public Safety Unions is Complete

If someone told you that they were going to invest their money, but if that money didn’t earn enough interest, they were going to take your money to make up the difference, would you think that was fair?

When it comes to pensions for local government workers, that’s what’s happening all over California. San Jose’s story provides a particularly lurid example. Back in 2007 the San Jose Police and Fire Department Retirement plan was 97.8% funded (SJPF CAFR 2006-07, page 37). Back then, the annual contribution to the pension fund was $62.7 million, with the employees themselves contributing $16.1 million through payroll withholding, and the city contributing not quite three times as much, $46.6 million (SJPF CAFR 2006-07, page 40).

Last year, the San Jose Police and Fire Department Retirement plan was 79.3% funded (SJPF CAFR 2014-15, page 119). The annual contribution to the pension fund had ballooned up to $150.0 million, with the employees themselves contributing $20.7 million through payroll withholding, and the city contributing over six times as much, $129.3 million (SJPF CAFR 2014-15, page 73).

No wonder the City of San Jose put Measure B on the ballot in 2012, and no wonder voters passed it by a margin of 69% to 31%. But that wasn’t the end of it.

The unions embarked on a multi-year campaign in court. As reported here in August 2015 in the post “San Jose City Council Capitulates to Police Union Power,” the relentless union counter-attack eventually exhausted the will of the City Council. Facing an uphill battle against judges who themselves receive government pensions, they decided not to appeal the court’s overturning of a key part of the voter approved reform – one that would have allowed reductions to pension benefit accruals for future work.

Never forget that these are the same pensions that the unions lobbied politicians to enhance retroactively back in the late 1990’s and early 2000’s.

Earlier this month, in a final ruling that is almost anti-climactic, Santa Clara County Superior Court Judge Beth McGowen denied a legal attempt to stop the city from completely repealing the pension reform initiative voters approved in 2012.

Politicians come and go. Government unions, by contrast, have continuity of leadership, a massive and uninterrupted source of cash from taxpayer funded government worker paychecks, and unwavering resolve. This not only allows them to negotiate from a position of almost unassailable strength, and fight an endless war of attrition in the courts, but it also allows them to control the narrative. The narrative that the public safety unions used in their fight with pension reformers in San Jose was aggressive, to say the least.

From the start they demonized San Jose mayor Chuck Reed, who spearheaded reform efforts, accusing him of being more interested in his political future than the safety of the citizens. It wasn’t unusual back then, or in the years thereafter, to see bumper stickers with a simple message, “Chuck Reed is a bad person.”

The union also claimed they were unable to recruit because San Jose’s pay and benefit package was not competitive with other cities. But according to a report by NBC’s Bay Area affiliate, police union representatives told recruits to “take advantage of the academy, then find jobs elsewhere.”

But how underpaid and uncompetitive is San Jose’s pay and benefit package for their public safety employees? If you view the 2014 pay and benefits for San Jose’s city employees on Transparent California, you will see that 76 of the top 100 paid positions are either police or fire; they are 160 of the top 200 paid positions. What about averages and medians?

Using State Controller data, and not even screening out positions such as “accountant II,” or “Analyst II,” within the police and fire departments, the median total pay and benefits in 2014 for San Jose’s full-time firefighters was $214,669, and for full-time police it was $233,070. Properly fund their pensions and their retirement health benefits, and their median pay is easily over a quarter-million per year. And what about those pensions? How much are they?

Once again, Transparent California data for the San Jose Police and Fire Retirement Plan shows just how high these pensions can get. They estimate the full-career pension (30 years service or more) at $112,425 per year – NOT including health insurance benefits. That is corroborated by the “Average Benefit Payment Amounts” from the retirement plan’s CAFR (SJPF CAFR 2006-07, page 152) which shows the average 2014 pension benefit for retirees with 26-30 years service at $107,280, and for 30+ years at $115,884.  If you review the Transparent California pension data for San Jose’s public safety retirees by name, you will find 758 of them are collecting pensions – not including retirement health insurance benefits – in excess of $100,000 per year.

