S.F. and Oakland are Eyeing Big Deficits. Why Not San Jose?

The South Bay city is reporting a $35.3 million surplus

Some of the Bay Area’s largest cities are facing truly eye-popping budget deficits.

San Francisco is projecting a $290 million shortfall. Oakland, short by $177 million, isn’t faring much better. But down south, the outlook is a bit sunnier. San Jose is reporting a $35.3 million surplus.

Why such a divergence?

Economists and budget officials attribute the disparity to San Francisco and Oakland’s heavy reliance on tax revenues that are still recovering sluggishly from the pandemic’s economic gut punch. The cities blame the down year on a mixture of poorly performing key revenue streams and the drying up of federal pandemic-related funding.

San Jose, on the other hand, has come away generally unscathed by leaning on a tax base that’s largely weathered negative financial forces. Worth noting: The surplus in the FY2023-24 budget remains small when compared to its $5.2 billion total budget — less than 1%.

“We’re in a positive position,” city budget director Jim Shannon said. “It’s not like we’ve got money to burn, by any means.”

Key to the large discrepancy between the cities is the real estate transfer tax, levied when a property changes hands.

That tax pool for Oakland peaked during FY2021-22 at $138.4 million but is expected to only reach $110.4 million for the coming FY2023-24. In San Francisco, the difference is starker. In 2021, the city brought in over $500 million from the tax, while this upcoming year it’s expecting less than half of that figure.

Both cities have blamed high-interest rates and work-from-home trends as the reason for these gloomy outlooks — part of what some are fearing could result in a “doom loop” for the downtown cores, where a dwindling tax base could spur serious cuts to essential services and spark an existential economic crisis.

But in San Jose, the city only collects a small amount of this tax and is projected to receive $22 million this coming year. That’s an increase of $2 million compared to 2021.

Sales tax is also playing a role. San Francisco is expecting a meager $14 million increase compared to 2021, bringing the city to $202 million this coming year. Oakland is experiencing a similarly small bump over the same time period, a $5 million increase totaling $104 million.

But San Jose — somewhat of an outlier — is projected to receive a whopping $50 million more in sales tax than it did in 2021, a total of $336 million.

Jeff Bellisario, executive director of the Bay Area Council Economic Institute, said the geographic makeup of the three cities’ economies may play a role.

“San Jose’s economy is not nearly as concentrated in the downtown area when compared to San Francisco and Oakland,” Bellisario wrote in an email. “With a slow return to the office and higher commercial vacancy rates in S.F. and Oakland, we’ve seen sales tax revenues decline in those areas along with business-related taxes.”

Oakland officials also say the transient occupancy tax, which hotel guests pay, still hasn’t made a full recovery since before the pandemic. Revenues are expected to increase this coming year by about $6 million from 2021 — totaling $22 million. But that’s still behind a high of $25.9 million in 2018.

All three of the cities have experienced nearly identical population decreases — around 0.5% and 0.6% between 2021 and 2022 — according to California’s Finance Department. And, even with its nearly one million residents, San Jose has dropped out of the top 10 most populous cities in the country.

As for pandemic-related funding infusions — which includes the American Rescue Plan Act (ARPA) — Oakland has already used all of the $188 million it received from the federal government to plug up previous shortfalls it was facing since 2020.

In San Francisco, nearly $250 million in reimbursements for COVID-19 expenses was expected from the Federal Emergency Management Agency. But now, the city said it will likely only get $23.4 million because of delays.

In San Jose, the picture is a bit more hazy.

Click here to read the full article in the Mercury News

San Jose Transgender Activist, Teacher was Vengeful ‘Enforcer’ for All-Female Biker Gang, Leading to Oakland Triple Homicide, DA says

Victim started keeping a pistol for protection, police say

Days before a well-known transgender activist and teacher is to go on trial facing charges of murdering three family members in 2016, Alameda County prosecutors have signaled their intent to portray her as the enforcer of an all-female outlaw biker club who’d followed one of the victims around after she left the group.

