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The city of San Diego will begin charging employees pension contribution rates required by the city’s retirement system, after the city attorney and the retirement system said it was illegal to do otherwise.

The new rates would shift about $2.6 million of the city’s $229 million annual pension payment to its employees, resulting in lower paychecks for most city employees.

City Chief Operating Officer Jay Goldstone said he made a “management decision” not to implement the new rates because he believed the City Council would agree to pay some of those costs. A council committee had recommended that the city pay the expense — a share of disability benefits. Goldstone said he didn’t want to change the rates twice.

“That would have been, in my judgment, an administrative nightmare for the city,” Goldstone said.

But Goldstone had no authority to make that decision. Not only had the full council not discussed the item, it hadn’t even been placed on a council agenda.

Goldstone said he believed the issue was going to be on the council’s docket last week as it was considering a financial reform ballot measure.

“It appeared to me that the train was moving fairly fast,” he said. “In retrospect, had I known it was not going to be docketed I would not have done that. I would not have given those instructions.”

Goldstone said the new rates would be implemented immediately. Employees will see greater variation in their next paycheck because the city had to make up for a month of not charging the required amount.

That the mayor and City Council even are considering boosting employee pension benefits contrasts recent rhetoric.

For the past two weeks, all we’ve heard from Sanders and the council majority is how serious they are about financial reforms including cutting employee pensions. It’s their main justification for asking voters to increase taxes as part a fiscal package in November.

Increasing employee benefits at the same time attention is focused on cutting them would seem to give opponents of the November ballot measure plenty of ammunition that backers aren’t making substantial reforms.

One ballot measure critic, San Diego County Taxpayers Association CEO Lani Lutar, is questioning Goldstone’s judgment and said his argument “seemed suspect.”

“Since when has the city made a decision based on the assumption the city might take action, especially if it’s in violation of the City Charter?” Lutar asked. “To simply say it’s going to be an ‘administrative nightmare’ to do this is unacceptable.”

Further, Lutar said, Goldstone would have had to assume Mayor Jerry Sanders would not veto a council decision to pick up the pension costs, even though the mayor hasn’t taken a position.

Goldstone reiterated that Sanders hasn’t decided if he’d support picking up the costs. The city’s public safety unions and police and fire chiefs have said charging employees for a share of disability benefits could affect recruiting and retention. Goldstone said the departments’ recommendations could influence Sanders’ decision.

— LIAM DILLON

Dagny Salas

Dagny Salas was web editor at Voice of San Diego from 2010 to 2013. She was an investigative fellow at VOSD from 2009 to 2010.

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