Which brings up another noteworthy topic – disability pensions. Of the 2,215 San Jose public safety retirees and beneficiaries as of June 30, 2015, 894 of them have retired under a “Service Connected Disability” (SJPF CAFR 2006-07, page 150). Once you adjust for beneficiaries (codes 5, 6, and 8 on table), this represents 49.8% of the retirees. Is it actually possible that half of all police and fire retirees are disabled from on the job injuries? How is this being verified? What are the criteria? The IRS grants significant tax benefits to public safety retirees with service disability pensions.

The financial condition of San Jose’s police and fire retirement system is dramatically worse today than it was ten years ago. The combined assets of their pension fund and their retirement health (OPEB) fund are now $3.1 billion, against liabilities of $4.6 billion – a funded ratio of 67%. And the unions who call the shots are making it abundantly clear that when the money runs short, you’re going to pay.

 *   *   *

Ed Ring is the president of the California Policy Center.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Union Environmental Appeal of San Jose Infill High-Rise Fools No One

Today (Tuesday, August 13, 2013) construction trade unions either showed exceptional arrogance or exceptional foolishness when they chose to exploit the California Environmental Quality Act (CEQA) against a high-profile “infill” project in downtown San Jose.

For the past few years, some California state legislators have wanted to discourage CEQA actions meant to advance objectives unrelated to environmental protection. Even Democratic legislative leaders such as California State Senate President pro Tem Darrell Steinberg (D-Sacramento) are seeking minor CEQA amendments to reduce obstacles to infill development, which is regarded by some as a wise planning strategy for the environment.

Under these circumstances, it was astonishing to see the Santa Clara-San Benito Counties Building and Construction Trades Council appeal the San Jose Planning Director’s approval of a downtown 23-story residential “infill” project called One South Market Street. The appeal was filed by the law firm of Adams Broadwell Joseph & Cardozo and based on alleged CEQA violations and planning and zoning code violations.

No one was fooled. San Jose Mayor Chuck Reed declared “It’s not really about the environment … it’s abuse of the environmental process.” And Councilman Johnny Khamis complained that the city council had two abusive back-to-back CEQA objections on its agenda, one with an anti-competitive motive and one with a union motive.

In the end, the city council rejected the union appeal, although two council members voted to support the unions. One of them was San Jose City Councilman Xavier Campos, who is the brother of Assemblywoman Nora Campos, who is married to Neil Struthers, who spoke at the meeting in support of the CEQA appeal as the head of the Santa Clara-San Benito Counties Building and Construction Trades Council.

Groundbreaking for the project had already occurred in a ceremony on June 25, 2013. No one up to that point had indicated any concerns about permitting or environmental review. But on that same day, the law firm for construction unions submitted an objection letter. The unions formally appealed various aspects of the project on July 9 and July 12.

In an August 13, 2013 article about the appeal (Union Challenging Downtown San Jose High-Rise), the Silicon Valley Business Journal indicated that the union objections to the project were not necessarily related to environmental concerns.

So what’s going on? Sources told me the union appears to be trying to send a message after several key subcontracts on the job were delivered to non-union contractors out of Sacramento.

“The Building Trades are not opposed to more high-rises downtown. What we are opposed to is this developer generating more profits at the expense of local workers and the environment,” Neil Struthers, CEO of the Santa Clara & San Benito Counties Building & Construction Trades Council, told me in an email.

He added: “No project should be given the ability to avoid the requirements every other developer must meet as it relates to water quality, affordable housing and traffic mitigation. Someone needs to stand up to those that have the power to gain preferential treatment from local government.”

Reportedly the contractor most objectionable to the unions is a large electrical company that works on major commercial projects throughout Northern California. Its headquarters is in Sacramento, but it has a Bay Area office in Hayward, 25 miles away from downtown San Jose via Interstate 880. Construction companies in Northern California capable of working on a 23-story high rise building tend to have a regional market – these are not hometown plumbers.

Because the City of San Jose has provided tax and fee waivers with financial value to the developer, One South Market Street is regarded under California law as a public works project. All construction companies – both union and non-union – must pay state-mandated construction wage rates (“prevailing wages”) to their trade workers on this project. In California, state prevailing wage rates always duplicate the wage rates in the applicable union collective bargaining agreements for that trade in that geographical region.

In other words, local hiring or wage rates are not legitimate issues. Control of the workforce is the issue.

