San Jose, Calif., mayor to file statewide pension reform measure

Reuters

STANFORD, Calif., Oct 9 (Reuters) - The mayor of San Jose,California's third biggest city, said on Wednesday he would filea statewide ballot measure within days with election officialsthat would give local governments authority to trim pensionbenefits for current employees to help reduce spending onretirement benefits.

Mayor Chuck Reed told a conference at the Hoover Institutionat Stanford University that the measure would not advocatespecific pension reforms but would instead propose giving localofficials the power to rein in pension spending by allowing themto lower future retirement benefits.

The measure would propose a constitutional amendment for astatewide vote ideally next year, Reed told Reuters after hispresentation to the conference.

"I'd like to do November of '14," he said.

Reed, a Democrat, last year successfully spearheaded ameasure in San Jose, the 10th largest U.S. city, that wouldallow city workers to keep pension benefits they had earned butrequire them to pay more toward their pensions to keep up thesame level of benefits. If they don't pay more, future benefitsare reduced.

Local governments in California may devise less generouspension benefits for future employees but state law makes itdifficult to reduce benefit levels for current public employees.

Reducing pension benefits for future employees will savelocal governments money over the long run but they can onlycurtail pension spending immediately by trimming retirementbenefits for current employees, Reed said.

Pension spending has become a rising concern at the stateand local levels across the United States in recent years andhas been a top issue in the high-profile municipal bankruptcycases of Detroit and the California cities of Stockton and SanBernardino.

In San Jose, city employees are challenging the city'smeasure in court, underscoring the challenge local officials inCalifornia face in cutting pension costs for their existing workforces. The costs have been on the upswing over the past decadeand, according to Reed, forcing cuts to services.

Reed said he expects a number of mayors to back his measurebut declined to say which ones.

California Governor Jerry Brown, also a Democrat, signedlegislation last year that raises minimum retirement ages andreduces pension benefits for new public workers, moves he saidwill save billions of dollars. Critics said state officialscould have been more aggressive with pension reforms.

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