The County’s “Balanced Budget” Under Cortese
Dave Cortese has repeatedly claimed that under his watch, the County has been a picture of fiscal balance, saying that he and the County Board “negotiated over $200 million in employee concessions” that have somehow resolved their pension problems.
Sadly for all of us, that’s far from the truth. In Cortese’s six-year tenure, the County’s unfunded retirement debt has ballooned from $2.0 billion to $3.3 billion in 2013. Even worse, the County still fails to pay its minimum “annual required contribution” each year for retirement costs – paying only about half its annual “credit card” bill for retiree health care this year, for example. As a result, the County’s unfunded debt continues to grow—every year that the County fails to make the minimum payment on that debt.
What about that $200 million in concessions?
They consisted almost entirely of one-time contractual concessions, not structural reforms that would provide ongoing savings to taxpayers. For example, on August 13, 2013, Cortese and the County Board gave retroactive pay increases of over 4.5% to the County managers’ union, and refunded contributions that those employees were required to pay to attempt to reduce their own plans’ unfunded debt. Of course, by giving the money back, the debt wasn’t reduced. Benefits formulas weren’t altered. No real pension or fiscal reform resulted. That’s why the County’s retirement debt continues to grow.
Of course the County budget is “balanced” today – as it is required to be “balanced” under state law. The City budget has also been balanced every single year. The bigger question is, “how was that budget balanced”? The County increased sales taxes in 2012 – and still failed to reduce their ballooning retirement debt. It’s not hard to balance budgets by simply increasing taxes, but are residents getting more in services? Of course, in the City of San José during Cortese’s tenure, the budget was balanced by reducing services, as annual retirement costs tripled.
Who picks up the tab for Cortese kicking the can down the road? We do – and our children.
In contrast, since Mayor Chuck Reed and Councilmember Sam Liccardo led pension reform efforts in 2012, the City of San Jose has balanced its budget for the last three years with small surpluses, after a decade of large, chronic deficits. Since then, the City has modestly restored services and expanded new safety programs, e.g., adding a third Police Academy to accelerate officer hiring, launching our first class of Community Service Officers, and expanding road repair and repaving. More service improvements are on their way under the Liccardo administration, relying on fiscal reform savings.