San Jose makes ‘half-off’ pension offer in attempt to solve bitter police battle

SAN JOSE — Marking a dramatic shift by City Hall in the bitter fight over government pensions, San Jose leaders Thursday offered to cut in half the $50 million a year in retirement concessions they’re seeking from municipal workers.

Union leaders were quick to dismiss the offer, but did not rule out a return to the bargaining table. If settlement efforts fail, the matter could be tied up in court appeals for years, depriving the city of needed savings and workers of clarity over their compensation that has led many to seek jobs elsewhere.

The offer signaled a new posture from city leadership, where the new mayor and a City Council majority had campaigned to maintain the city’s fight for pension reforms. It comes amid growing worry at City Hall and in neighborhoods about San Jose’s dwindling police force, where officers have been bailing for more lucrative jobs in other cities in part because of the pension battle.

“I’m fundamentally a pragmatist,” Mayor Sam Liccardo said. “I’m looking for ways to solve the fiscal issue, but we cannot ignore the human one.”

Pension reform remains the No. 1 controversy in City Hall, as city leaders — pointing to retirement costs that have shot up from 10 percent of the city budget to 30 percent in the past decade — say they need tens of millions of taxpayer savings to avoid further service cuts, even as the changes have contributed to the police force dropping from 1,400 officers last decade to fewer than 1,000 cops now.

The new proposal amounts to the biggest concession from the city since the employee unions sued to block the pension reforms that voters approved 2½ years ago and comes amid rising calls from residents to settle the issue so they can start seeing more cops on the street.

Just Wednesday night, as the city was sending its offer to the unions, more than 500 residents in an upscale Almaden Valley neighborhood packed a city meeting to demand answers from Liccardo and police brass about a recent spike in burglaries. The crowd was asked how many of them have been burglarized, and dozens of hands went up, causing a collective gasp from the crowd. Yet so many officers have left the police department that the police can barely investigate most property crimes.

“There was a time when people would scratch and claw to wear this patch,” assistant police chief Eddie Garcia told the crowd, indicating his shoulder. “And we need to get back to that place.”

The concession offer from city management marks the first attempt at negotiations since the January inauguration of the new council and Liccardo. The police union also just elected a new president, Sgt. Paul Kelly, and both sides are eager to settle the issue soon. They just can’t agree on how.

So far, the 2012 voter-approved pension initiative, called Measure B, has shrunk pensions for new hires and eliminated bonus checks and trimmed health plans for retirees. That’s led to $25 million in annual savings.

But union lawsuits have blocked an additional $49 million in annual savings from making most workers pay more for their pensions. Those cases are now in the appeals court and could take several more years to resolve. The council’s proposal calls for the two sides to negotiate $25 million in annual retirement cost savings — roughly half the disputed total, and enough to give the city a comfortable budget cushion.

“We’re willing to split the baby,” Liccardo said.

The offer also amounts to an admission from the new mayor that he can’t be as tough on pensions as he argued for during his campaign without risking the police staffing crisis — which has already become the biggest issue of his young administration — spiraling further out of control.

But the unions gave no indication they would be softening their stance. In a letter earlier this week after being made aware of the proposal, the presidents of the two public safety unions called the $25 million savings figure “arbitrary” and “a major step backwards.”

City leaders did not specify what form the savings would take, though presumably it still would require longtime employees to pay more toward their retirement in some fashion, an idea the unions have strongly rejected and one that a lower-court judge already struck down.

The $25 million number reflects what city leaders say is needed — after adding in a proposed sales tax measure in 2016 and other proposals — to restore services to 2011 levels. But union leaders say that includes additional road maintenance beyond 2011 levels, which they feel they shouldn’t have to pay for.

The unions representing police officers, firefighters and city engineers released a joint statement Thursday saying city leaders “ought to have their heads examined” if they think they can restore services while significantly cutting worker paychecks. There are also concerns that the city’s plan could require approval by voters, likely not until 2016.

“If the city is serious about fixing the mess they created,” the union statement said, “they must acknowledge that a global settlement on Measure B, retiree health care and our contracts must be done in 2015 without waiting to go back to the ballot, otherwise we are just spinning our wheels.”

Staff writer Mark Emmons contributed to this report. Contact Mike Rosenberg at 408-920-5705. Follow him at Twitter.com/RosenbergMerc.

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