'Smart Reform' Pension Measure Would Blow $20M Hole in Budget. Or Would It?

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The Board of Supervisors had a fun decision to make today: Whether to suck on or spit out an ingenious little poison pill. Buried within the Memorandums of Understanding the mayor's office hammered out with public safety unions -- in which cops and firefighters agree to $11.2 million and $8.7 million in concessions, respectively, for this fiscal year -- is a clause noting that any state or local measure lowering cops' or firefighters' salaries would render those give-backs null and void.

So, yes, if Jeff Adachi's "Smart Reform" pension measure makes the ballot and then passes, it would suddenly blow a $20 million hole in the city's balanced budget. Unless that's not the case -- which is based on a few very pressing legal questions.

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Yes, take the poison apple ... only $20 million per bite!
Adachi's measure -- which just became that much harder to campaign for -- would mandate all "miscellaneous" city workers contribute 7.5 percent of their salaries toward pensions and up public safety workers' contribution from 9 percent to 10 percent. It also would mandate workers pay 50 percent of their dependents' health care costs instead of 25 percent. This, Adachi says, will save the city $167 million in year one alone.

(Incidentally, pulling the rug out from under the city with a clause expressly designed to undermine the democratically expressed will of the voters is a cynical way to do business -- but brilliant nevertheless. Mayoral spokesman Tony Winnicker called this "part of the collective bargaining process." And it is -- in San Francisco. Unions are now hitting Adachi's measure from both the left and the right -- and public safety workers will get their piece of the pie, no matter what. In case you'd forgotten, this is a union town.)

The supes, by the way, decided to suck on that pill. With only Chris Daly and David Campos objecting, the board moments ago approved all the union contracts before it. The specter of blowing up the city budget was just too much for the supes to stomach, they said repeatedly. 

Yet all of this talk of $20 million budget shortfalls could end up being a melodramatic display of political theater that doesn't cost the city any money at all. How's that? Well, despite the fact Adachi claims his measure would save the city $167 million from day one, it's not entirely certain that's the case.

The controller's office has queried the city attorney whether it is possible to open up current unions' agreements with the city and rewrite the rules upping their pension and health care contributions. If the city attorney opines that altering closed labor agreements is off-limits -- a distinct possibility -- that would mean two things:

  • Adachi's measure, if successful, won't start saving the city big money until union contracts are renegotiated a couple of years down the road, and;

  • Since the police and fire wage concessions are only a one-year deal, the passage of "Smart Reform" wouldn't trigger the clause nullifying the give-backs.

If the city attorney rules, however, that everyone but cops and firefighters will have to start kicking in toward their pensions the moment Adachi's measure becomes city law, the math has not yet been done on whether savings will balance out the $20 million hit the city would take from the evaporation of public safety give-backs.

Either way, the passage of "Smart Reform" would mean that its stipulations -- regarding pension contributions and health care costs -- would be set in stone for the next round of union negotiations with city employees. That's a big deal -- though not nearly as big as the $167 million in instant savings Adachi has been hawking. Also, it's not sexy -- and it is complicated.

Try encapsulating that message for a doorknob flier; it'll be a lot easier for unions to claim it kills the budget;  makes voters more likely to be shot by crooks or burned in a fire; or kicks the kids of a low-paid minority female city worker off health care. 

In any event, expect heavy doses of politics and reams of lawyers to be involved in this matter for the foreseeable future.

Coda: Incidentally, the controller's office told SF Weekly that the police and fire give-backs will actually cost the city more in fiscal 2011-12, as this year's concessions are just delays of already agreed-on wage increases. 

Alex Wolens contributed to this report.

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