SJ Mayor Reed faces ethics complaint over pension reform

Tonight, San Jose Mayor Chuck Reed is expected to give his annual State of the City address at the Civic Auditorium. He will deliver the speech in the shadow of an investigative report by NBC Bay Area, alleging that Reed and staff misled public employee union negotiators over the direness over the so-called future pension “crisis”. Apparently staff used fuzzy projections of $650 million by the 2015-16 budget year, which could be $250-300 million more than the actual cost of the program. It was those projections that Reed was using to push a pension reform ballot initiative this summer, one that the City Council approved to go on the ballot.

In light of the news report, an ethics complaint has been lodged against Reed, which could result in a full-blown investigation of whether or not Reed and the City fudged the numbers. The police officers union, which has been at odds with Reed, may be sharpening the knives for the mayor, who has been playing hardball with the unions over the last couple of years. Whatever happens, you can at least expect the death of the ballot initiative, which even if passed may not be constitutional. Although it is generally acknowledged by union reps that some kind of pension reform was needed, Reed’s draconian measures probably weren’t. Now it looks like those tactics may come back to bite him.

As far as the ballpark goes, it’s not related to this issue except for the possibility that referenda for both could be on a future ballot. Will Reed finally back down? It’s all up to him.

26 thoughts on “SJ Mayor Reed faces ethics complaint over pension reform

  1. always a fan of anyone willing to stand up to public sector unions and their ridiculous pensions..perhaps the new ballpark woulsnt cost so much if unions didnt have a stranglehold on government money and insist the stadium was either built with union labor or at worst bacon-davis labor….

    would be a lot cheaper

  2. From the looks of it, the unions created their own “ethics” complaint category because the official form doesn’t even apply. There’s not even a box to check off for that so they drew one in.

  3. Public sector pensions are not out of control, there are however some savings that they are going to have to figure out. By the way, Davis-Bacon, not Bacon-Davis, requires that all Federally-funded or assisted construction projects done in an area, guarantee that a worker is paid the prevailing wage and benefits of any regular private-sector construction worker on a similar project in the area. Thats pretty sensible. You wouldn’t pay someone building something in San Jose what someone is being paid in Cleveland or Detroit, cost of living is much higher in SJ. P.S. that bill was authored by a Republican and signed into law by a Republican.

    Also, Davis-Bacon wouldn’t apply to Cisco Field because it is going to be Privately-financed without government bonds. That means that the A’s and the Marketplace will determine the best fit to build the stadium. Usually the best people for major construction projects are the guys from the building trades, meaning the Laborers, IBEW, Plumbers and Pipefitters and Carpenters, amongst many. Why? Because they have generally been apprenticed for years to do this work. Call me crazy, but I’d rather for a big ticket item, to go with pricier quality than cheap and shoddy.

    The unions are going to fight pension deals because thats their job, a lot of their guys have been laid off over past 4 years and the job of the union is to defend the terms of the contract at hand. The job of the Mayor and civic leaders is to bring public coffers out of the red and into the black. They will get something done. Unions around the state have done a lot of give backs during the recession. Sure, they could give a bit more, but they aren’t the root cause of the economic problems cities in CA are facing. The state is subject to harder times during shifts in the economy because it has a smaller property tax base compared to it’s size, (39 million people, 170,000 square miles) due to proposition 13. Its always going to be that way until, wealthier property owners who grandfather in their property from being taxed at market rate to pay their fair share. Schools, CalTrans and any number of agencies have taken big hits not because of pensions but because state revenue(artificially-low in normal times) is even lower in a bad time. So criticize away at unions and their pensions, but those numbers are paltry compared to the big elephant in the room.

    But I think you will be happier that your stadium will not be built with public dollars and will be built quality by union-labor. And hopefully we can enjoy it for decades to come. I’m excited to see it go up. (Crossing-fingers)

  4. San Jose has cut so many services because of these pension costs combined with declining tax revenues. Of course, these cuts certainly won’t make it easier to get a ballpark measure passed. “How can we spend $10 million on a ballpark when we’re laying off police officers?” will be the battle cry, even if we’re getting $500 million in private investment in our downtown. $10-$18 mill would make this the best ballpark deal of all time, probably even better than Frisco’s.

