This is a big year for the City of San Jose and its future. The City faces a $100 million budget deficit. Mayor Reed and the rest of the council will have to pull the proverbial rabbit out of a hat. Unfortunately, things may get worse before they get any better. Truth is, there’s no rabbit…there may not even be a hat!
Earlier this week, KLIV Radio reported on the current conditions of the commercial real estate market in Silicon Valley. According to researchers at CB Richard Ellis, around 43 million square feet of office space is currently available in Silicon Valley, the equivalent of 15 Empire State Buildings! “Analysts say local office foreclosures will double in 2010 as property owners struggle to fill that space with companies willing to pay appropriate prices.” That can’t be good.
San Jose’s greatest problem however, is the high labor costs for its many thousands of current and former employees. It’s a big problem at every level of government. In a recent column, former Mayor Willie Brown outlined the issue perfectly:
“If we as a state want to make a new year’s resolution, I suggest taking a look at the California we have created. From our out-of-sync tax system to our out of control civil service, it’s time for politicians to begin an honest dialogue about what we’ve become. Take the civil service. Over the years…the civil service system has changed from one that protects jobs to one that runs the show.
“The deal used to be that civil servants were paid less than private sector workers in exchange for an understanding that they had job security for life. But we politicians, pushed by our friends in labor, gradually expanded pay and benefits to private-sector levels while keeping the job protections and layering on incredibly generous retirement packages that pay ex-workers almost as much as current workers.
“Talking about this is politically unpopular and potentially even career suicide for most officeholders. But at some point, someone is going to have to get honest about the fact that 80 percent of the state, county and city budget deficits are due to employee costs. Either we do something about it at the ballot box, or a judge will do something about it in Bankruptcy court. And if you think I’m kidding, just look at Vallejo.”
If Willie Brown is right, what is San Jose as a city and a people going to do about it?