Just How Bad is San Jose’s Budget Situation, Really?
On Wednesday of this week, one could read an account of the previous day’s San Jose City Council meeting in the Mercury News that started this way:
Every San Jose branch library shuttered. All city community center programs shut down. No more school crossing guards or park rangers. Even fewer cops.
That will likely be the reality for San Jose residents next summer if city officials don’t raise taxes or trim employee pensions and perks, city administrators told San Jose’s elected leaders Tuesday.
It doesn’t take much reading of the news these days to realize what a dearth of dollars persists in local, state, and federal government. But as sky-is-falling scenarios are frequently advanced on both sides of any political issue, you always wonder just how much currency to give particularly bleak narratives like the one purveyed here. Further down in the Merc article, for example, you get this:
(T)he early budget look was also a strategic move by Mayor Chuck Reed to shore up support for his controversial pension reform proposals — which he says are critical in preventing San Jose from sliding into “service-level insolvency.”
So I asked longtime San Jose political reporter Janice Rombeck, editor and publisher of KQED News Associate NeighborWebSJ, just how seriously she was taking the dire predictions of severe cuts for fiscal year 2012-13 that are even more dire than those already enacted.
Very seriously, it turns out…
Here’s an edited transcript of my interview with her:
What happened at the City Council meeting Tuesday?
The city budget director painted three pretty grim scenarios. The first was if no new revenue comes in and if the fiscal reforms that Mayor Chuck Reed has proposed don’t get enacted. This is what the city is facing under that scenario: all libraries closed, all community centers closed or leased out to private directors, more police officers cut, no improvement done to city streets, maintenance and parks outsourced or just not done.
City Manager Deb Figone said “this is no way to run a city of a million people.”
Is this just political posturing or do these numbers really add up?
There was a push to sound the alarm and let people know this is for real, this is not political posturing.
I think the numbers are real.This is much earlier than they usually start on budget projections. I think it’s because the outlook is grim, but also because they want support for these fiscal reforms, including the reduction of pension costs, the main expense that is driving these deficits. And they want to go to the ballot box probably not in June but maybe November 2012, to get a city charter change so that they can reduce pension benefits.
If they get these pension reforms, the draconian cuts need not take place?
There probably will still be cuts in the short term because some of these cost savings won’t be realized until later on, but it won’t be as dramatic as portrayed in scenario 1. But the city is still facing cuts beyond what we’ve had here before.
What is the status of Reed’s pension reform plan?
The city has run out of options.
Most of it still needs to be negotiated with the 11 unions that make up city employees. That will be the difficult part. The ballot measure will allow the city to impose reductions in benefits if it can’t be negotiated.
The city cut benefits and salaries of city employees by 10% last year, to help close the deficit in the current budget. But the Police Officers Association has filed a complaint. They want the cut to be for just one year; the city wants the cuts to be ongoing. That’s in arbitration right now, and it could be devastating to the budget if the arbitrator comes back and says the city can’t impose it again next year.
How does the public feel about pension reform?
The public is supportive of pension reform. But there was a lot of discussion at the council meeting about the public not understanding the reality of what the city is facing, and among some of the councilmembers there was a push to sound the alarm and let people know this is for real, this is not political posturing.
There has been pushback from some parts of the community who say the numbers are wrong, the actuarials are wrong, and the pension estimates and the costs are wrong. Independent auditors and insurance experts have said that’s not true, these costs are going to escalate.The city has run out of options. They don’t’ feel they can cut any more employees and continue to run the government and city services. They are going to try to increase the sales tax; they just passed a medicinal marijuana ordinance that will bring in additional revenue, maybe a couple of million dollars. They’re looking under every nook and cranny. But it’s just not popular to raise taxes in a recessionary economy in which people are hurting and out of work.
It used to be journalists were kind of skeptical about early projections…That’s not the case anymore.
Part of the other result of this is that residents are going to have to do a lot more that they have been relying on the city to do. Graffiti removal is one — the city relies on volunteers to do that. It’s not going to be business as usual in San Jose.
It used to be that journalists were kind of skeptical about early projections. There always seemed to be a little bit of crying wolf. Then when budget time came around they’d come up with the money. But I don’t see that; that’s not the case anymore. These are real numbers and real tough decisions that are going to have to be made.
We’ve already seen it in this current budget: the anti-gang task force, the Strong Neighborhoods initiative, anti-graffiti and anti-litter programs that are nationally known and have been held up as models for providing city services have been decimated or at least drastically cut. There are no sacred cows, there are no easy ways to balance this budge anymore.
You can watch an archive of Tuesday’s City Council meeting at the San Jose web site.
Update Sep 27 Janice Krombeck received this email from Mayor Reed’s office today:
(We) want to point out…that the Mayor, and many of his colleagues on the Council, are currently targeting a March 2012 special election for
fiscal reforms (not June or November). If we get voter approval in March, we’ll have just enough time to implement the pension changes in time to achieve savings in FY 12-13.
We’ve been trying to do our best to make sure the media (and through them, our employees and the public) are aware of the timeline we’re working on. Esp. since the whole reason for doing this is to try
and get the savings needed to avoid those devastating impacts next June.