Dana Rivers, 67, of San Jose, has been in police custody since 2016 when she was arrested and charged with murdering Charlotte Reed, 56, her wife Patricia Wright, 57, and Wright’s 19-year-old son, Benny Toto Diambu-Wright, inside their Dunbar Avenue home in Oakland. Rivers is also charged with dousing the garage with gasoline and setting it on fire, an apparent cover-up attempt that was thwarted when a policeman came to the scene just three minutes after a neighbor called 911.

Now, court filings by both defense and prosecuting attorneys are laying out both sides’ views of the case, including details of the killings never before released to the public. The defense filings are not as detailed because, unlike prosecutors, they’re not required to put their cards on the table before a trial begins.

Rivers’ attorney, Melissa Adams, has indicated she will be making a self-defense or “in defense of others” argument before the jury, which is expected to be convened by early next week. In court papers, she has described Wright and Reed’s relationship as “quite volatile” and that Reed initiated a fistfight within a month of the triple-homicide. Adams has also filed a motion to exclude reference to Rivers’ motorcycle club as a “gang,” writing that she’s unaware of the group ever having been classified as such “in this county or any other.”

But a recent prosecution court filing describes Rivers as an “enforcer” for an all-female “outlaw” biker club known as the Deviants MC. Authorities say she went by the nickname “Edge” and proudly wore tattoos indicating she was a “1 Percenter” — a term referencing the relatively minuscule number of motorcycle clubs that turn criminal — and a “supporter” of the Hells Angels Motorcycle Club.

Prosecutors allege that in the months leading up to the killings, Reed had joined and dropped out of the club, and that members, including Rivers, began threatening her. Reed became so fearful she began leaving a pistol by her nightstand, they say. Still, the prosecution memo says that when police asked Rivers in the immediate aftermath of the killings if they were in any way related to the Deviants, she denied it.

“This has nothing to do with that,” Rivers said, according to court records. “This was personal.”

Before her arrest, Rivers was best known as a schoolteacher who became an international news story when she came out as transgender to her students in a high school in Antelope, California. She was subsequently fired for sharing details of her transition, then sued the district and received $150,000 in a settlement. In the aftermath, she became an activist for transgender rights, and ultimately moved to the Bay Area to restart her life as an educator.

Rivers is also a U.S. Navy veteran who sought mental healthcare at the Menlo Park Veterans Affairs Center in Palo Alto. That is where she met Reed, a fellow veteran who was struggling with PTSD. The two struck up a friendship, and in February 2016, Reed joined the Deviants Motorcycle club, according to court records. It was a short-lived stint. By that summer, she decided the club was “too political” for her and left, prosecutors say.

But according to authorities, the club wasn’t quite done with Reed. She allegedly told a friend that the club had asked her repeatedly to return patches containing the Deviants emblem, a blue tribal sword with wings along with top and bottom “rockers” stating the name and location of the club. She also reportedly began receiving threats, and Reed’s friend said she had spotted Rivers outside the veteran’s affairs center, staring intently at Reed, according to court records.

One of Reed’s children also told police she overheard a phone call where a person talking to Reed said something along the lines of, “Oh my god, are you okay? Have they sent Dana after you?” Around the same time, Reed started keeping a pistol by her bed at night and downstairs during the day, prosecutors allege.

But in the weeks leading up to the killings, things changed. Reed and Rivers reportedly rekindled their friendship, although to prosecutors, “it appeared that the defendant was attempting to regain Ms. Reed’s trust.” Rivers began hanging out at the Dunbar Avenue home, helping Reed with her Harley Davidson or other mechanical projects. At around 6:45 p.m. Oct. 10, 2016, Rivers reportedly texted her wife that she was staying over at Reed and Wright’s home.

Then, shortly after midnight on Oct. 11, a neighbor called 911 to report hearing gunfire, then looked outside and saw Diambu-Wright stagger and fall in the middle of the street. The 19-year-old and recent graduate of Berkeley High School’s Academy of Medicine and Public Service was dead from gunshot wounds.

