Struggling, San Jose tests a way to cut benefits
The seaside city of Pacific Grove is considering whether to form a combined fire service with other municipalities nearby.
San Diego, which has been in pension-related turmoil for a decade, has fallen hundreds of millions of dollars behind on its program of fixing roads, sidewalks and storm sewers. Last year, voters there approved their own ballot measure requiring all new city employees, except police officers, to be given 401(k)-style retirement plans instead of defined benefit pensions.
As in San Jose, public employees' unions sued. In March, a state administrative labor-law judge found that the city had failed to bargain as required with its workers. The city went ahead with the ballot-measure change, but the administrative finding portends further litigation.
Mr. Crane blames the political leadership in Sacramento, San Jose and all similarly struggling cities for failing to deal with the pension problem while it was still manageable. Mr. Reed agreed. "I have to accept my share of the responsibility," he said. "There's plenty of blame to go around."
Now, he said, city workers must understand that the 10 percent pay cut they accepted a few years ago, in a previous attempt to right the city's imbalance, was not sufficient to solve the problem and that deep, painful pension and retiree health care changes were needed.
(Read more: States control your health-care fate)
Already, the city payroll has dropped by thousands of workers in recent years — a decline that in the case of the police has been exacerbated by the departure of veteran officers.
"It was pension layoffs," said Sharon W. Erickson, the city auditor. "We had to lay off employees because pensions were going up. The park department alone was cut 47 percent."
Joe Nieto, president of the Plata Arroyo Neighborhood Association in the heart of the city's East Side, said he has definitely noticed the service cutbacks. Vandalism in the neighborhood's park has gotten so bad that he said he has stopped trying to keep ahead of the graffiti that festoons its sprawling skateboard ramps.
"What's the point in cleaning it up?" he said. "It'll look just the same in two weeks' time. The bottom line is that we don't feel as safe as we used to feel here."
No one wants to cut workers' wages and benefits, Ms. Erickson said, least of all Democrats. Providing city services was the reason most Democrats went into government, she said.
"But for every one of us, there was a tipping point," she said. "For me, it was when they announced that swimming pools wouldn't open in the summer. Then you drive around the city, and roads are in abysmal shape."
Police response times for Priority 1 calls, meaning a violent crime that is still under way, have stayed steady, at about seven minutes, Ms. Erickson said. But response times for Priority 2 calls, involving violent but not active crimes, have crept up, and lower priority calls are taking hours and sometimes more than a day to generate a response.
"We have a huge opportunity here to get it right," Ms. Erickson said. "And if we can't get it right here in San Jose, where can we get it right?"
—By Rick Lyman and Mary Williams Walsh of The New York Times