…I did not actually eat breakfast with members of the Chamber of Commerce last week, but I met with them early in the morning—which is a challenge for me since I normally go to bed at 1am. The Chamber, as many of you know, is an interest group that advocates on behalf of small and large businesses. They invited me to attend their meeting for some Q-and-A.

The Chamber, like labor unions, the Democratic Party, the Republican Party, or the League of Conservation Voters, typically endorses candidates running for political office. Endorsements carry clout with some voters, but more importantly, endorsements come with monetary donations, plus independent expenditures for political mail to voters, and volunteers to walk door-to-door on your behalf. In my Council election, the Chamber endorsed my opponent and as a result, they did four independent expenditures on his behalf in addition to donating money to his campaign.

Elected officials are asked on a routine basis to speak with special interest groups so they may better understand how you feel about issues, thought process, values, explain past votes,etc.. As this is my “City Hall Diary,” I wanted to let you know what we spoke about.

We chatted about San Jose Inside, which included many of my past blogs from the Rose Garden Park to the budget to pensions. They found much of what I have written and the comments posted to be refreshing and much more open-book then the norm.

Many of the members’ perspectives, in the real world, comes from their private sector work. Therefore, there is a deep understanding about the risk of capital, the adage that “time is money,” and that idea that there are no guarantees in life.  Needless to say, their questions and perspectives were much like the constituents in my district who email me.

They want to know: How can someone get paid over $275K in accumulated sick leave when they retire? How come the general fund must cover the stock market loss for city pensions when private individuals have no one to ask for help for their own retirement? Why don’t new employees not yet hired get 401K’s?

I was asked about my opposition to converting industrial land to housing.  As I have indicated before on this website, San Jose needs to keep land zoned industrial and preserve it for current or future job growth. My answer on this subject has remained the same whomever I speak to. We may very well convert an industrial parcel when my tenure in District 6 has passed or when the jobs catch up with housing growth.  In the meantime, there is plenty of land zoned residential that will be built out after the recession.

I did ask the volunteer members of the Chamber that since they have questions about government fiscal policies, perhaps they attend city budget meetings if they can get out of work. I also expressed my goal to serve the residents of San Jose above interest groups, and stated my belief that decisions should be based on what is best for the San Jose as a whole for the long term.

If you are in business for yourself or work in private sector you may agree more often then not with the views advocated by the Chamber.

On another note: Last week the question came up as to whether the City can switch our retirement plans to the State Employees program called CalPERS.  City pensions are in the City Charter XV, which would have to be maintained unless the Charter was changed by a citywide election. It is a complex move to transition from an independent plan to another system such as CalPERS, although other cities, such as Oakland, have done it.

There are two ways.  One is to have new employees go into CalPERS, and current employees and retirees would stay in the existing plans.  That is complicated because the liabilities would have to be paid with a declining number of members paying into the system—similar to Social Security.  The other way is to move everyone over, which would still require voter approval (by you). Increased retirement benefits require voter approval in San Francisco, however, in San Jose no election is needed, since actions take place through the Council or binding arbitration.

Our County Assessor was quoted on Friday as saying the downturn in real estate values is “worse than expected,” and that more than 90,000 residential parcels will be valued at less then their purchase price. We are living through historic times, with unprecedented negative growth in real estate. That has happened in Santa Clara County only a handful of times: in 1932,1933 and1936, and again in 1978 (after Prop 13) was passed. So what does that mean, other than many depressed homeowners? Well, it means that the City of San Jose’s deficit just catapulted to $77 million.

The City Manager announced Friday that we will have an additional shortfall of $14.3M due to lower property tax revenues on top of the sales tax decline which added another $3M to the deficit. I believe we will also see a sharp fall in our TOT (hotel tax) this quarter. This means less city services starting July 1, 2009 for you. But there is more…

You should be praying for the stock market to rise not just for your own 401K but for your city services. City pensions are self-insured, and if there is a shortfall, then money comes out of the General Fund. Today, the city matches employee contributions for retirement based on actuarial studies. For example, for Police, the city puts in 24.94 percent on top of the 11.96 percent the employee puts in. For Fire the city puts in 27.37 percent and the employee puts in 12.45 percent For the rest of city professional staff, the city puts in 22.68 percent on top of the 8.93 percent from the employee. Does your employer match your 401K to this level?

Now that the market has tanked, money must come from the General Fund to cover the loss. The good news is that we don’t need to cough up any money on July 1, 2009. The bad news is that we need to cough up money on July 1, 2010 for the next fiscal year. Of course, if the stock market completely recovers by the end of June 2009 then we are good—but that is doubtful.