Oakland police Officer Yusey Ghazi arrived within three minutes of the 911 call, and within about 30 seconds of his arrival, Rivers allegedly exited the home. She was wearing a black motorcycle helmet with the visor up, a black shirt, a black leather vest, blue jeans, black boots, and was covered in “wet blood” and gasoline, prosecutors said in court records. She allegedly told Ghazi nothing was going on and that she had been helping a friend fix a motorcycle, but then admitted there were two dead people in the home and the garage was on fire.

Inside her vest, police found brass knuckles, pepper spray, and several .38 caliber bullets. Inside the home were two guns, including a .45 caliber Colt 1911 handgun equipped with a silencer. The gun appeared identical to one tattooed on Rivers, next to text that reads “do not lie to me, f—-r.” Prosecutors say the tattoo had “after-market” markings consistent with the pistol in the home. Adams wrote there was nothing incriminating about Rivers having a tattoo of an “iconic” firearm.

Wright and Reed’s bodies were found in an upstairs bedroom, and so was a .38 caliber revolver. Both had been shot and stabbed, but Reed suffered roughly 40 stab wounds, authorities said. In a brief statement to police, Rivers allegedly said she was a veteran and needed mental health care.

“I’m not exactly sure what’s going on here, but I know I’m in trouble,” she allegedly said.

The next development in the investigation came three months later, when the executor for Reed and Wright’s estate was cleaning out their home. He reportedly found a letter, addressed to Reed and sent by Rivers, and dated July 25, 2016. It said that Rivers recently shopped at Pier One and smelled a lavender candle, which triggered a memory of Reed. Rivers interpreted as proof that Reed was still close to her heart, prosecutors wrote.

Click here to read the full article in the Mercury News

California unemployment rate at record low 4.1%

JobsCalifornia’s unemployment rate dropped to 4.1 percent in September, a record low since it started tracking the number this way in 1976, the Employment Development Department reported Friday.

The Bay Area boasted the state’s lowest unemployment rates, falling below 3 percent in eight of the nine counties, all but Solano, where it was still under the statewide average.

The San Francisco, Oakland and San Jose metro areas all posted unemployment rates that were the lowest for the month of September since 1990. They fell below the lows set in September 1999, the peak of the dot-com boom.

Economists cheered the numbers, coming 10 years after the financial crisis that sent the country into a tailspin, but said they may be overstating the health of the labor market. Wage growth is still subpar, with benefits and bonuses making up a growing percentage of total compensation. And the labor force participation rate, which measures the percent of the adult population with a job, is markedly below where it was 10 year ago. This suggests that there are still discouraged workers sitting on the sidelines who could be pulled back into the labor force if wages were more enticing and employers more willing to hire them. …

Click here to read the full article from the San Francisco Chronicle

California’s solar-panel mandate for new homes will keep the cost of living unaffordable.

Solar panelsCalifornia, where a modest, burned-out home in San Jose just sold for nearly $1 million, well above its asking price, is in the throes of a housing-affordability crisis. The state’s latest response to the housing crunch: a mandate that builders install solar panels on every new home in the Golden State.

It’s tough to overstate the high cost of housing in California, even relative to the state’s high incomes. In San Jose, the average home costs 10.3 times the area’s median income, according to Demographia’s International Housing Affordability Survey. This high ratio is not due to some local bubble — it’s 9.4 in Los Angeles, 9.1 in San Francisco, and 8.4 in San Diego. Elsewhere in the country — even in relatively prosperous cities with high growth — housing is more affordable. In Columbus, Ohio, and in Atlanta, for instance, home prices average only about three times the median income. Even New York City, considered “severely unaffordable,” scores just 5.7.

