San Jose’s drive to austerity

June 21, 2011

Michael Chase explains how far the bipartisan austerity agenda has reached.

SAN JOSE, Calif., Mayor Chuck Reed and three members of the City Council are proposing a vote on June 21 to declare a "Fiscal and Public Safety Emergency" and a November ballot measure which grants pension and other compensation increases only by voter approval. The city is following a consensus from Congress to City Hall that public-sector workers should be sacrificed on the altar of "fiscal responsibility."

Such measures are reminiscent of Wisconsin Gov. Scott Walker and the Republican-backed bill to force public-sector employees to make increased contributions to pension and health care benefits and strip unions of collective bargaining. If passed, the San Jose public-sector workers could not negotiate wages and benefits or cost-of-living increases.

Much has been made of Walker and the governors of Ohio, Michigan and Indiana and other Republicans' full-on assault targeting unions; but it is a bipartisan effort at all levels of government which makes this a serious threat to labor. The mayor of San Jose is a Democrat and the City Council is overwhelmingly so. This belies any suggestion that all that is needed is a Democratic majority to produce the desired effect for unions.

In order to accomplish this act of "fiscal responsibility" an amendment to the city charter must be approved to allow what is now illegal to become legal. Such a measure is of dubious legality and is likely to be challenged in court, as the Wisconsin laws have been.

The introduction of the memo proposing "fiscal reforms," dated May 13, states, "We are open to other solutions and our proposal directs staff to engage with employee groups--many of whom have said they are eager to work in partnership to solve this crisis--and to discuss alternatives that also solve the problem."

But local activists say the city administration won't discuss these questions with representatives of unions.

The proposed amendment to the city charter would prevent "the mayor, the city council, city manager, the other officers of the city, the Board of Arbitrators, and other arbitrators...from making or approving any contract, memorandum, agreement, award, grant...except upon the prior approval by the voters."

Given the hostility toward labor from elected officials, the press and the public, the prospects of voter-approved wage and benefit increases are slim, and this is obviously the point. Editorial pages in the Bay Area are hardly friendly to labor--that is, when they deem it necessary to mention unions at all.

Both the local papers and politicians are creating a perception that wage and benefit increases are synonymous with service cuts and increased fees, which, of course, would mean a rejection of any future ballot measure which contains these items.

A TWO-tier retirement plan would be established by the mayor's plan. A local activist described the proposal, stating the "system would be for new hires and current employees to opt into. The new tier is Social Security and a 2.6 [percent] 401(k). The employees currently in the system will earn lower pension benefits than currently and will have to pay 50 percent of the pension fund unfunded liability."

For those who can't afford it, they will be "economically forced into the second tier," the activist said. "Since every time an employee leaves the trust, the number of employees who have to share the debt decreases and each person pays more, this would essentially force most, if not all, employees into the second tier."

The prospects for retirees will be quite bleak living in one of the most expensive metropolitan areas in the country under these terms.

Last year, San Jose reduced the public workforce by 800 positions. For the current year, the city projects a reduction of 600 positions. This is despite significant concessions made by public-sector unions.

While workers in both the public and private sector are being forced to sacrifice, rare is the serious discussion of a corporate tax increase and substantial tx increases on upper-income individuals.

An alternative would be to enforce SB1137, the state mortgage relief bill with a provision for local governments to impose fines of $1,000 a day on financial institutions that don't maintain vacant properties. Enforcement of this state law could generate $5 million for the current fiscal year alone.

San Jose, "the capital of Silicon Valley," is home to some of the most recognizable names in the high-tech industry. Considering the concentration of high-tech firms, the city should have more than an adequate tax base. Most tax proposals, however, have been regressive--such as the across-the-board hikes such proposed by California Gov. Jerry Brown, or sales tax increases that affect the working class and the poor disproportionately. Corporate tax increases and increases on wealthy individuals should be the demand to counter extortion from the city officials.

Council member Ash Karla authored an e-mail petition suggesting cooperation with city workers as an alternative to forcing labor to bear the budget burden.

San Jose is not alone. Other cities are demanding concessions from labor, all while cutting services and the cost of living only goes in one direction: up!

Sign the petition to save collective bargaining for San Jose's public workers.

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