Judge blocks pension cuts in San Jose

In a case with major implications for public employees around the state, a judge Monday shot down a voter-approved measure in San Jose that cuts workers’ pensions.

But the judge did say the city of San Jose could trim workers’ salaries to achieve the desired savings.

The ruling by Santa Clara Superior Court Judge Patricia Lucas comes at a pivotal time as cash-strapped cities continue to scrutinize pensions as a potential target for cost cutting.

The bankrupt city of San Bernardino has indicated it might try and slash its annual contribution to CalPERS. It may have gotten a recent legal boost when a bankruptcy judge in Michigan said the city of Detroit is free to go after pensions. CalPERS officials have said they think the Detroit ruling would have no bearing on public pensions in California, however.

Meanwhile, San Jose Mayor Chuck Reed – who championed the ballot initiative, Measure B, that was the subject of Monday’s ruling – is pushing for a separate, statewide public vote that would give state and local government agencies throughout California the right to impose cuts to pension plans for existing workers.

Reed told the San Jose Mercury News that he was pleased that even though the pension cuts were blocked, the city can proceed with millions of dollars in pay cuts. Although he would have preferred to reduce pension costs directly, “I think we’ll get very close to what we had hoped for,” he told the newspaper.

But Jack Pitney, a political scientist at Claremont McKenna College, said the court ruling could be a setback to Reed’s statewide initiative. “I see it as a potential obstacle that the courts wouldn’t necessarily be friendly,” Pitney said.

At the same time, the ruling allowing cuts in salaries was bad news for workers, he said. “If I were a (public) worker, I wouldn’t regard this as a Christmas present,” Pitney said.

Public employees union leader Dave Low, chairman of Californians for Retirement Security, blasted Reed’s insistence on pursuing the statewide initiative. “It’s time for Chuck Reed to stop declaring legal and political war on police, firefighters, teachers and other political employees,” Low said in a statement released by the group.

San Jose voters approved Measure B last year, but the law was put in limbo after the unions sued. The new law required existing employees to contribute an extra 16 percent of their salaries toward their pensions. The city has already implemented portions of Measure B requiring higher contributions from newly hired workers; those portions weren’t subject of the lawsuit.

Lucas’ ruling, which came after a weeklong trial in July, is likely to be appealed.