Regulations that stifle building are a big part of the problem. Reason illustrated the absurdity of California’s building rules when it profiled a laundromat owner in San Francisco who has spent four years and $1 million trying to develop apartments on the site of his one-story, non-historic building in a city starving for new housing. It’s so tough to find an affordable place to live in San Francisco that people in their late thirties are living in dorms.

But beyond the zoning and regulatory barriers, mandates that raise prices are an underreported part of the housing price challenge in California. The New York Times estimates that the solar-panel requirement will add $8,000 – $12,000 to the cost of a home — close to the price of a year’s in-state tuition at UC Berkeley. One local chapter of Habitat for Humanity says that the charity will have to raise an additional $80,000 to $100,000 per year just to keep building the same number of homes. Advocates insist that solar power saves money in the long run, but if it’s such a great deal, why does California have to legislate it?

The state’s rationale for imposing the directive is, of course, climate change. But as New York Times climate reporter Brad Plumer tweeted, adding 10,000 new apartments in San Francisco would reduce carbon-dioxide emissions in the state by three times as much as the solar-panel mandate because urban apartment-dwellers use less energy than single-home occupants. California is already a green-friendly state. Building more housing that lets more people live in California, even at current energy-efficiency levels, would have a positive effect on emissions. The alternative is forcing people to move out of state and into more polluting jurisdictions.

State legislators made an attempt to expand housing availability with Senate Bill 827, which would have preempted local zoning rules by requiring cities to allow midrise construction near rail stations and major bus stops. The legislation should have pleased climate-change activists by facilitating the construction of new transit-oriented development and increasing density. But powerful environmental groups in California, including the Sierra Club, lined up against the bill, which failed in committee.

With its heavy-handed, top-down approach to zoning, SB 827 raised legitimate concerns about local control over land use—but the bill’s opponents block any plan that would materially increase housing supply in transit-accessible areas. California’s environmentalist-NIMBY axis has been highly effective in driving housing costs to unsustainable levels. The failure to build new housing in America’s most climate-friendly locales suggests that the underlying rationale for California’s rules is not climate, but exclusion.

San Jose city manager, police chief highest paid in salary survey of 200 cities

As reported by the San Jose Mercury News:

San Jose’s police chief and city manager each raked in nearly a half million dollars in salary and benefits in 2016, topping their counterparts at more than 200 other California cities, new compensation data released Monday show.

Police Chief Eddie Garcia cost taxpayers $497,000 in pay and benefits, according to records released Monday by a Las Vegas nonprofit, Transparent California. City Manager Norberto Duenas was right behind Garcia at $492,000 in pay and benefits.

The distinction for San Jose was notable, especially after battles over paychecks and pensions led to an exodus of rank-and-file officers in recent years in America’s 10th-largest city.

Garcia said he was “somewhat surprised” that his compensation was tops among California’s police chiefs for whom complete pay and benefit information is available. …

Click here to read the full article

Suffocating Regulations Driving California’s Housing Crisis to the Brink

urban-housing-sprawl-366c0Stories about the desperate living arrangements of highly compensated California tech workers sound like tales of Third World misery. One newspaper reports that a Silicon Valley engineer pays $1,400 a month just to live in a closet. He’s squeezing his wallet for the privilege of having a “private room” in a house where five adults live in bunk beds in a single bedroom. Another media outlet reported that a Google engineer moved into a “128-square-foot truck — in the company’s parking lot” because the cost of living in a real house was just too much.

Housing is so expensive across California that Joel Singer, CEO of the California Association of Realtors, said last fall that “only about one-third of our fellow citizens can afford to buy a median-priced home in the Golden State, down from a peak of 56 percent just four years ago.” Californians who own their homes spend more than a quarter of their total income on housing, the highest ratio in the nation. In 2014, Golden State renters paid 33.6 percent of their income on housing — third-highest in the nation. Despite rent-control laws — actually, in part due to those laws — San Francisco has the most unaffordable rental costs in the world, according to Nested, an international real estate service. Los Angeles is tenth on the list. Three of the five costliest housing markets in North America are found in California: San Francisco, San Jose and Los Angeles.