Presumably, the Santa Clara-San Benito Counties Building and Construction Trades Council will continue to interfere with the project (perhaps with a lawsuit) until the developer (Market Street Tower Venture, LLC, on behalf of Essex OSM REIT, LLC) agrees to sign a Project Labor Agreement or some other contract giving unions a monopoly on construction of the building.

The One South Market Street CEQA appeal shows that unions have a strong economic interest in stopping any proposals that compromise the obstructive power of CEQA. It should not be a surprise that construction trade unions are reportedly the primary obstacle to Senator Steinberg’s very modest CEQA reform bill, Senate Bill 731, but apparently Senator Steinberg was surprised, according to the August 5, 2013 article from California Forward: CEQA Roundup: Have Negotiations Really Stalled?

Steinberg himself seems to have been surprised by the opposition on the part of some labor leaders, in particular, who have pushed back against his most basic goal: Updating the CEQA process for infill projects. While the Senate leader has tried from the start to write a bill that would drive more of this type of development across the state, sources say some labor leaders view the coming infill wave as the source of a steady stream of jobs – and they are wary of losing CEQA as a tool they can use to reach project labor agreements with developers.

Reform of the California Environmental Quality Act is not an environmental issue. It’s a labor issue.

News Media Coverage

San Jose Denies ‘Greenmail’ Environmental Appeals on High-Rise ProjectSan Jose Mercury-News – August 13, 2013

San Jose Council Says ‘No’ to Union’s CEQA Challenge of One South MarketSilicon Valley Business Journal – August 13, 2013

Sources

Staff Report on Appeal of Santa Clara-San Benito Counties Building and Construction Trades Council to One South Market Street Project (includes June 25, July 9, and July 12 letters from law firm of Adams Broadwell Joseph & Cardozo)

Initial Study/Mitigated Negative Declaration for One South Market Street and Mitigation Monitoring or Reporting Program for One South Market Street

Union Challenging Downtown San Jose High-RiseSilicon Valley Business Journal – August 13, 2013

California Senate Bill 731 – CEQA reform for infill development projects

CEQA Roundup: Have Negotiations Really Stalled? – California Forward – August 5, 2013

KT Properties One South Market Street

Background on One South Market Street from Silicon Valley Business Journal

CEQA Works – the coalition of environmental groups and labor unions opposed to CEQA reform

www.PhonyUnionTreeHuggers.com


Kevin Dayton is the President & CEO of Labor Issues Solutions, LLC, and is the author of frequent postings about generally unreported California state and local policy issues at www.laborissuessolutions.com. Follow him on Twitter at @DaytonPubPolicy.

Unions: It’s Just Pension Envy

Rhode Island’s Democratic state treasurer, Gina Raimondo, is fond of saying that pension reform is about math, not politics. Other blue-state politicians, ranging from New York governor Andrew Cuomo to Chicago mayor Rahm Emanuel, have moved toward fixing unsustainable pensions. But California’s top statewide political leaders have mostly shrugged at the problems caused by excessive pay and benefit packages granted to public-sector workers. The state faces an unfunded pension liability of at least $300 billion, and major cities—notably Stockton and San Bernardino—are taking the municipal-bankruptcy route; even Los Angeles is mulling the option. Until recently, even the most modest reforms to California’s public-employee compensation have gone nowhere—and though Democrats are now suddenly talking about tackling some kind of pension reform within the next four weeks, history suggests that it’s wise to be skeptical.

What is it about California’s Democratic leaders that makes them ignore fiscal reality and put politics above mathematics? Conventional wisdom holds that unions elect these politicians and that the politicians do the unions’ bidding. But in reality, the unions <em>are</em> the legislature. Most of the Democratic leadership in the state assembly and senate comes directly out of the union movement and identifies with the public sector. For these union Democrats, government is primarily a means to improve the financial condition of those who work for the government.

The best articulation of this vision can be found in a speech that state treasurer Bill Lockyer gave last October. “As a California public official, I also believe in the principle that our nation and our state have an absolute obligation, to every American and every Californian, to ensure that when the time comes for them to put down the tools and enjoy a well-deserved retirement, those workers can live the rest of their lives with dignity and good health, and not in poverty,” Lockyer said. “And in my view, nothing is more important in providing for retirement security than preserving the defined benefit pension for those who have it, and restoring and reinvigorating the defined benefit leg of the three-legged retirement stool for those across the country who have lost it in the space of a few short years.” Lockyer conceded that “pension liabilities <em>are </em>a problem,” but only because “they are driving unacceptably high contribution rates for employers and workers, too.” In other words, public pensions are a concern not because of the costs to taxpayers but because of the burden they place on government agencies and government employees. To ease that burden, union Democrats want—what else?—new taxes.