Without a stock market recovery, the baseline contribution rate from the city would increase from 22.5 percent for Police & Fire to the range of 35.3-57.8 percent for July 1, 2010, and then rise again July 1, 2013 to 54.2-70.1 percent.  These are projections only. Let us hope they go down. But what this means in dollars is that the city would have to reduce the General Fund that pays for all the services we have counted on by $31M July 1,2010, $24M July 1,2011, $22M July 1,2012, $24M July 1,2013 for a total cost of $101M. That’s for Police and Fire only.

If these numbers are not evidence enough that we need to have a new benefit structure for new city employees, I am not sure what is.

I am sponsoring a viewing of a documentary titled “IOUSA.” This movie is an eye-opener about the looming financial catastrophe. This is the consequence of elected officials not making tough decisions, but promising everything without thought about future implications. In addition, a speaker from the bipartisan Concord Coalition will be speaking at the event. The Concord Coalition was started by two senators—one Democrat and one Republican—back in 1992 to bring awareness to the National Debt.

When: Monday May 4 from 7-9pm.
Where: San Jose City Hall Council Chambers (200 East Santa Clara Street)
Cost: Free, but limited seating
Click this link to watch a trailer from the documentary IOUSA:http://www.youtube.com/watch?v=HBo2xQIWHiM
I look forward to you joining me and others on May 4. Please RSVP:Pierluigi.Oliverio@sanjoseca.gov

On Friday, March 20, I participated in a fun event called San Jose Bike Party. The “bike party” is organized by people who promote bicycling in San Jose. They pass out flyers at bike shops and use the internet to get the message out. There have been 18 “Bike Parties” so far and the 19th is coming up on April 17 at 8:45pm at the old Zorba the Greek Restaurant parking lot located at South Bascom Avenue and Stokes Avenue in District 6. The bike parties are themed events, around themes like mustaches, mardi gras, robots etc… The event has some of the flair of the Burning Man scene, plus some rockabilly style, but it also includes just regular bicycle enthusiasts.

I rode my vintage, made-in-Waterloo,-Wisconsin Trek bicycle with my bicycle partner, who works on a great program called Turning Wheels for Kids. After congregating at the shopping center, we were sounded off to obey the traffic rules, leave no rider behind, and to pick up any litter. San Jose Bike Party also encourages helmets plus both front and back bike lights—suggestions which I followed. Apparently, the more lights you had the cooler you were; some bikers that had lights wrapped around much of their respective bicycles.

At 9:20PM the Bike Party rolled south down Stokes and made a left on Southwest Expressway to Fruitdale. At this point it seemed like we were on the General Plan 2040 tour, passing several new housing developments across from the light rail line.  The group then massed to Willow Glen via side streets onto Lincoln Ave where 500 bicycles were counted by the event organizers. At this point we took up both right lanes on Lincoln Ave and little more. Onlookers were wondering what was going on, and the response was always the same as bikers yelled out “Bike Party!”

The caravan of bikes continued down Lincoln Ave and merged onto Almaden Expressway then went all the way to Blossom Hill making, a left turn en masse. The group pulled off at an empty strip mall parking lot to regroup. At this point the tandem bike that was towing a couch turned on a stereo and then younger folks started dancing instantly. After five-to-ten minutes we rode together through Oakridge Mall where again spectators were stunned by so many bicycles cruising by.  We then went all the way up to the Oakridge mall parking lot roof where we enjoyed a view of San Jose and again the music sounded and the dance party started again briefly.

From here, we went down Winfield to Pearl Avenue, passing another housing project at the Chynoweth Station (side note: not enough density in this development makes the attempt at retail nearly impossible). We then proceeded south passing the Capitol Auto Mall to the Rubino Circle neighborhood, and down to Old Almaden Road which put us back on Almaden Expressway. We then passed the Canoas Gardens neighborhood and made the fork back into Willow Glen, since my bicycle partner was tired. The Bike Party continued on all the way to Downtown finishing at SJSU. The ride was assisted by one or two SJPD cars off and on, offering automobile drivers awareness of the approaching bike party. Thank you SJPD.

If you like to ride a bike and enjoy people, then you may very well enjoy the next Bike Party. Remember to wear a helmet and grab some lights!

Last week I responded to many of your questions with a term, “Meet-and-Confer.” This terminology is used in reference to discussions that city management has with unions about almost anything.

