Saturday, May 7, 2011

Retiree Health Reform in San Diego: Or, How to Spend Your Way to Solvency

Rest easy, San Diego, this will stay open.
This week was filled with news out of San Diego, related to the city's efforts to close its $56.7 million budget gap for the next fiscal year. Unfortunately, it's not clear the city got any closer to actually closing that gap.

On one hand, the city has recently been discussing Mayor Jerry Sanders' plan to save money by cutting hours at libraries, parks, and recreation centers around the city. Unfortunately, in response to public backlash over the proposal, the City Council signaled Thursday that they have no intention of supporting this plan. San Diego must have some incredibly nice public libraries and parks, because cutting 154 jobs in the two departments and halving the operating hours at local rec centers and branch libraries would have saved the city an estimated $14 million against the deficit. The rationale for avoiding the cuts: libraries are what Councilman Kevin Faulconer calls "the fabric of our city". "People love our libraries. People use our libraries," Faulconer said. "We’re not going to turn in the keys to the libraries". How can you argue with reasoning like that? Well, we'll try: there's no reason parks and libraries can't be privatized, except if they only exist to keep public workers employed.

We're not sure if Sanders commented on the Council's decision, because on Friday he was busy digging the city even deeper into a hole. Yesterday, city leaders signed a 15-year agreement with the firefighter and city-employee unions to reform retiree health benefits for public workers. Three other unions are expected to follow suit in the coming weeks, though the police are not on board and union membership still needs to ratify the agreement. On the surface, it sounds like a good deal, and Sanders trumpeted it as such: employees will begin contributing to their health benefits, and the city's contribution rate will decrease over time. But here's the catch: the deal calls for San Diego's contribution rate to decrease, not its absolute level of contributions. So the city will put $11 million more towards retiree health care than it did last year, and its contributions will continue going up until 2032. And San Diego has a budget deficit, you know, now. To his credit, Councilman Carl DeMaio blasted the deal, saying the city left savings in the neighborhood of $340 to $540 million on the table. DeMaio, who prefers scrapping the city's contribution altogether, said, "A terrible deal is now just a bad deal".

We realize we give cities like San Francisco a lot of crap for not taking their fiscal crises seriously, and maybe we've been looking past San Diego a bit. For a city supposedly dominated by "small-government" conservatives, its politicians sure do behave like their tree-hugging, dope-smoking, high-taxing neighbors to the north.


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