The housing crisis isn’t confined to the state’s elite coastal enclaves. In Riverside County, part of a region east of Los Angeles known as the Inland Empire, only 39 percent of households “are able to purchase a median-priced home, which in February was $334,440 for a single-family home,” the Desert Sun reported last March. The national average is 58 percent.

The California housing crunch is the product of a dire shortage of homes. Over the last decade, developers have built an average of 80,000 homes each year. But that number is about 100,000 units short of what’s needed to keep up with demand. According to the California Department of Housing and Community Development, the state will need to build roughly 1.8 million units between 2015 and 2025 “to meet projected population and household growth.” That would be like building more than 10 new Oaklands or nearly six new San Joses over that time.

Developers aren’t fools. They know that there is a great demand for housing in California. The profit motive would make them happy to build all those additional Oaklands. But California’s regulatory climate and development policies have eaten away at that incentive. The hurdles to building homes are high and solidly rooted: the most imposing is the California Environmental Quality Act (CEQA), which allows opponents of development to shut down projects in the courts, often with no environmental basis. But because the lawsuits can disrupt and suppress projects, the law has become, as the Hoover Institution’s Loren Kaye says, a “tool for abuse.”

Other barriers include the steepest impact fees in the nation, in some cases nearly $25,000 per unit; affordable-housing mandates in more than 170 jurisdictions that require developers either to choose between building units at below-market value or face government fines; local anti-growth policies; and rent control.

The regulatory regime even includes parking mandates that require, for example, a development to have at least one parking space for every bedroom in the project — a formula that absurdly still applies when only one driver lives in a three-bedroom apartment housing five people. A Southern California Association of Governments report says that sometimes housing units are removed from a project just to accommodate these local minimum-parking mandates.

Californians have raised NIMBYism virtually to a level of first principles. Golden Staters don’t mind housing development, as long as it’s “not in my backyard.” The state has an ugly history of established residents pressuring local officials to build policy walls that make development too costly to pursue. The result of all this government is a shortage that has produced the most distorted housing market in the country. It’s so warped and battered that it can hardly be called a market.

Layers of government housing policy have been settling on top of one another for decades, creating a deep regulatory bog that is exceedingly difficult to dredge. So it’s reasonable to ask if California will ever become livable again. And with state and local policymakers seemingly less attached to reality every year, it’s reasonable to give up and move, as many have already done.

California Lawmakers to Scrutinize New Bullet-Train Plans

As reported by ABC News:

State lawmakers will have their first opportunity to quiz the officials responsible for California’s $64 billion high-speed rail plans at a committee hearing Monday to review a new business plan that calls for overhauling its proposed route and postponing the first service by three years.

Those overseeing the project are expected to face tough questions about the plan to shift construction to the San Francisco Bay Area rather than head first to Southern California, an acknowledgement of the financial and political challenges that have plagued the project.

The new plan calls for building the first 250-mile segment from the rural town of Shafter to San Jose at a cost of nearly $21 billion. The first leg would begin operating in 2025 — three years later and 50 miles shorter than the original planned route that would have sent trains to the San Fernando Valley.

Project backers are touting it as the first plan to build a …

Click here to read the full article

Electric Cars – The Promise and the Reality    

BMW_i3_01

By Abe Ostrovsky with contribution from Peter Whealton

I leased an electric car nine months ago. A 2014 BMW I3 rex. The BMW advertising was clear. Eighty-seven miles per full charge plus 48 miles of additional range from the range extender, a built-in gas driven generator that recharges the battery while driving. The gas tank serving the generator is 1.5 gallons. The extender is meant for the occasional short additional miles to reach a charging station when a destination turns out to be just beyond the electric range or mishaps on the road mandate a detour.

My discussions with the sales person reinforced the claimed range and I was further reassured as I read that since BMW did not expect the range extender to be used regularly, it would automatically come on and cycle for 5 or 6 minutes every 2 months to keep it lubricated and ready.

