Speaker Series
Pete Constant & Mike Wasserman
July 2011
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Pete Constant discussed the deficits that face the City Council nearly every year. |
The Conservative Forum attendees on Tuesday night, July 12th, were treated to an incredible education on local matters, budget challenges and the problems faced by city councils and boards of supervisors. Two of the most dedicated public servants - San Jose City Councilman Pete Constant and County Board of Supervisors member Mike Wasserman - in the state of California appeared before The Conservative Forum, and spoke openly and candidly about fiscal matters, and addressed each and every one of them in a fiscally responsible manner.
San Jose City Councilman Pete Constant spoke first, and talked about the huge deficits that face the city council every year that somehow get balanced. He shared with the group that there are 178 square miles and 945,000 people in San Jose, and for the past 10 years, the city has been faced with budget deficits. One of the reasons is that the council has solved the problem one year at a time rather than make structural changes that would solve the problems for the foreseeable future.
Since the city does not have many options to raise taxes, thankfully, they must find ways to lower expenses. During the past decade, the city has gone from 8,000 employees to 5,000 employees. Despite that, costs continue to rise significantly based on substantially increased wages, and significant rises in retirement allocations. Between August 2000-2010, police officer salaries increased from $72,000 to $118,000; and pension benefits after 30 years of service increased from 80% of pay to 90% of pay. The net effect is a doubling of pensions in 10 years.
In 2001, the city contributed $78 million towards pension plans. By 2015, that number will be $400 million. Pete also informed us that the city has unfunded liabilities of $2 billion for pensions, $1.6 billion for health care, and $1.4 billion for roadways. Despite all of these challenges, Pete is optimistic primarily because we have a mayor "who gets it." There are now six city council people who are demonstrating fiscal responsibility. Six is the magic number since the council is composed of 11, and it takes six to have a majority.
Board of Supervisors member Mike Wasserman indicated that the county had similar, but different problems. The similarity is that there are constant budget challenges. The county employs 15,500 people, and that number, unlike San Jose, has remained constant. The county has a daily payroll of $6 million. Like San Jose, they have been confronted by a budget deficit for ten years in a row.
Board of Supervisors member Mike Wasserman indicated that the county had similar, but different problems. The similarity is that there are constant budget challenges. The county employs 15,500 people, and that number, unlike San Jose, has remained constant. The county has a daily payroll of $6 million. Like San Jose, they have been confronted by a budget deficit for ten years in a row.
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Mike Wasserman discussed the similarity of their constant budget challenges. |
Mike has introduced three approaches to deal with recurring budget deficits:
1. Comprehensive Attrition Plan (CAP)
2. Hiring Freeze
3. Pay cuts in down times
Instead of firing people, Mike shared the concept of re-allocating people when someone left or retired. At the same time, when cuts need to be made, he poses the following question to the employee or employee group who do not want to be cut, "What is your alternative? What would you suggest?"
Both political leaders have offered common sense, reasonableness, and fiscal conservatism.