☆ Perspective: Domino effect of SJ's union deal could disturb pension plan

SoCal's Fox & Hounds Daily editor-in-chief and former Howard Jarvis Taxpayers Association president Joel Fox wonders—following SJ's controversial handshake agreement with Labor—if our pension debt will become less manageable moving forward. An Opp Now exclusive.

The first thing you look at when government salaries are increased is this: How will it affect the pension plan? Pension debt is one of the obligations of local government that can really put the squeeze on their budget long term. Lots of cities are having trouble meeting their obligations (though, of course, it depends greatly on how they've invested). So with San Jose's decision to raise public employee salaries over the next few years, this is one concern I'd be wary of, as I assume they're also going to be increasing some of the pension costs coming up. It's worth questioning.

Overall, I think the mayor's onto something here with his concerns about the 14.5–15% raises. The increase in salary satisfies at the moment, but how will it play out in the long term? For instance, a lot of the unions' requests are based on the fact that we've hit a period of inflation; cost of living has gone up, forcing government expenses to go up. But through this deal, San Jose government sets a new floor. As time goes on, that could increase the cost to the city's budget. Or maybe we're fortunate and inflation goes down in the future, but then we'd still have the obligation made during this period. Anyone who’s doubtful of this deal is right to be concerned.

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