Monday, May 23, 2011

Is San Jose the Next Madison, WI?

We were very intrigued by the news last month that the collective bargaining rights of public employee unions were in danger in, of all places, Massachusetts. For partisan talking heads, this news made it more challenging to argue, as they did in Wisconsin and Ohio, that the push to curtail these rights was a way for Republican governors to weaken a key ally and sponsor of their political opponents. Well, this week is likely to bring another stiff challenge to public-employee rights in, of all places, the Democratic stronghold of San Jose.

As the Bay Citizen reports, tomorrow is likely to bring a declaration of a fiscal state of emergency from San Jose Mayor Chuck Reed. As we've noted before, California's third-largest city is currently facing a budget deficit of $110 million and pension obligations that could utterly swallow its finances in the not-so-long term (currently, half the city's budget goes toward pension obligations). And Reed is not messing around in dealing with unions reluctant to accept his proposals for steep cuts in benefits and higher retirement ages. He wants to use the state of emergency to amend contracts and benefits for city workers and retirees directly, and to do this, he's asserting that these workers have no "vested rights" to the terms of their pensions going forward. While the unions are certain to fight this claim in court, and have prior precedent on their side, Reed is confident that San Jose's finances will ultimately be seen to justify his actions. If the city's pension costs climb to $650 million five years from now (as they would under Reed's worst-case scenario), the city would be unable to offer most of its current services, and would only be able to pay for a workforce of 1,600 (down from its 4,200 current employees). He described the possible San Jose of 2016 as follows:
A volunteer fire department, a mostly volunteer police department, and not much else. All libraries except Martin Luther King would be closed. All community centers, most likely closed. You cannot manage the 10th-largest city in the country with 1,600 employees and a volunteer fire department. It is impossible. It cannot happen.
Given the number of cities and states facing similar problems, any union challenge to Reed's plan would be closely watched around the country. But in California, we've reached the point where even "progressive" strongholds like San Jose have run out of alternatives.

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