The voter-approved measure in San Diego imposes a six-year freeze on the pay levels used to determine pension benefits for current employees, a move that is expected to save nearly $1 billion over 30 years. Public employee unions have sued to block the measure, saying City Hall failed to negotiate the ballot's wording as required by state law.
Legal experts expect the cities to argue that their obligations to provide basic services such as police protection and garbage removal override promises made to employees.
In San Diego, the city's payments to its retirement fund soared from $43 million in 1999 to $231.2 million this year, equal to 20 percent of the operating budget. At the same time, the 1.3 million residents saw roads deteriorate and libraries cut hours. For a while, fire stations had to share engines and trucks. The city has cut its workforce 14 percent since 2005.
San Jose's pension payments jumped from $73 million in 2001 to $245 million this year, or 27 percent of its operating budget. Four libraries and a police station that were built over the past decade have never even opened because the city cannot afford to operate them. The city of 960,000 cut its workforce 27 percent over the past 10 years.
"It's a problem that threatens our ability to remain a city and provide services to our people," said Mayor Chuck Reed. "It's huge dollar amounts and has a huge impact on services."
Unions representing police officers and firefighters in San Jose claimed in lawsuits filed last week in state court that the measure violates their vested rights.
"What they've done in San Jose is patently unlawful under existing court precedent," said Steve Kreisberg, national collective bargaining director for the American Federation of State, County and Municipal Employees. "We know of no other places where this has survived legal scrutiny…. There is no justification for essentially seizing the property of employees."