LOS ANGELES — A California state judge struck down key parts of San Jose's voter-approved pension cuts, finding that the city cannot reduce pensions, but it can cut workers' salaries to pay for higher retirement costs.
Santa Clara County Superior Court Judge Patricia Lucas released her tentative ruling on Monday, which prohibits California's third largest city from forcing its current employees to contribute more to their pensions, as required under last year's Measure B.
The measure, supported by San Jose Mayor Chuck Reed, was approved with nearly 70% of the vote in 2012. It aimed to protect pension benefits already accrued by current employees, but make changes going forward to reduce costs.
It would have required current employees to either pay for a larger share of their current pension plan or opt-in to a lower-cost plan.
"The court's ruling guts Measure B," said Ben Field, executive officer of the South Bay AFL-CIO Labor Council. "Judge Lucas affirmed what we have been saying all along: the city cannot break its promises to its employees and its retirees."
The South Bay Labor Council, which represents more than three thousand San Jose employees, said it is looking forward to moving ahead with the city in a "lawful and reasonable way" to address pension costs.
While Judge Lucas ruled that the city cannot reduce pensions, she upheld 10 out of 15 sections of Measure B, including employee compensation reductions to help cover the retirement plans' unfunded liabilities, the elimination of bonus pension checks, reforms to the definition and administration of disability retirement benefits, and provisions related to the city's retiree healthcare benefits.
Following the ruling, Reed said the decision protects $20 million in annual savings the city is already reaping due to the elimination of bonus checks and changes to health care plans.
"Unfortunately, the Judge's decision to invalidate certain portions of Measure B also highlights the fact that current California law provides cities, counties and other government agencies with very little flexibility in controlling their retirement costs," Reed said in a statement. "That's why I believe that we need a constitutional amendment that will empower government leaders to tackle their massive pension problems and negotiate fair and reasonable changes to employees' future pension benefits."
Reed is leading a campaign to submit such a constitutional amendment to California voters in 2014.
Both sides are reportedly expected to appeal the parts of the decision they dislike.