Thursday, June 30, 2011

GOP Ballot Measure Relies on Illegal Maneuvers, Resulting in Higher Costs, Phantom Savings and No Safety Net for Workers

Press Release from San Diego and Imperial Counties Labor Council, AFL-CIO

Mayor’s Proposition Depends on Breaking State Law In Order To Achieve Lion’s Share of Projected Savings

SAN DIEGO – (Thursday, June 30, 2011) – The Republican ballot measure to leave city workers without Social Security or any other retirement safety net includes a maneuver that Mayor Sanders claimed was illegal just a few months ago in order to achieve be

According to the ballot measure’s supporters, the section of the proposition requiring the city to freeze pensionable pay for 5 years accounts for up to 87 % (or $1.1 billion) of the savings heralded by supporters. It is against California state law to impose a pay freeze for that long without bargaining in good faith with employees first.

“They’re counting chicks that will never hatch under state law,” said Lorena Gonzalez, the San Diego Labor Council’s Secretary-Treasurer. “This proposition leave workers without Social Security or any retirement safety net and assures the City will find itself back in expensive courtroom battles like in the Mike Aguirre days. Those are steep prices to pay for what appears to be minimal savings compared to the status quo.”

Other reasons why this ballot measure is BAD for San Diego:

BAD FOR THE LONG TERM: Additionally, it appears to be a better deal for the city to keep the employees in the pension system. In year 27 of the lower scenario, the costs of the 401-K begin to outpace the savings from reduced payments to the pension system. This begs the question of why the Republican campaign cut off the chart at year 27 instead of going further, because it is clear that this measure has the potential to end up costing more in the long run.

BAD FOR THE SHORT TERM: The supporters are admitting that the short-term costs outweigh the savings even if the measure is found to be legal. The San Diego City Employees Retirement System said that moving to a 401-K will cost the City $94 million over the first six years because money for new employees will not regularly be directed to the retirement system. That’s the last thing San Diego needs as police, fire and other city services have been cut during this recession.

BAD MATH: The ballot measure uses an apples-to-oranges comparison in assumptions, assuming that salaries are going to grow 4 percent annually in the current pension plan and only 2 percent annually in the proposed 401-K plan. This is a dishonest comparison.

TAKING CREDIT FOR WHAT’S ALREADY HAPPENED: The Republican campaign is taking credit for the pick-up savings, even though that has already been eliminated through collective bargaining between the City and its employees.


1 comment:

the OB Rag said...

You missed some text in one of your first paragraphs of the press release.