Carmel Valley will be helped by pension and retiree healthcare reform, councilman says at workshop
By Karen Billing
District 5 San Diego City Council member Carl DeMaio said San Diego really has two options in dealing with the more than $72 million deficit expected in fiscal year 2012: “Gut and cut” city services or reform.
DeMaio leans strongly toward the latter with his 90-page “Roadmap to Recovery” that assumes that no tax increase will be big enough and no service cut deep enough unless the city reforms the pension program and retiree health care system.
DeMaio has been sharing his plan across the city since November and made his most recent stop at the Carmel Valley Recreation Center on March 2, an event attended by about 40 people.
DeMaio said the plan, created by his diligent staff and with extensive help from city attorney Jan Goldsmith, proposes solutions that can balance the budget without making any more cuts to city services—over five years he thinks the city can save $737 million in retiree health and pension costs and $304 million in savings from reorganization and new delivery models of city services, such as opening up 11 different services to competitive bidding.
The roadmap was able to balance the budget with a 4 to 6 percent reduction in salaries.
He said people have already paid the price as far as cuts, with reduced library hours, staffing at parks and recreation facilities, reduction in police and brownouts at city fire stations.
The answer is not in increased fees, he said, citing how water bills are up and yet people are using less water.
“We don’t have to watch this play out month after month, year after year,” DeMaio said. “Solutions can be put in place if we’re willing to make the tough decisions.”
DeMaio said the pension program is driving the city’s budget deficit. In defined benefits alone, the cost has jumped $82 million in 2010 to $232 million this year and it will continue to climb to about $500 million by 2024.
The pension accounts for 67 percent of the payroll for the city—in average businesses it accounts for 14 to 16 percent.
“A financial recovery plan has to put heavy emphasis on pension and health care reform,” DeMaio said, noting that the deficit can be seen throughout the city—that pothole in your neighborhood hasn’t been filled because the city is filling the pension pothole.
A big part of his plan is ensuring that the city’s costs and pay are in line with costs seen in the private sector.
He takes issue with things like specialty pays and bonuses. In one case, employees were receiving a bonus that amounts to $5.4 million a year, or more than half of what it would take to restore browned-out fire stations.
“You have to look at it and say why are we forced to make service cuts when there are so many practices not common anywhere else,” DeMaio said. “It’s no longer defensible.”
There are 16 legal reforms the city can make, DeMaio said. The reforms just need to be approved by the mayor and city council.
Reforms include requiring that city employees pay their fair share, setting up a 401K program that allows employees to opt out of higher pension tiers (giving them more take-home pay) and freeze the highest pensionable salary for five years, which could flat line the city’s payments instead of seeing them rise.
There are currently about 10,500 city employees and about 900 are unclassified and unrepresented, meaning the rest are in six labor unions.
“I have no problem with collective bargaining, I have a problem with elected officials doing bidding on behalf of labor unions…they need to bring the taxpayer voice to the table,” DeMaio said.
He hopes to bring pension reforms to a public vote by June 2012, but the rest of the issues will need to be approved by all five council members and the mayor.
He said if people support his plans, the council and the mayor need to feel the heat—all are up for election next year.
“By voting down Prop D you put them in a box,” he said. “Do not underestimate the power of phone calls and e-mails. Make it part of your daily routine, bombard them and let them know what you think.”
To check out the Roadmap to Recovery, visit cleanupcityhall.com
- Carmel Valley town hall meeting to be held by San Diego City Councilman Carl DeMaio
- Carmel Valley: San Diego Councilman Carl DeMaio to hold town hall meeting
- City considers replacing employee pensions with 401(k)-like plans
- County to reform in-home care program
- City of Solana Beach, employees come to terms on wages, pension cuts
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