Voters in San Jose and San Diego will decide on Tuesday whether to approve measures to lower public pension costs by reducing benefits. These elections are critical to the public pension reform movement, with many across the nation watching these bellwether votes. If the measures pass, they will provide momentum for other municipalities to use similar tactics to reduce public pension costs. Public unions are understandably opposed to radical change in pension plans even as they, and most, acknowledge that some changes are needed.
The collapse of the real estate bubble damaged the financial health of many cities. Despite this, public pension costs continued to rise steadily. Municipalities are caught in a relentless downward spiral of less revenue and increasing costs.