  5. Excellent point Nicosan!

  6. re: its always going to be that way until, wealthier property owners who grandfather in their property from being taxed at market rate to pay their fair share….Yes, we can have exact same houses right next door to each other where one pays $5,000 a year in property taxes and the other one pays $500…While I’m not a big fan of unions, it does make sense to get people who have apprenticed and been certified in their craft to build the ballpark…That being said, this whole budget thing couldn’t come at a worse time for the ballpark. The vote will probably pass anyway but we’re still going to hear arguments about spending any money at all on a stadium when we’re laying off police officers, even if it is a paltry amount compared to the $500 mill private investment we get in downtown San Jose…

  7. Sorry about the similar posts. I thought the first one didn’t make it because I didn’t fill my name in right.

  8. In that case, apology ACCEPTED! Thumbs up.

  9. I think what may happen is that IF Coliseum City can become a reality with both the Raiders and Warriors staying, then Raiders will play two seasons in SC and be co tenants with the Niners in SC until the new Coliseum City is built…or Raiders go to SC longer than that until they get a new stadium in Oakland OR LA!

    I’m actually amazed that the NFL gave the SC Niner stadium a $200 million loan for a 1.2 billion stadium (if not more when it is all said and done) with NO provisions that the Raiders need to be con tenants to receive that $200 million?? Weird…..

    Wow…I guess Coliseum City will not receive a $200 million loan even though that idea and concept is better than the Niners SC stadium site, because of better and more convenient public transportation facilities more than anything?

    I hope Quan can get her Chinese investors to put money into Coliseum City and invest to keep the Raiders and Warriors around.

    The A’s are as good as gone to SJ IMO.

  10. The Giants are a bunch of greedy bastards. They paid NOTHING for those territorial rights back in the early 90′s when they were exploring options for a new ballpark in the San Jose area, because they threatening to move to Tampa Bay if they didn’t get a new ballpark here in the Bay. The A’s owners at the time were nice enough (or stupid enough) to let them have that territory to try and stay in the Bay Area.

    My question is, since the Giants ended up staying in the Bay Area and eventually built AT&T at the China Basin, then why weren’t those “territorial rights” to Santa Clara County REVOKED like they should have been by Faye Vincent or Bud Selig??

    Did they fall a sleep at the wheel? I would love to someone in the sports media here in the Bay Area on TV or more than likely on Radio to ask Faye Vincentt and Bud Selig this question. I want to hear the answer!

  11. mayor reed better be talking about the A’s in his state of the city speech

  12. Thanks for taking point Nicosan. As a public employee with an “evil” public pension, I tire of being the scapegoat for mismanaged budgets and an overall poor economy. We public employees did not turn the mortage and banking industry on its head. We did not rob Peter to pay Paul in budget decisions. I pay into my retirement as does my employer. My retirement money is well and diversely invested and has enough funds to pay reitrees. Times are lean, revenue is no longer what it was and changes need to be made. However, union busting is not needed. There are many labor laws everyone enjoys thanks to unioins. We don’t need to turn labor laws back 100 years to balance budgets today. This is happening nationwaide. Do you take lunch breaks? http://www.concordmonitor.com/article/310149/lunch-breaks-on-the-chopping-block?SESS7f0dc3c9fd0d9d2104ef2d5bcd1aec79=bing

  13. /rant

    sorry, but as a private sector guy who has seen people deal with the bad economy and union government handouts (hello GM/Chrysler), it’s discouraging to see this “entitlement” complex prevalent by unions. i can understand that they contributed their pensions according to the “rules”, however to complain about mass layoffs and hardships that everyone else experiences while saying that they themselves cannot do the same is such bs just because they are “public” servants. being in a public role does not mean you get full immunity from budget crisis and/or a bad economy. take your lumps like everyone else whether it be the forms of mass layoffs or budget cuts. it’s really discouraging to see that my tax dollars are not contributing as much to the public well being, but rather to selfish folks who insist they are better than others and deserve to be so. if union members would speak up to show that they understand this more publicly instead of standing behind loudmouth, overpaid union leaders, maybe there won’t be a backlash in public opinion (see measure v and w).

