SAN DIEGO (CNS) - Instead of guaranteed pensions, new city employees would be offered more volatile 401(k)-style retirement plans if a ballot measure proposed Friday by San Diego Mayor Jerry Sanders were approved by voters.
Sanders said he and Councilman Kevin Faulconer will begin a signature gathering effort to get the proposal on the ballot during the next regularly scheduled city election in June 2012.
"As our pension obligations continue to threaten our long-term fiscal stability, it's clear more must be done," Sanders said.
"The notion that all public employees should have a richer retirement benefit than the taxpayers they serve, while now also enjoying comparable pay and greater job security, is thoroughly outdated," Sanders said. "What's worse is it is bleeding our resources at a level that is unsustainable."
The proposed ballot measure would get rid of what are known as defined benefit pensions for new hires, including elected officials, and instead offer them a 401(k)-style plan similar to those in the private sector. Workers would contribute a certain amount to an account and the city would match it.
Many 401(k) contributions are invested in mutual funds or other financial instruments, meaning workers' retirement funds could rise or fall based on the stock market.
Acknowledging the risk of 401(k) plans, Sanders said his proposal would exempt public safety workers and allow them to keep guaranteed pensions "because I believe we cannot afford to lose top-notch prospective officers and firefighters to other cities."
The mayor said it was unclear how much the change would reduce San Diego's $2 billion pension shortfall.
Councilman Carl DeMaio, who recently released his own plan to deal with San Diego's budget crisis, said the mayor's proposal was a step in the right direction, but does not go far enough.
"We need to see comprehensive reform of existing pension obligations," DeMaio said.
DeMaio said Sanders' plan does nothing to address the "outrageous and unsustainable" pension benefits existing city employees are set to receive when they retire.
Sanders' proposal comes only weeks after San Diego voters overwhelmingly rejected Proposition D, which would have raised the city's sales tax by a half-cent.
The mayor pledged to move ahead with the 10 fiscal and pension reforms outlined in Proposition D, including implementing the managed competition outsourcing program and selling the Miramar Landfill.
Sanders also outlined steps he plans to take to help close San Diego's projected $73 million budget shortfall in the coming fiscal year, including further streamlining city government, eliminating free trash collection for homes on private streets, pursuing franchising opportunities at golf courses and airports and eliminating non-critical operations, such as community plan updates.
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