Let It Bleed

The city is awash in red ink, thanks to billion-dollar benefit giveaways and our politicians' lack of will.

Prop. B won't change that. It also won't solve the problem of pension-spiking. Prop. B won't solve the benefits-driven budget crisis, either. What it will do is shift 14 percent of the forthcoming massive benefits burden to workers, leaving the city with 86 percent of the anticipated load, starting in fiscal year 2013. That's $744 million still on the city's tab, per the Controller's office.

"It's not that city workers shouldn't have health care; of course they should have health care," Adachi says. "But, for God's sake, it's not something that shouldn't be subject to the realities of the economic recession we're facing."

That's still too much for the powers that be to countenance — and, even if approved, Prop. B faces an uphill battle to be implemented. Unions have promised to take it to court, and even if their lawsuit fails, it's all but certain to keep the city from putting the measure into effect for years to come — by which time San Francisco's benefit costs will require city actuaries to buy calculators with more digits on them.

Supervisors could always put another measure on the ballot to undermine Prop. B — and keep doing that every year until the voters roll over.

But perhaps the most insidious example of how the city is willing to sabotage pension reform is revealed by commentary from Newsom. Should voters approve Prop. B, the mayor told the editorial board of The Bay Citizen, the city would be forced to offer raises to its employees to make up for their increased benefits costs, deepening the city's pension chasm. Of course, his ploy would be a direct violation of the stated will of the people. To protect city workers from having to pay for retirement costs, whether you like it or not, is a statement of priorities. For city government, it seems, democracy is less important than preserving payouts.

When it comes to addressing the city's runaway benefits costs, elected officials are of two minds. Some don't know, and others go out of their way not to know.

At a recent committee meeting, Supervisor Sophie Maxwell asked the Controller's office if the dire financial picture pointed out in a 2010 Civil Grand Jury report was right. It seemed so bad — could it possibly be true?

"This is not news," Peg Stevenson told her. "You all have been aware of this. ... Those things are true, and you have all been working on them."

Maxwell acknowledged this. Then the supervisors went on to disagree with most of the findings they'd admitted they knew were true.

Much in the same way people in the city haven't prepared adequately for an earthquake everybody knows is coming, San Francisco is going out of its way to sandbag serious efforts to address a financial disaster.

Both labor-friendly supervisors and labor leaders insist there is a solution for this problem. That solution is for labor-friendly supervisors and labor leaders to meet and devise a solution.

"We need to involve all the stakeholders," Supervisor David Campos says. "It can't be one supervisor or one elected official, be it the public defender or anyone else, making a top-down move." Adds San Francisco Labor Council executive director Tim Paulson, "Public employee unions have been at the table every single time to deal with anything to save city services."

Unions and politicians sitting around a table, talking about contracts? Sounds great. Except, isn't that what got San Francisco in trouble in the first place?

John Avalos doesn't foresee a pleasant chat. "We're going to have to say no to labor," he says. "There's going to have to be cuts in the workforce, the largest part of our budget. We have no choice but to come up with these concessions."

That's not the conversation labor wants to have. Both Paulson and Bob Muscat, executive director of Engineers' Local 21, claimed actuarial projections of massive pension contributions are unrealistic "worst-case scenarios." This is factually untrue, but Muscat went one better. He claimed that the independently prepared actuarial predictions — undisputed by any city agency and long used to set contributions to the city's Employee Retirement System — are bunk. "Some people honestly don't believe any of those costs," he says. "I know people who've spent half their life in the retirement system who disagree."

So, in essence, a city that has bent over backwards for decades to accommodate labor, and is vigorously defending it against this year's Prop. B, is now using "bad" actuarial data to force union concessions. It's doing this by contributing hundreds of millions more to their pension plans than it would otherwise have to.

Well, okay then.

San Francisco does have some long-term approaches that could help. Very long-term. In 2009, voters passed Prop. D, which mandates that the city significantly fund its retirement account during years when investment returns are good enough that it could take one of those pension holidays. It's a great idea — and if it were in place 20 years ago, the city would now be on solid fiscal footing. Unfortunately, it will probably be decades before the balance sheet is healthy enough that Prop. D will be triggered.

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