    /rant off

  14. @PJK – Becuase the form didn’t have the correct box doesn’t mean that the ethics violations alleged were invalid. Read the entire complaint and take a look at the statutes in question. Hopefully, you’re not one to defend actions by politicians that run afoul of the law because you want a new baseball park.

    ________________________________

    The problem with this situation is that Mayor Reed’s credibility now being openly questioned and there is the possibility that a criminal investigation will be launched. Hopefully the June ballot doesn’t marry the issues of pension reform and the ballpark. If anything, once MLB finalizes the matter and approves the move, consideration is given to put off that measure until November to let the dust settle on the mess created by several of the SJ politicians if they decide to keep pension reform on the June ballot.

    Moderator: There are over 5000 SJ city employees and thousands more throughout the state that are being thrown down by several uninformed comments that are inflamatory by nature. The topic of and A’s baseball location might include friends or family of such employees and many of the comments are IMO off topic of the baseball stadium and violate your carefully guarded spirit of this forum which has been to keep conversation on track and prohibit insults to others that view the forum. Your paragraph at the top points to the police union but fails to recognize the federated union representing a far greater number of employees and that it was in fact their representative on the Channel 11 story that kicked off this controversy rather than anybody from public safety. Thanks for making this forum a great place to read and learn.

  15. Marine Layer says:
    February 10, 2012 at 1:46 PM Marine Layer(Quote)
    @DKnight007 – I probably won’t do anything new on it until the A’s announce and the vision is officially unveiled, with (hopefully) more details.

    ^^^^
    Understood. Thanks.

    I think the ballpark in SJ has the potential look even more unique than initial concept artist designs.
    I would like to see an area where the fences are low like perhaps 5 feet, and where fans are right there close to the action in section of the ooutfield. I also would like to see the bullpen area in CF be an open fence area where the bullpen guys can see the field and so i can fans from the plaza area in CF. Kinda like what they have in San Diegos ballpark in CF.

  16. @PJK – Becuase the form didn’t have the correct box doesn’t mean that the ethics violations alleged were invalid. Read the entire complaint and take a look at the statutes in question. Hopefully, you’re not one to defend actions by politicians that run afoul of the law because you want a new baseball park.

    ________________________________

    The problem with this situation is that Mayor Reed’s credibility now being openly questioned and there is the possibility that a criminal investigation will be launched. Hopefully the June ballot doesn’t marry the issues of pension reform and the ballpark. If anything, once MLB finalizes the matter and approves the move, consideration is given to put off that measure until November to let the dust settle on the mess created by several of the SJ politicians if they decide to keep pension reform on the June ballot.

    Moderator: There are over 5000 SJ city employees and thousands more throughout the state that are being thrown down by several uninformed comments that are inflamatory by nature. The topic of and A’s baseball location might include friends or family of such employees and many of the comments are IMO off topic of the baseball stadium and violate your carefully guarded spirit of this forum which has been to keep conversation on track and prohibit insults to others that view the forum. Your paragraph at the top points to the police union but fails to recognize the federated union representing a far greater number of employees and that it was in fact their representative on the Channel 11 story that kicked off this controversy rather than anybody from public safety. Thanks for making this forum a great place to read and learn

    • @George the A’s fan – The first paragraph I specifically wrote “public employee union”. The reference to the police union was merely an observation I made on how they seem to have the most combative relationship with the mayor. While this issue is only tangentially related to the ballpark, I’ll allow a full, vigorous debate as long as it doesn’t get out of hand. So far, IMO, it hasn’t.