<em>Sacramento Bee </em>reporter Jon Ortiz, who covers state workers and unions, wrote that Lockyer’s speech “echoed the new argument that public employee unions are making in defense of retirement benefits.” And this year, the public got to see an incongruous legislative manifestation of Lockyer’s argument. Los Angeles Democrat Kevin de León’s Assembly Bill 1234 would have the state, in effect, create a miniature Social Security system designed to bolster <em>private</em> retirement accounts—albeit at a much lower rate of return and with much lower benefits than those enjoyed by retired public employees. De León’s bill passed the state senate and awaits a hearing before the assembly’s appropriations committee—incredible as it may seem, given the legislature’s refusal to give public-pension reform any serious thought.

The reason for the de León bill is union Democrats’ belief that the pension problem is merely, as Lockyer puts it, “a very serious and virulent strain of pension envy.” Instead of fixing the unsustainable public-pension system—which they regard as a success that has helped a portion of the public receive the kind of comfortable retirement that everyone should have—the union Democrats want to throw a few bones to private-sector workers afflicted with this “pension envy.”

Lockyer’s intransigence illustrates why San Jose mayor Chuck Reed says that getting any reform out of Sacramento is hopeless. Reed, of course, spearheaded a successful pension-reform ballot initiative that unions are now challenging in court. If pension reform succeeds in the Golden State, it will happen at the ballot box—in spite of the best efforts of union Democrats, who continue to defend the indefensible.

<em>Steven Greenhut is vice president of journalism at the Franklin Center for Government and Public Integrity.</em>

text your ex back freehow to get ur ex back How To Get Your Ex Back what not to text to get an ex backfree copy of text your ex back


Text Your Ex Back Free Ebookget my ex back fast text your ex back free how to get back with your ex girlfrienddr phil how can i get my ex girlfriend back

Local Government Election Results in California Highly Relevant to Labor Issues

California’s primary election night was overshadowed by the support from Wisconsin voters for state elected officials who implemented a modest reform of collective bargaining for public employees. But here is an exclusive report on how the June 5, 2012 election also brought good results for advocates of fiscal responsibility and economic and personal freedom in California.

Some might say that voters are being hoodwinked by FOX News, conservative talk radio, and the Dayton Public Policy Institute. To me, it’s clear that a majority of Californians do not see tax increases, more government spending, and expanded government programs as the solution to the state’s economic struggles.

SAN DIEGO REGION

Similar to what’s taking place in numerous states throughout the country, voters in the San Diego region are actively responding to a challenging economy by calling for smaller and more efficient government.

I’ve already posted on the easy 58% victory in the City of San Diego for Proposition A, which enacts a Fair and Open Competition ordinance prohibiting the city from requiring construction contractors to sign a Project Labor Agreement to work on taxpayer-funded construction. I also reported already on the 57% victory in the City of El Cajon for Proposition D, a new charter that includes a Fair and Open Competition provision and also gives the city authority to establish its own government-mandated construction wage rates (prevailing wages) for city projects. (Boy, unions hate it when local governments take power away from the state!)

There will be a heated campaign up to November 5 for San Diego Mayor. Advocate of economic freedom (and San Diego City Councilman) Carl DeMaio will face leftist Congressman Bob Filner. This election will feature a passionate debate over the benefits of capitalism versus socialism. If DeMaio is elected as Mayor, there will be a dramatic change in political culture in the City of San Diego.

(See Filner’s letter here telling the Chula Vista Chamber of Commerce to oppose Proposition G in part because it would be a “fool’s errand” to seek federal funding for the city if Proposition G passed. It did pass, and somehow the federal money continues to be piped in, as shown by evidence of continued federal grants to the city’s Capital Improvement Program here.)

