Interim mayor may be key to pension-reform battle 

Whether it is better to give than receive has been a question for the ages, though generally side-stepped in more modern times.

But it’s at the core of the biggest hurdle facing city taxpayers and public employees these days, with no better example than the one offered by San Francisco, finally coming to grips with this looming budget buster.

In November, labor unions barely beat back a ballot measure authored by Public Defender Jeff Adachi to rein in rising pension costs, but the issue continues to vex City Hall, with the cost to taxpayers estimated to hover around $400 million in the next fiscal year.

For weeks now, Supervisor Sean Elsbernd and Controller Ben Rosenfield have been meeting with labor leaders in the offices of financier Warren Hellman to try and hammer out some type of agreement, though those involved in the talks say they are still in the preliminary stage, with no details to offer.

That Adachi hasn’t been invited to the table will surprise no one — labor groups are still steaming over his ballot initiative — but his absence doesn’t mean that he won’t be a force before long since he represents the big money interests that were behind Proposition B.

And that split may be significant if some compromise can’t be worked out because the biggest fear among city officials is that ultimately two competing measures will be placed on this November’s ballot — one considered more friendly to labor’s interests and one taking a bigger cut into the bloated retirement benefits that are costing San Francisco taxpayers hundreds of millions of dollars each year.

That scenario is exactly the one new Mayor Edwin Lee is hoping to avoid. On Thursday, at his first meeting with the group, Lee made clear that pension reform is his top priority this year and he plans to tackle it with full force. If labor thinks that he’ll back down based on some future political interests, then they don’t understand the person who now occupies Room 200.

“I’m not looking for some short-term answer,” Lee told me. “I need solutions that will last. I don’t want to see competing proposals on the ballot. It’s in everybody’s best interests to work together and if they need to use me as a cover that’s fine, but I’m not going to do this at a political level.”

Lee has several things going for him. He said he has no desire to seek re-election in November, giving him a rare chance to use the weight of the office to steer an agreement. And the anger among the public over the exorbitant cost to pay union pensions is growing at a faster rate than the actual spike in benefits.

Their fury is justifiable. Union leaders so far have balked at contributing more to their own pension benefits, putting the taxpayers at increasing risk. The so-called “defined contribution” benefits are at the core of the ongoing fight over reform, yet to date most of the labor leaders have refused to alter their position.

That’s a big gamble — one they will almost certainly lose. The reason is simple: Current union members won’t be impacted by any change in pension benefits, those are guaranteed. Labor leaders are really fighting for future members, an idea that may make sense to their rank and file but a concept that is completely lost on average citizens who are emptying their wallets to cover those lavish retirement plans.

Although Adachi is on the outs, don’t expect that to remain so for long. He is backed by some venture capitalists that have money to spare, a fact not lost on Lee, who said he was going to make sure Adachi was ultimately included in the talks — labor’s ruffled feathers notwithstanding.

“[The two sides] may still do their own things [with competing ballot measures],” Lee said. “But I’m not going to let that deter me. I refuse to accept the premise that we can’t find a solution.”

We’ll know in the next few months whether the public employee unions and others have decided to join the rest of us in the real world.

Right now, they feel protected in their wobbly, self-serving bubble. But it’s about to burst.

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Ken Garcia

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