A Progressive’s Progress: San Jose mayor Chuck Reed shows how Democrats can take the lead on public-pension reform.
Skyrocketing compensation costs for public employees are forcing California municipalities to contemplate spending cuts and, in some cases, even bankruptcy. The question isn’t whether to rein in these pension and medical liabilities—that’s unavoidable—but precisely when and how to do so. Dominated by public-sector unions, the state legislature remains in deep denial, but some local leaders, acknowledging reality, are taking action on their own to control costs. “We’ll do this city by city a few times and that will help to move the state,” San Jose mayor Chuck Reed told me in a recent interview at City Hall. Eventually, Reed says, California will need a statewide pension-reform initiative to overcome the legislature’s intransigence. Reed, a progressive Democrat who has dragged along a slim majority of a 10-member city council, is leading the most impressive effort statewide.
Reed numbers among a small but growing group of California Democrats making the “progressive case” for pension reform: if local governments spend so much money on retiree pensions, they won’t have enough left to provide the government services that liberals care so much about. Governor Arnold Schwarzenegger’s pension advisor, David Crane, also a Democrat, has told the legislature that one cannot be a progressive without embracing pension reform: ignoring it imperils government services. It’s no surprise, then, that Crane views Reed as the most “courageous” leader in California.
In California and other blue states, serious pension reform cannot happen without Democratic leadership. Reed said he started paying attention to the issue in the early 2000s, when San Diego’s fiscal meltdown made him wonder whether San Jose might suffer the same fate. Reed won a city council seat in 2000 and the mayor’s office in 2006. In the past decade, pension costs increased 350 percent. Today, retirement benefits consume 20 percent of the city’s general-fund budget, crowding out other essential government services. Meantime, the city has 2,000 fewer employees today than ten years ago. In the current fiscal year, all city employees took a 10 percent pay cut. Despite those cuts and layoffs, each San Jose household owes about $11,000 to cover the city’s pension debt alone.