On February 25th, the Washington Post decided to wade into San Jose’s pension wars with a major article by Michael K. Fletcher. Alas, the venerable Post apparently did not even do minimal research or fact-checking before putting pen to paper. The result is a disappointing mega-whopper.
Fletcher depicts a grim picture of life in San Jose. He states, “Taxes have gone up as city services are in decline…” Later, he adds, “Poor and middle-class taxpayers…are paying higher taxes so public employees can retire in relative comfort.” The image is stark. Taxes are skyrocketing while a dedicated Mayor Chuck Reed laments, “I am cutting services to my low-and-moderate income people…”
But anyone who has paid even minimal attention to the fiscal history of San Jose must immediately question this depiction. What taxes is Mr. Fletcher talking about?
Since 1996, California cities can only raise taxes through a vote of the electorate – so it’s easy to identify every tax increase during a given period. Have San Jose voters increased their city sales taxes or ad valorem property taxes – the city’s largest sources of revenue? Nope. What about business license taxes? No change in decades.
Haven’t there been any tax increases? Sure. But none that are compatible with Fletcher’s theme. A tax on card rooms is paid only by gamblers. A higher Transiency Occupancy Tax is paid by visitors. San Jose did change its 911 fee to a tax, but it reduced the rate by 10%. The City also expanded the base of its telephone utility user’s tax to cover more types of communication, but again it reduced the rate by 10%. The only measure that fits Fletcher’s profile was a library parcel tax. However, this measure just costs a single family home $25 a year. That revenue can only be spent on library equipment and services, and the tax was adopted ten years ago, well before pension costs significantly escalated.
It is noteworthy that just a few weeks ago, San Jose’s new City Manager made a comprehensive presentation to the Mayor and City Council on the city’s fiscal policies during the Reed Administration. He pointed out that San Jose has accomplished most of the Mayor’s proposed reforms: salaries have been slashed, services contracted out, retiree health benefits modified, pension costs reduced. He emphasized, however, that one strategy needed for fiscal stability has not yet occurred. Taxes have not been increased.
In short, the core message of the Washington Post article – that in San Jose burdensome higher taxes are paying for public employee pensions – is as phony as a 3 dollar bill.
If that wasn’t enough, the rest of the article swarms with additional whoppers.
Fletcher writes that the source (my italics) of Reed’s /fiscal/ troubles is gold-plated pensions. What about the other substantial sources of the city’s fiscal woes – such as its weak tax base and the dramatic decline in tax revenues that followed the national financial crisis of 2008? It appears Fletcher has swallowed a flawed Reed claim that he has made in the past. Reed made the same assertion in the original ballot argument for Measure W, a proposition that gave the city council more authority to modify pensions. A Superior Court judge ordered the language modified because this assertion was so false and misleading it overcame the normal deference that courts allow for political speech.
And there’s more. Fletcher accuses the state of piling on government pension liability because a recent bill aims to create a state managed pension plan for private sector workers. But Fletcher neglects to mention that the legislation didn’t create the new plan; it merely set up a task force to study the proposal, and one of the mandates to the Task Force was to avoid risk to the General Fund.
Last but not least, after hearing Mayor Reed proclaim his deep concern for San Jose’s low wage residents, Mr. Fletcher seems to have failed to take even a minute or two to examine Reed’s record in regard to that constituency. In 2012, San Jose residents placed Measure D on the ballot – a proposal to increase the minimum wage in the city. Estimates indicate that proposition – which passed overwhelmingly – will add about $60 million to the paychecks of low wage workers struggling in a region with one of the highest costs of living in the nation. Chuck Reed strongly opposed Measure D.
Here’s some advice to the Post on how to avoid whoppers: remember that there’s two sides to every story. And the next time a politician tells you he or she’s a superhero, check out the facts.
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