To modify a line from Democrat political strategist James Carville, “It’s the pension, stupid.”

We can talk all we want about a “transparent budget” and implementing the Kroll report recommendations and I’m all for those things. But the real reform action – the tough work – will be in digging out of the multi-billion debt in our city’s pension system.

Although I am very supportive of Mayor Jerry Sanders’ efforts to reform City Hall thus far, I am anxiously awaiting a comprehensive plan by the mayor for addressing the pension deficit. Before releasing his plan, the mayor plans to commission a cost study of pension alternatives. The study (which hasn’t yet even begun) is a prudent pre-cursor to the release of a comprehensive plan. The mayor’s study should allow us to know what specific fiscal impact various pension reforms will have on the liability.

While the mayor’s team compiles and studies various pension reform alternatives, our community should be engaging in a real and serious effort to generate as many ideas for eliminating the pension debt as possible. Let me suggest we take two “ideas” off the table from the get-go, and establish a clear “timetable” for reform as well.

A serious pension fix cannot be just about infusing billions of tax dollars (read: pension bonds) into the pension system. That’s throwing good money after bad. Real pension reform must include reforming the unsustainable benefit levels.

And a real plan is not to file another lawsuit. There are some who hope that lawsuits filed by City Attorney Mike Aguirre will invalidate the pension benefits that were increased under the 1996 and 2002 deals. Magically, much of the pension debt would disappear!

While I completely agree that we should challenge the legality of the benefits and seek a judge’s review of the now-tainted deals, we should not pin the financial recovery of our city on some judge intervening and rolling back the benefits. And even if the benefits were rolled back, it would be years of appeals before our city would know whether the pension debt was erased. Of course, we could also lose our efforts to reverse the benefits.

Finally, a real plan has to take effect as soon as possible. With each passing day, our liability grows and more employees are enrolled in the old pension system. The mayor has committed to releasing a pension fix this fall. But if that plan is to make the necessary reforms to pension benefit levels, it is unlikely that the plan can be fully implemented before June 30, 2007.

Why such a long wait? Two of the city’s five unions (MEA and Local 127) have labor contracts in place through that date, and any changes in pension benefit levels would likely require a re-opening of those contracts. Do you really think the labor unions are going to come back to the table? I’m not too optimistic, but somehow we have to get all parties to the table so we can move our city past the pension crisis.

If we are to really restore the financial health of the city of San Diego, we must devise a comprehensive plan for addressing the pension crisis. We cannot wait, we cannot push back the hard decisions, and we cannot hope a judge will waive a magic wand and make the debt go away.

What are some elements that should be included in a comprehensive pension reform package? In my next post, I’ll share one key idea – that city employees pay a fair share (50 percent) of pension costs. Implementing that single reform might have some far-reaching impacts on the pension debt, both past and in the future.

CARL DeMAIO

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