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Judge hears arguments on San Diego pension measure

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POSTED July 28, 2012 1:11 a.m.

SAN DIEGO (AP) — A city employees’ labor union on Friday urged a judge to put a voter-approved pension overhaul on hold while it hammers out details of new 401(k)-style retirement plan for new hires.

Ann Smith, an attorney for the San Diego Municipal Employees Association, asked for a delay that would last only until the city and its unions could work out details of the new plan, which will apply to all new hires except police officers. She predicted a deal could be approved by the City Council as early as late October.

A delay of a few months seems unlikely to seriously threaten the pension overhaul, but City Attorney Jan Goldsmith urged that it take effect immediately after California’s secretary of state certifies the election results, which is expected next month. He raised the prospect of a hiring freeze if the city is blocked from putting the plan into effect.

San Diego Superior Court Judge Luis Vargas made no ruling after nearly two hours of arguments. He plans to issue a written decision later.

The June ballot measure passed by a 2-to-1 margin, and a similar initiative in San Jose also scored a lopsided victory. The votes in California’s second- and third-largest cities emboldened activists seeking to cut pension payments in state capitols and city halls across the nation.

Nearly 116,000 San Diego voters signed petitions to get the measure on the ballot. It imposes a six-year freeze on pay levels used to determine pension benefits unless a two-thirds majority of the City Council votes to override it, and it requires the 401(k)-style plans for new hires.

“It is a classic constitutional exercise of the initiative process,” Goldsmith told the judge.

The labor union attorney did not ask the judge to delay the measure while it wages a broad legal challenge. The California Public Employment Relations Board sued the city in February after unions complained to the board of unfair labor practices.

The unions contend Mayor Jerry Sanders and other city officials circumvented state labor law by failing to consult them before putting the question to voters. They say the mayor, as the city’s lead negotiator, was required to go first to the negotiating table.

Sanders, who attended Friday’s hearing, has said he was exercising his First Amendment rights as a private citizen when he advocated for Proposition B.

San Diego’s independent budget analyst estimates the freeze on “pensionable pay” will save the city $963 million over 30 years. The switch to 401(k)-style plans is expected to cost $13 million, although it would shift the risk of investment losses from taxpayers to employees.

The San Jose measure would force current employees, including police officers and firefighters, to pay much more toward their retirements or accept lower benefits. New hires would receive less generous benefits.

Unions representing San Jose police officers and firefighters claimed in lawsuits filed last month in state court that the measure violates their vested rights.

San Diego and San Jose, like many states and cities, have struggled to maintain basic services as pension obligations have mounted.

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