Also, Councilman DeMaio’s Proposition B to reform public employee pensions in the City of San Diego won with 66% of the vote. And this was not the only successful urban public employee pension reform measure to win voter approval in California on June 5: Mayor Chuck Reed’s Measure B to reform public employee pensions in the City of San Jose (a much more liberal city than San Diego) passed with 70% of the vote. Apparently Californians are a lot like people in Wisconsin: they understand that future economic growth and job creation cannot be anchored on excessive government payouts obtained by public employee unions through politically-manipulated collective bargaining.

Also in the City of San Diego, Scott Sherman won a city council seat. He supports economic freedom and fiscal responsibility. Ray Ellis – also an advocate of economic freedom – will face Sherri Lightner in November for another city council seat.

NORTHERN CALIFORNIA

Even in much more liberal Northern California, there was good news beyond the win for public employee pension reform in the City of San Jose.

In Placer County, construction unions flushed $30,000 down the toilet in funding 92% of the campaign of Pam Tobin, who challenged incumbent Kirk Uhler for a seat on the Placer County Board of Supervisors but lost, 60% to 40%. I was at the Uhler election night victory party in Granite Bay and was pleased to see the result. See my exclusive investigative report revealing and analyzing the union sources of Tobin’s campaign contributions here.

But Placer County Supervisor Jennifer Montgomery won re-election. She voted in 2010 against the currently-in-effect Fair and Open Competition policy banning Project Labor Agreements on county construction projects.

Elsewhere in Placer County, 65% voters in the City of Auburn rejected Measure A, a proposed charter that would have given authority to the city to establish its own policies concerning government-mandated construction wage rates (prevailing wages) on city projects.

In an earlier post I compared the City of Auburn’s charter campaign to the charter campaign of the City of Rancho Palos Verdes (in Los Angeles County) in 2011. In both cases, large and politically sophisticated construction unions used their well-funded labor-management cooperation committees, political action committees, and general budgets to steamroll over a home-grown local grassroots movement.

City council members and city staff seeking a charter should conduct honest assessments of what it takes to win against aggressive self-interested union opposition. You’re fighting a political machine, as city council members and community activists have recently learned through experience in Rancho Palos Verdes, Auburn, Redding, Paradise, South Lake Tahoe, Folsom, and Elk Grove. You CAN win like Oceanside did in 2010 and El Cajon just did on June 5, 2012.

There was a victory in Contra Costa County against a union supported candidate, where Danville Mayor Candace Andersen won 60% of the vote and easily defeated Contra Costa Community College District Governing Board member Tomi Van De Brooke for the open seat held by the late Supervisor Gayle Uilkema. Van De Brooke only received 28% despite receiving the “benefit” of nasty union-funded mailers about abortion sent to district voters. This is yet another case in which Associated Builders and Contractors (ABC) in California made a politician accountable to the voters for supporting costly union-backed policies in order to lock up union campaign support. Regrettably, the Project Labor Agreement imposed by Van De Brooke in December 2011 for community college district construction projects will remain as a legacy of this election.

In Sonoma County, there will be a clash between two ideologically opposite members of the Santa Rosa City Council for an open seat on the Sonoma County Board of Supervisors. The candidate for economic freedom, John Sawyer, will face off against pro-union candidate Susan Gorin.

In Solano County, pro-union challenger Skip Thomson defeated Mike Reagan, the one solid advocate for economic freedom on the Solano County Board of Supervisors. Reagan barely held onto the seat against Thomson four years ago. The Project Labor Agreement policy for Solano County construction projects will continue, now without an opposing view on the board.

In Yolo County, incumbent Duane Chamberlain survived a challenge from union-backed Woodland Mayor Art Pimentel for a seat on the Yolo County Board of Supervisors.

Voters rejected Measure J, a $59.5 million school bond measure to modernize a high school in the City of Antioch. That was a whopping target for a Project Labor Agreement, as shown by the construction union funding of the campaign to support Measure J.

Predictable results were seen in the elections for Sacramento City Council, where candidates backed by business groups lost, as usual. The Sacramento City Council continues to be dominated by politicians lukewarm toward economic growth. I believe this results in part from voter distrust of candidates funded by housing tract developers, and NOT because voters love unions. In fact, I think union connections would be a liability for incumbents if campaigns chose to focus on them aggressively.

Kevin Dayton is the President and CEO of Labor Issues Solutions, and is the author of frequent postings about generally unreported California state and local policy issues at www.laborissuessolutions.com.