By Khalida Sarwari
In his sixth State of the City address, San Jose Mayor Chuck Reed focused on his fiscal reform plan and assured that brighter days are ahead.
“The steps we have already taken, combined with the steps we will take before the end of June, will allow us to reduce the cost of retirement benefits, halt the decline in jobs and begin to restore services at long last,” Reed said in his speech at the San Jose Civic Auditorium on Thursday night.
As part of the fiscal reform plan, passed by the city council last year, all city employees including the city council, have had to take a 10 percent pay cut, which Reed said was “crucial” to saving jobs and services.
Reed said the plan is helping to rein in increasing retirement costs and restore services to January 2011 levels.
Retirement benefits consume more than 20 percent of San Jose’s general fund, Reed said. The city’s annual retirement costs have increased from $73 million a decade ago to $245 million this year.
“Writing ever-larger checks for retirement benefits has had a dramatic impact on our work force,” the mayor said. “We’ve cut more than 2,000 positions over the last 10 years in order to balance our budgets. Every city job eliminated reduces the services we can deliver to our residents.”
Reed said his pension reform ballot measure in June would also bring costs under control. The proposal requires current employees to pay a larger share of the cost of their retirement benefits and new employees to pay half of the cost of their retirement benefits.
The ballot measure would not cut accrued benefits that employees have earned for the past five years of service.
“All together, the ballot measure will save the taxpayers hundreds of millions of dollars over the next 10 years, and much more after that as the percentage of employees in the new plan grows,” Reed said.
Emphasizing a message of “hope, optimism, and recovery,” Reed reported that progress has been made in addressing chronic homelessness and closing the student achievement gap.
He said the economy is on the upswing, as evidenced by San Jose tying for the highest rate of job growth of all U.S. metro areas in 2011 and the addition of 25,000 jobs in the course of a year.
Mo Qayoumi, president of San Jose State University, commended Reed on his plan and efforts.
“The mayor had great comments about plans that he has put together to see how the city can move from some of the challenges that were caused due to the economic downturn,” Qayoumi said.