The battery charger that is included with the car is classified as a level 1 and takes 20 hours for a full charge. BMW sells a level 2 charger (an extra $980 accessory which requires wall mounting to a 220 Volt, 30 Amp source – it cost me $250 to provide this power in my garage). This charger will charge a depleted battery in 3+ hours. The logical operating radius for the car is therefore 43.5 miles one way assuming there is no time to recharge the battery at the destination.

In my case, 43 miles was sufficient to reach most addresses in Los Altos Hills and San Jose was reachable depleting the battery one way. This covered most of my needs so I leased the car, bought a level 2 charger and had an electrician install it in my garage.

Soon I learned that the car was capable of delivering the 87 mile range only when driven carefully (no quick acceleration and no extensive brake usage) on flat streets (no San Francisco hills) in a mode that deactivated many features (no AC or heat or seat heaters) at a maximum speed of 56 miles per hour (no expressway driving). The actual range being driven normally (I am told I am an aggressive driver) on San Francisco hills and Bay Area expressways is around 50 miles, just a few miles more than half  the advertised range.

Just so there is no misunderstanding, I think the I3 is a great city car. It is well featured, easy to drive, has nice pep, handles well, parks easily and transports 4 comfortably. As a city car in San Francisco, a city that is approximately 7 miles by 7 miles, it is terrific. But if normal usage requires more than 25 miles one way, the battery system is inadequate.

My investigations into battery technology indicate that advances in battery density (the amount of stored electricity available per pound of battery) is rapidly increasing. Chevrolet has recently announced the Chevy Bolt, a compact expected to deliver 200 miles of range on a fully charged battery which should be available by end of 2016. I expect that battery technology advances will allow a doubling of range for same size and weight batteries by 2017. At that point the lower price electrics will have sufficient battery power to compete with gasoline powered cars at competitive pricing.

Until then, I will continue to rent Zip cars when going further than the short rides to San Carlos airport, Walnut Creek or Lucas Valley.

San Jose joins forces with seven other cities to raise minimum wage

As reported by the San Jose Mercury News:

SAN JOSE — Top officials from seven Bay Area cities will join Mayor Sam Liccardo on Thursday to announce an unprecedented joint venture to raise the minimum wage across the valley in a regional effort to close the growing gap between the rich and the poor in Silicon Valley.

The official announcement is expected in a news conference Thursday. The mayors of Campbell, Palo Alto, Cupertino, Milpitas, Morgan Hill, Monte Sereno and a representative from the city of Santa Clara are expected to announce their support for the initiative.

It’s the first time the region has seen such a large collective effort by multiple cities to raise wages. …

Click here to read the full story

San Jose City Council Capitulates to Police Union Power

“He told the class to take advantage of the academy, and then find jobs elsewhere. The police union tries to get us to leave the department.”

–  Anonymous source to NBC Bay Area, television report “Another San Jose Police Recruit Says Union Tried to Get Cadets to ‘Find Jobs Elsewhere’,” Oct. 28, 2014 (excerpt begins at 1:38 in report).

San Jose Police DepartmentA precedent setting new development in San Jose last week provides abundant evidence of just how powerful local government unions really are in California. As reported Monday in San Jose Inside and elsewhere, an embattled City Council has tentatively approved a new contract with San Jose’s police union that awards them “a 5 percent ‘retention’ bonus and an 8 percent raise over the next 16 months. In addition, former officers who return to the force in the next year can claim a 5 percent signing bonus.”

More significantly, at the same time, the San Jose City Council has tentatively agreed to drop their appeal of a court ruling that overturned a key part of a San Jose pension reform, a re-examination of the so-called “California Rule.” As pension expert Ed Mendel reported in PublicCEO, “The ‘California rule’ is a series of state court decisions widely believed to mean that the pension offered on the date of hire becomes a vested right, protected by contract law, that can only be cut if offset by a new benefit of comparable value.”

