Pensions: This Ain't Over, San Francisco
|Our pension mess ain't over till it's over. Or the city goes well and truly broke.|
Whether you did or didn't, a number of you must be relieved that you'll never have to parse through competing pension measures again -- or, for that matter, even think about the city's pension issue. We passed Prop. C and solved our pension problem. Right?
Not exactly. Prop. C -- and the vanquished Prop. D -- will "solve" the city's pension issue in the same manner that planting a tree in your backyard "solves" global warming. Passing "pension reform" in this city ended up requiring an overarching consortium of labor, wealthy financiers, and disparate members of the "city family" -- as well as a slick PR machine. This issue will come before voters to be "solved" again -- and again and again -- but that level of collegiality may not be there. Next time it will be nastier.
First of all, it's worth revisiting just what Props. C and D purported to do. Triumphant Prop. C, by the controller's estimation, could shave 18 to 20 percent off of the city's pension payments for the next decade. Using the same economic model, Prop. D could have knocked off 23 to 26 percent of what the city is on the hook for.
The pension plan the city is patting itself on the back for passing still leaves 80 to 82 percent of our rampantly burgeoning pension payments hailing from the city and its taxpayers. Jeff Adachi's Prop. D, demonized once more by labor and its political allies, would have left the city burdened with 74 to 77 percent of the massive bill. Either way, we're still spending around $7 billion to save $1 billion.
This is why the city needed to pass a bond measure to maintain the roads.
What's more, both Props. C and D registered the vast majority of their hypothetical savings by asking our current workforce to chip in more. But if the market well and truly tanks, the city will be plunged deep into a hole that even augmented worker contributions will hardly touch. Finally, hundreds of millions in savings under the controller's model depend on times being good enough to trigger a supplemental Cost of Living Adjustment for retirees -- which both plans would do away with. But if the market tanks, no COLA is paid out in the first place -- and you don't get any savings.
The tricky thing about pensions is that legal precedent is pretty clear that any move made to the detriment of workers -- such as asking them to contribute more -- must be countered with a benefit. This makes saving money difficult.
Prop. C counters this with a ploy called "the fairness float." In short, when times are bad, workers will pay more toward their pensions. When times are good, they'll pay less. Never mind the city's own economic projections predict bad times for another 20 years or more. Adachi, meanwhile, claims that it would be legal to simply up workers' required pension contributions with the commensurate benefit being a fiscally stable pension system.
(I did my best to make all of this fun and understandable in a cover story earlier this year. Please feel free to check it out).
The point is, it's hard to imagine that someone won't sue the city over Prop. C -- retirees are especially pissed. Had Prop. D passed it might have triggered more lawsuits than the Ford Pinto. But, either way, some other city with big money problems -- not us, evidently -- is going to push the legal envelope further. And get sued. And if that city prevails in court, then, no doubt, San Francisco will attempt to rejigger its pension situation to the detriment of its workers. That, as noted above, will get nasty. And, because of the way city government is set up, you're going to get to vote on it.
Finally, Adachi's political future is now rather murky. No one has weathered more abuse to advance the cause of pension reform further in this state. Without Jeff Adachi, there would be no Prop. C. But Adachi's decision to jump into the mayor's race on the very last day must now be reexamined in light of how both he and his measure did at the polls.
Regardless of his worth as a candidate and potential mayor, Adachi did not make much of a dent in the mayor's race. And, after he personally jumped into the contest, Prop. D suffered for publicity and funding. One could argue that both of these moves blew up on Adachi. His future as the public defender seems assured as long as he wishes it to be. But if he desires political upward mobility -- or even to be the Man Who Cried Pensions -- in this city, that's harder to foresee.
Our calls to Adachi haven't yet been returned. He remains a busy man.
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