  17. Pensions were deemed unsustainable by the private sector 20 years ago- I can remember the transition to a 401k account- and definitely have felt the pain of the economy over the past 4 years- I also have my vacation capped- and I fully understand the need for companies to do this- for the public unions to old onto what the private sector gave away years ago because it isn’t sustainable is pretty crazy-unions need to either step up and negotiate a fair agreement or cities will be forced to outsource to private companies and reduce city staff- mayor Reed gets an A in my book for being one of the few politicians willing to take on a issue which only will escalate further as the average age of a human continues to grow

  18. I agree GoA’s. I also give Reed an A. The act of taking on PUBLIC unions is a sure fire way to make his own job a more contentious one — yet he did it. I further agree that the public union pension model is unsustainable. Cities, counties, states — as more years pass and the cost of retired employees continues to take up a greater share of revenue — will be forced to face the issue. It, literally, will force the choice of greater and greater service cuts or significantly decreasing the cost of retirees. There simply is no way around eventually facing that moment. Some entities have faced up to it while many others continue to kick the can down road (even in the face of clear evidence that the cost of retirees cannot reasonably be met). But it isn’t easy. Public unions are a serious force in politics. Trying to change something they are against is, as Reed found out, tantamount to a perpetual knife fight.

    How this translates to the eventual — yes, I think a Stadium vote in SJ is fait accompli — SJ stadium vote is a good question. It will really test the union’s pragmatism versus its hatred of Reed. The ballpark is a sure winner for some of the public unions — which is to say the union population will grow if the Stadium is built. Besides getting its membership the best deal possible, the next job of the union leadership is to expand its numbers. And I suspect if the unions get behind the stadium, it is a likely winner (barring a scandal/negative press event). However, a stadium win means Reed is labeled a winner. I think there are few things that would make the unions more upset than to see Reed go out on a winning note.

  19. Just a point to the private sector folks, union folks understand the need to be fiscally responsible. Unionized labor in the US accounts for about 12% of the total labor force. Thats down from a high of around 30% in 1960. Public sector unions have shrunk in the past three decades. Meanwhile looking at CPI, wages have stagnated in that period. So I think if you believe that public pensions are the root of the problem, I think its a false premise. Sure, they cost municipalities, states, etc. but in the end, they are much less a part of government expense then they were, and they are shrinking.

  20. @nicosan- so I think we can agree that cities are under siege finically- so what is the root of the problem their revenues have declined and labor/pension costs are their most significant expense?

  21. @ Nicosan – join the rest of the world. Unless you’re highly skilled, most wages will have very little variability especially as we went through the dot.com bust and housing collapse. It’s a matter of supply and demand…too many folks qualified for a particular job, will undoubtedly cause less compensation for that job. if the unions understand fiscal responsibility, why would they be opposed to take on their own risks with retirement instead of having taxpayers subsidize it?

  22. I take issue with “unions” being considered under one umbrella. I am a supporter of unions which is to say private sector unions. Private sector unions and the management of their respective companies/industries have a model that can work. A private sector union asks for A. Management looks at the business model and says we can give B. Final compensation is hashed out under the guidance of continued profitability (a.k.a continued employment). These contracts signed help to set some standards for non union workers too. Of course when profitability becomes compromised, management then renegotiates at that new threshold to attempt to maintain profitability (or union ranks thin out very fast). The private union has an ultimate interest in keeping the company profitable. This is NOT the model of a public union. As revenues decrease for a government, public unions roles do not lessen (in rare cases they may decrease to a small almost inconsequential degree). They continue to get raises and benefit increases. Why? Because the model I spoke of above does not apply to public unions. Check it out, check out the wages of the public unions in San Jose as year after year after year after year city revenue decreased and deficits were run. This is the very definition of unsustainable. And this year after year of wage increases and benefit increase for public unions is causing a breaking point. It is axiomatic that public unions cannot take this large (and larger) share of the revenue pie (especially that much of the pie taken by former workers who are now retired) as revenues continue to decrease — or at least you would think it is axiomatic. It isn’t to public sector unions because the private sector union model does not apply to public sector unions, Revenue is almost completely disconnected from the public union contracts. If it were the public unions would have taken an across the board pay cut some years ago (at the very minimum COLA freezes). But the public union model is based almost entirely on political campaign financing. The model is: We get you elected with singularly massive support – you rubber stamp our contract demands. That is a model that was destined to eventually lead to financial catastrophe. The check and balance is almost non existent with public unions and the general public would do well to strip public union power.
    Unions are, imho, getting a worse rap than deserved and becoming even more unpopular with the general public — based largely on the actions of the public unions. Too bad…..

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