In practical terms, this means that pension benefit formulas, according to the California Rule, cannot even be trimmed for future work performed by existing employees. San Jose’s pension reform Measure B, passed by 70 percent of voters in 2012, presented city employees with a choice – they could either contribute an additional 16 percent towards their pension benefits via payroll withholding, or they could accept lower pension benefit accruals from then on. Nothing they had earned to-date would have been taken away from them.

Despite legal opinions that claim the California Rule is not well established law, and despite that the California Rule is contrary to the law governing public sector pensions in most states, and contrary to all law governing private sector pensions everywhere, San Jose’s local elected officials have capitulated.

THE INHERENT HYPOCRISY OF THE ‘CALIFORNIA RULE’

It is difficult to overstate just how hypocritical the union’s position is on the issue of modifying pension benefit formulas. Because the problems with pensions began back in 1999, when Senate Bill 400 raised pension benefit accruals per year for the California Highway Patrol. Within a few years, most every agency in California followed suit. And these pension benefit enhancements were applied retroactively to the date of the employees’ hire.

That is, starting in 1999, agencies changed the pension benefit formula so that, for example, police and fire pension accruals were not just increasing from 2 percent to 3 percent per year from then on, but retroactively to the day each employee was hired. So someone who would have earned a pension equivalent to 2 percent of their final salary times the years they worked would now earn a pension equivalent to 3 percent of their salary times the years they worked, even if they were going to retire within the next year or two.

What San Jose Measure B tried to do was not roll back pension benefits from 3 percent per year to 2 percent per year for years already worked. It only tried to reduce the benefit accrual, prospectively, for years still to be worked. And even that was too much for these unions.

THE DEVASTATING COSTS OF SAN JOSE’S POLICE/FIRE RETIREMENT BENEFITS

If taxpayers could afford to pay these pension benefits, there might be a stronger argument to preserve them. But San Jose’s independent Police and Fire Department Retirement Plan, according to their most recent financial report, is not in great shape financially. Keeping it afloat requires staggering sums of money from taxpayers that are only going to increase each year. Here are highlights:

(1) The plan as of June 30, 2014 (most recent data available) was 77.5 percent funded (page 114). This means that instead of earning their officially projected annual return on investment of 7.125 percent per year, just to avoid becoming more underfunded, they will have to earn 9.2 percent per year. Just to stay even. That is their so-called “risk free” rate of return.

(2) The fund truly is “risk free” to participants, because the taxpayers pay most of the expense and cover the losses when the market fails. In FYE 6-30-2014, police and fire employees contributed $21.1 million into their retirement fund, and taxpayers (the city of San Jose) contributed $123.6 million (page 69), nearly six times as much. How many “six to one” matching contributions are out there for corporate 401(k) plans?

(3) The unfunded liability for the San Jose Police and Fire Retirement Plan was $806 million (page 114) as of June 30, 2013 (most recent actuarial data), equal to 436 percent of payroll. Or looking at this another way, the city’s pension contribution was $123.6 million, whereas their “covered payroll” was $184.6 million. That is, for every dollar San Jose pays to put police and firefighters on the street, they have to pay 67 cents to the pension fund.

(4) It’s not just pensions. The San Jose Police and Fire Retirement Plan includes city funded retirement health insurance benefits. How’s that fund doing? As of June 30, 2013 (most recent data), that plan was 11 percent funded, with an unfunded liability of $625.5 million (page 65).

(5) If you consolidate the financial data for San Jose’s Police and Fire Retirement Plan’s pension and healthcare (OPEB) plans, the most recent statements indicate they are 67 percent funded, with a total unfunded liability of $1.4 billion. If San Jose were to responsibly reduce their total unfunded liability for public safety retirement benefits, they would be paying far more than 67 cents for every dollar of payroll.

