As you probably already know, the City of San Jose is once again facing a significant budget deficit. The figure now stands at $110 million, which is only $8 million less than last year’s record deficit. What makes this year’s fiscal situation more complex is the fact that last year, the Council already asked for and received significant concessions from many of the City’s unions. In addition, the Council has already made cuts in personnel and services. In a nutshell, the City has not just trimmed the fat, but has in fact cut to the bone by reducing important services and personnel. This leaves us with extremely challenging decisions going forward. The difficulty lies in responsibly facing the current fiscal realities while still trying to provide the quality of services that San José residents deserve.
Contrary to popular belief, the cause of the current situation is not an overcompensated city workforce. Make no mistake—significant changes to the current pension system have been made, and will continue to be made. But I want to reiterate my strong belief that the city employees have been unfairly blamed during this process. When most of the contracts that currently exist between the City and the unions were agreed upon years ago, the economy was flourishing and few predicted the economic downturn that would soon follow. Because of the economic boom, San Jose and many other cities suddenly began to lose talented workers to the private sector. Because San Jose could not offer significantly higher salaries, San Jose and many other cities had to offer better benefits to compete with the private employers for talent pool that was quickly flocking to the private sector. In short, the City’s employees did not twist anyone’s arm to receive the compensation that is now the subject of so much heated debate. These contracts were mutually agreed upon by the City and its workers during a time of economic prosperity. The unfunded liability that the City is currently facing was not caused by City employees—if anyone is to blame, it’s Wall Street. At least half of the unfunded liability was directly caused by the recent market collapse.
As a result, we are now faced with excruciating decisions that will affect the very nature of the City we love and live in. Should we cut the number of streetlights that are on at night or do we cut the crossing guards that protect students walking to and from school? Do we reduce anti-gang programs or reduce the number of days that libraries are open? And can we implement effective pension reform while still providing a compensation package that is sufficiently competitive with other cities so that our city can attract and hire the most qualified candidates? Already there is discussion about reducing the size of our police force by over 350 officers, which would bring us back to staffing levels that we had during the 80s, when our city had about one-third less residents than it does today. There is also discussion about reducing our number of firefighters from 650 to about 570. As a point of comparison, Tulsa, a city almost equal to San Jose in square miles, but about one-third the size of San Jose in population, currently has 650 firefighters. Detroit, which has a slightly smaller population than San Jose and which is about 20% smaller geographically, has over one thousand firefighters. There can be little doubt that reducing the size of our police and fire departments will likely continue the downward trend of our ranking as one of the safest big cities in the nation.
There is no quick fix to our current dilemma. No matter what choices are made, San Jose will not be able to offer the same level of services that its residents have become accustomed to over the years. This is why I believe that it is critically important to refrain from the finger-pointing that underscored last year’s budget process. During last year’s budget process, several of the City’s labor unions voluntarily offered concessions totaling $14 million, which allowed us to save community centers and libraries that were on the chopping block. Additionally, the San Jose Police Officers’ Association, which at the time could have resorted to binding arbitration, voluntarily cut their own compensation and benefits packages in order to do their part to help the City out of the fiscal crisis. These voluntary concessions prevented the layoffs of dozens of police officers. And on Tuesday, March 1st, Local 230, the union that represents San José’s firefighters, voluntarily offered ongoing 10% reductions in their total compensation as well as a two-tiered retirement system. This is exactly the type of cooperative approach that is needed to resolve the budget shortfall, and is why I have always maintained that the best way to fix the system is to work together with our employees.
I understand that you may disagree with aspects of my position. That’s OK. As Thomas Jefferson said, “every difference of opinion is not a difference of principal.” Reasonable minds can and will disagree on the best course of action going forward. The ability to respectfully disagree and yet work towards a common goal is one of the underlying principles of our country. However, when the fiscal circumstances are as dire as they currently are, we can’t afford to have disagreements escalate to the level of bitter rhetoric that we have seen recently. The bottom line is that we all live here, and we all want to see San Jose rebound. My focus has been and always will be on the residents of San Jose, and during this difficult process, my aim is to responsibly balance the budget while finding every possible way to give San Jose residents the safe, beautiful city they deserve. But in order to save San Jose from its current fiscal predicament, we must work together. This is the framework with which I will do my very best to ensure that we find a way to balance the budget while still keeping San Jose the city that we love.