Once a labor contract is agreed upon, any thought of a change requires a meet-and-confer meeting. It could be a compensation freeze, sick time, vacation time, grievance, health care, retirement, education reimbursement, uniform allowance, time off with pay to conduct union activities, examining the possibility of using a non- union person to provide a city service, or even discussions about future employees who have not been hired yet, etc… So with the current budget deficit, if we want to have a discussion about city staff taking one day off without pay ($2.88M) to avoid layoffs, then there needs to be a closed-door meeting.

As an elected official, I have absolutely zero knowledge of these meetings except what is paraphrased for me by city management. So there are times where union members have genuine concerns and mention that city management did not answer questions, did not provide data or were playing games. How do I know one way or another what happened, since these meetings are secret? It becomes a he-said-she-said situation and burns everyone’s time going back and forth.

More often then not, the Union Business Agent is the person in the closed door meeting. They do not work for the city but are paid by the union to represent and negotiate on behalf of our professional city staff. They are paid from union dues and agency fees that come out of city employees’ paychecks. Last year that amount was $7,164,760.89, and approximately half of that amount can be spent on political campaigns.

I looked back at a prior blog I wrote on May 19, 2008, where I suggested that we allow more sunshine on labor negotiations. My view is still the same for both traditional labor negotiations and binding arbitration. Here is a clip from what I wrote nearly a year ago:

Labor negotiations are a long arduous process. In the past, the city and the unions have both pointed fingers at each other. Perhaps if these meetings were discussed in public, then there would be no finger-pointing. In the era of sunshine, maybe we should consider making these meetings public, as is done in other parts of the country. It would be interesting to know, for example, the full dollar amounts on proposals from each side through each stage of the negotiation, prior to final agreement.

If the city was being unfair, then everyone would know. If labor was asking too much, or they had good points about cost-of-living adjustments or worker safety then we would know.  With the bankruptcy of our neighbor, Vallejo, it seems like we should shine more light on collective bargaining, or, at least, the city should provide some type of summary of the negotiations to the public at an earlier time. If allowing the public to view the negotiations in real time would harm privacy, then, perhaps, the negotiations should be taped on video and shown after the agreement has been reached.  The negotiations could be viewable on the internet or Channel 26.  That way, the public would at least get to see what took place.

In the end, we on the council vote on compensation and benefit increases. However, we as a council will be long gone when the aggregate effect of past votes impacts the budget and neighborhood services. If decisions are made behind closed doors without public scrutiny, then it is easier to make unrealistic financial choices.

Making negotiations public will not take anything away from workers or make negotiations a game of “winners” and “losers.” People need to be paid a good wage with good benefits, that’s for sure.

With a total compensation of $815M and a General Fund of just over $1 billion we need to let the taxpayer know what is going on otherwise they will not support tax increases to provide city services.

Perhaps residents of San Jose should be allowed to vote on this topic?

On March 12, I hosted the second annual budget meeting in my district. My goal was to inform the community about the budget process, the size of our budget, where the revenues come from and different options on trying to deal with the current deficit.

The major message from the residents that attended the meeting was that the city needs to change employee policies and compensation (including sick leave payouts and pensions) before cutting services. Residents brought newspaper and magazine articles about how other cities are facing major financial issues, including bankruptcy, due to pension obligations.  Many people brought up analogies to Vallejo, which filed for bankruptcy.

The residents continuously asked when the City of San Jose was going to make these changes; city employee compensation, sick leave payout and pension adjustments.  Several people in the audience work at Hewlett Packard which implemented wage cuts for every employee in the company. Others had hours reduced at their employers, resulting in a cut in compensation, or were laid off. Other views expressed were switching to 401K’s from pensions. And 100 percent said new city employees should be given lower benefits than current empleyees, since we cannot afford them.

Recently, I read how union employees at the San Francisco Chronicle took pay cuts, fewer vacation hours and eliminated seniority just to keep the paper alive.  They did this so that more people could keep their jobs and therefore keep the Chronicle operating.  I hope these examples set the tone for San Jose’s management and unions.  The message that we are all in this together folks, lets see what we all can do for the sake of keeping our city healthy during this prolonged recession.

I prepared a presentation about the City budget for the meeting.

Some of the major facts:

• In the last seven years there has been a 58 percent rise in total compensation.
• In the last seven years the average salary went from $73K to $117K.
• In the last seven years our contribution towards pensions has more than doubled.
• We have a $1.4 BILLION dollar unfunded medical liability.
• To fix the budget deficit via economic development we would need to build 15 Valley Fair’s or 24 Oakridge malls. (That would require 750-1,200 acres of land, they would all have to be equally successful and residents would have to accept more traffic and parking in their neighborhood.)