THE MISLEADING EMPHASIS ON AN EXODUS OF OFFICERS

Throughout this battle between fiscal realists and the police union in San Jose, the police have maintained that officers were leaving the city to work elsewhere or to retire. There’s no question that their ranks have thinned, perhaps alarmingly. According to SJ Inside, “the agency [currently has] 943 sworn officers out of a budgeted 1,109 positions.” And historically San Jose’s police department has had as many as 1,400 officers. But is the union thwarting efforts to fill the ranks?

Several news reports suggest that could be the case – starting with the local NBC television affiliate’s report quoted earlier. That anonymous source corroborated what another person stated publicly. According to the San Jose Mercury guest column entitled “San Jose police recruit: Union told class to quit right away for good of the department,” former police academy cadet Elyse Rivas writes:

“On the first day of the academy, our orientation included the opportunity to meet Jim Unland, the Police Officers Association’s president. In no uncertain terms, he blamed Measure B for the departure of hundreds of officers — and he told us that it would be better for the department and for us if we would just quit, right then and there. He said that our employment with the department did not help the POA’s cause in proving Measure B was killing the department’s recruitment capabilities. He urged us to find jobs elsewhere.”

Reached for comment earlier today regarding developments in San Jose, former Mayor Chuck Reed agreed with the substance of these allegations. Not only did he confirm reports of union representatives discouraging academy recruits from taking jobs with the department, but he also described other ways they thwarted recruitment:

“There were reports of recruiting events held in the San Jose police union offices where they invited police recruiters in from other cities to encourage active San Jose police officers to take these jobs in other cities.”

Reed also said, “When we were trying to hire officers, we wanted to bring in retired police officers in to do the background checks so we could keep our active officers on the beat – but the union urged retirees to refuse to accept the work.”

In any case, Reed pointed out that the city had determined to reduce the size of the police force back in 2010, well before voters approved Measure B, saying “the police department headcount went down from 1,400 to 1,100 before there was any pension reform.” Reed believes that an ideal headcount for the San Jose police department would not require returning to 1,400, and that getting to the budgeted 1,109 positions would be a good first step.

SO HOW MUCH DO SAN JOSE’S ‘UNDERPAID’ POLICE OFFICERS MAKE?

Getting timely and accurate information on public pay is difficult because financial reports from public entities take a long time to produce and often omit important data. The most recent payroll records publicly available for the city of San Jose are for 2013. According to a search on Transparent California of San Jose city employees with “Police” in their job title, in 2013 there were 260 of them who made over $250,000 in pay and benefits, and an astonishing 806 who made over $200,000 in pay and benefits. Here’s the link:  San Jose city employees, 2013, with “Police” in their job title.

Pension information for San Jose’s retired police officers is complicated by the fact that the data includes firefighters along with police officers. Moreover, the average full-career pension estimates are understated because a significant percentage of the current participants retired before pension benefits were enhanced in San Jose – a process of “continual enhancement” that continued up until 2008. Using 2014 data acquired by Transparent California, the estimated average full career pension for a San Jose police/fire retiree is $99,116 – with guaranteed 3 percent per year cost-of-living increases. The number for recent, post-2008, full-career retirees is undoubtedly much higher. Here is a 2014 roster of all of San Jose’s police/fire retirees – note that individual retirement health benefits (unfunded liability of $625 million) were not provided – certainly adding a value of at least another $10,000 per year.

Are San Jose’s police officers underpaid? The average veteran officer makes pay and benefits worth well over $200,000 per year. Add to that the likely 5 percent “retention bonus, and the 8 percent raise over the next 16 months per the tentative new agreement. You decide.

The personal attacks and confrontational tactics employed by the San Jose police officers union against their political opponents do not reflect well on the fine men and women who staff that department, who perform work of vital importance to society. Whether or not they intentionally urged officers to quit (or never join) the San Jose police force is almost irrelevant, despite abundant evidence that suggests they did. Because their real transgression against the people of San Jose, the taxpayers, the elected officials, and public safety itself, is to insist on levels of pay and benefits for their officers that are far more than the city can afford.

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Ed Ring is the executive director of the California Policy Center.

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