Before current San Diego Mayor Jerry Sanders assumed office, the city faced a massive fiscal crisis. The previous mayor, Dick Murphy, had just resigned in the wake of a pension scandal. Consequently, the Securities and Exchange Commission launched an investigation, San Diego’s bond rating was suspended, and the city couldn’t borrow money on public markets.
When Sanders ran for mayor in 2005, he ran on a platform of stabilizing the city’s ailing finances. With the passage of Proposition B in June, he was able to deliver on that promise. The proposition converts new government employee pension plans into 401(k)-style plans and ends pension spiking for all government employees.
The initiative had earned its place on the ballot via a petition that received over 94,000 signatures from registered voters and citizens of San Diego overwhelmingly supported Proposition B with two-thirds of the vote. It is expected to save $950 million over the next 30 years for San Diego taxpayers and free up that money to support services.
The nearly $1 billion in taxpayer savings is a welcome relief for San Diegans. Currently, $231.2 million — or 20 percent — of the city’s total budget is devoted government employees’ retirement-related expenses. In 1999, the city only had $43 million in pension liabilities. Not only do these costs affect taxpayers, they also threaten government workers. The government was forced to compensate for the huge pension price tag with cuts in services and job security. San Diego recently cut its workforce by 14 percent.
Unfortunately, this positive result may not be the end of the story. On July 18, union lawyers interrogated Mayor Sanders about the legality of his petition and ballot initiative for over five hours at a hearing by the Public Employment Relations Board — which arbitrates labor disputes in the state.
The Municipal Employees Association filed a complaint claiming that Mayor Sanders was acting as an “agent of the city” by circumventing laws governing public negotiations and passing the law as a ballot initiative. The mayor, however, was simply exercising his First Amendment right to free speech by supporting an initiative which curbed public pension-related expenses and improved the city’s fiscal situation. In Sanders’ own words, “you certainly don’t give up your First Amendment rights” as mayor.
The lawyers, however, seem to have forgotten that he did not give up his rights as a private citizen when he assumed public office. He explained in an interview, “As a private citizen, I began working with a group of people in November of 2010 on a plan to set the city on a path to fiscal sustainability.” He, like any other citizen of San Diego, knew the City Council would oppose the fiscal reforms so he chose to act with his fellow citizens.
The citizen’s initiative allowed Sanders to reach out directly to the taxpayers affected by the inflated government pension bills. In general, taxpayers pay for public employee pensions, which generally exceed the benefits of private-sector employees. With the proposition, citizens finally had a say in where their money was spent before the unions could demand even more from their pockets.
Nevertheless, the hearing will continue and the Public Employment Relations Board could take years to reach a verdict. If labor wins, all or part of the proposition could be axed and taxpayers can expect to cough up the extra $1 billion to pay for unsubstantiated government union pensions.