At the end I made my own suggestions of how to balance the budget:

• Wage freeze for the next three years.
• Freeze Step and Merit increases.
• 5 percent pay reduction for all 2,663 employees that make over $100K.
• 2 percent pay reduction for all employees making under $100K (includes council and staff).
• Make changes to sick leave and vacation payout.
• Raise fees on card rooms but allow them nine extra tables which will bring the city $5.5M every year on top of the existing $13M. (Bob Brownstein, a union leader and Pat Dando, the President of the Chamber agree on this.)
• In future years we maintain wage freezes.
• Sell the Hayes Mansion to cut the $4M we lose every year.
• Retain industrial land for job growth and slow down housing growth.

However we cannot provide core city services without more revenue:

• Therefore I proposed that we raise utility tax 1 percent on electricity, gas and water only. This would bring $11.43M a year that would go to police only.
• Spend 70 percent of new revenue on new officers and the balance on non-sworn police employees and technology so more police officers can be out on the street versus behind a desk.
• Also I believe we should do a $100M bond to pay for street repairs only, since we have a deferred backlog on maintenance of $457M, and the longer we wait it will cost us even more to fix streets since we will go from repaving to rebuilding.

The journey is far from over on the budget so stay tuned.

On Saturday morning, I went on my 5th Homeless Encampment “sweep” with the San Jose Police Department’s Metro Unit.  The Metro Unit is in charge of monitoring creeks for encampments.  These clean-ups have taken me to Districts 3,4,6 and 7, alongside the Coyote, Guadalupe and Los Gatos Creeks. When you climb down into the creeks you forget you’re in San Jose, as all you can see is nature.

We have hundreds of people in San Jose who live in the creek areas in temporary shelters. Some structures remind me of developing world shanty towns while other camps have a complete living room set up, with power operated from car batteries.  Some encampments are small and are set up underneath street overpasses, while other encampments are massive with many people.

In speaking with several of the people that have chosen to live in the creeks, I have these observations.
• The overwhelming majority are male with few females.
• They are mostly Caucasian and some Latino.
• The overwhelming majority have a substance abuse issue of alcohol and/or speed (crank/meth). They typically do not want to go to the shelters since the shelters have curfews and do not allow drug use or people to enter who are high.
• When asked where they were from, none of them said San Jose or Santa Clara County. They were all from other states like Washington, Colorado, Illinois, Nebraska… I thought to myself, is there any correlation between these people migrating to California due to warmer climate, or is this just coincidence?
• I encountered one schizophrenic gentleman who stopped taking his medication and substituted drugs instead.

In addition to the homeless encampments, the Metro Unit provides response to graffiti, back-up homicide investigation, surveillance, and narcotics enforcement. The Metro Unit manages the clean ups alongside the San Jose Valley Water District, and the labor is provided by 30-40 men that have weekend work issued by the court for things like DUI’s. They are directed down to the campsites to clear out all items. (They must be careful where they step because there are no toilets in the encampments, which means fecal matter abounds.) The weekend court-appointees then carry all the trash, mattresses, shopping carts etc… to the trash compactor on the garbage truck. It is not uncommon to fill as many as five trucks in one day.

Prior to the clean up date, SJPD has already visited the campsites and posted signs telling when they will be coming and giving fair warning to the creek residents to take their belongings somewhere else that day. They could be arrested for trespassing, since much of this area is private property owned by the water district.

The people that vacate the creeks on Saturday will return either the same night or within a few days since they know the drill; SJPD will not be back ‘til the next cycle which may be a few months. Last year, during the City of San Jose’s budget, Mayor Reed increased the funding by $76,000 for four additional creek cleanups.  The cost pays for the 8-10 officers assigned for the cleanup day, the dumping fees, and one or two people from the City of San Jose’s Environmental Services Department.

It is a sobering sight to see how some people live, and that a simple hot shower is not in the cards.

Some people believe that those who choose to live outside should be able to live in the creeks indefinitely. However, that could be problematic, with campfires that go out of control, water contamination, stolen goods and general lawlessness like a Mad Max movie.  Power struggles occur in the creek encampments which results in fist fights between individuals.

Certainly, this is a societal issue that takes a larger government then San Jose to solve since cities do not have borders.

On another note, this Thursday I will be hosting a meeting to discuss the City of San Jose budget deficit at the Willows Community Center, 2175 Lincoln Ave, at 7pm. You are welcome to attend.