Adachi/Moritz Initiative Is a Fraud

by Randy Shaw on August 2, 2010

Since my July 7 story on the so-called pension “reform” initiative on San Francisco’s November ballot, more disturbing facts have emerged. First, the Bay Citizen revealed on July 16 that the measure was almost entirely funded by a billionaire venture capitalist (Michael Moritz) and an ally of Governor Schwarzenegger (Stephen Crane), with Public Defender Jeff Adachi its public face. Second, while the initiative is being sold as pension reform, as much as 80% of its cost savings comes from steep increases in health care costs for city employees with dependents. The Adachi/Moritz plan raises pension costs for a typical employee with one dependent $1750.32 per year, while their health premiums would rise an additional $3,605.60 (a total annual “tax” of over $5300). This in a city that prides itself on its landmark “Healthy San Francisco” law, and whose Congressmember Nancy Pelosi spearheaded federal health care expansion. And who picks up the costs for dependents of city employees unable to afford this steep premium hike? San Francisco taxpayers.

The more I learn about the Adachi/Moritz so-called pension reform initiative, the angrier I get. A measure being sold as a good government reform primarily impacts the lowest paid city employees. It neither reduces the city’s bloated management bureaucracy nor addresses the costly problem of overpaid city “administrators.”

Frankly, the measure perfects fit with Congressional Republicans efforts to maintain the Bush tax cuts for the wealthy while opposing those for the middle-class. Adachi/Moritz is the type of deceptive proposal that could have come from Meg Whitman.

An Attack on Employee Health Care

Every article I have read about the Adachi-Moritz measure, including my own prior piece, accepts the proponents’ framing of it as a pension reform bill. Since states and localities are suffering financial problems for many reasons including rising pension liabilities, many are attracted to an initiative that promises to reduce pension costs and redirect the savings to public services.

But as noted above, most of the Adachi-Moritz savings comes not from pensions, but from health care. The initiative would dramatically raise health care costs on city employees seeking to cover spouses and/or children.

Is that really how San Francisco wants to address its systemic fiscal crisis? The Democratic Party has fought to expand health care coverage and make it more affordable – and now San Francisco voters are being asked by Adachi and Moritz to do the reverse.

No wonder Mayor Gavin Newsom, who has been adamant against supporting any new taxes on the November ballot, opposes this initiative. Newsom recognizes that you can’t support both Healthy San Francisco and a measure that will have the effect of eliminating health care coverage for dependents of city workers, which simply causes San Francisco taxpayers to pick up the bill when these dependents are treated at SF General.

Why is health care even included in an initiative that is supposed to be about pension reform? What does dependent health care have to do with a measure being sold as addressing pensions?

This measure reminds me of Prop 98 on the June 1998 California ballot. Prop 98 was marketed as addressing the abuses of eminent domain, but also included a provision eliminating local rent control laws.

The $170 Million Fallacy

The big selling point of Adachi/Moritz is that it not only saves the city from financial disaster, but also allegedly redirects $170 million in city funds to public services like parks, MUNI and housing. That’s very attractive, given constant MUNI fare hikes and service cuts, and battles to keep streets clean and parks functioning.

It sounds too good to be true. Which it is.

First, as noted above, the projected savings does not account for the costs of dependents forced to use SF General Hospital because their parent or spouse cannot afford the over $3500 annual premium increase.

Second, the projected savings does not account for the loss of local tax revenue. Employees forced to pay over $5000 more in increased pension and health care costs will spend less in San Francisco restaurants, bars, clothing stores and other businesses. This reduces the city’s business revenue, and hurts small businesses already under stress from the recession.

Third, the initiative does not require that a single dollar of savings be spent to improve MUNI or any other public service. Why not?

If the goal were to protect vital public services, why did Adachi and Moritz not create a “lockbox” to ensure this?

Instead, the measure allows city managers to take the savings and hire more administrators Or they can raise management salaries. The initiative even allows the next Mayor to direct the savings toward hiring a bunch of highly paid aides to work on pet mayoral projects.

Adachi/Moritz didn’t have the courage to take on these sacred budget cows. It was easier to promote the corporate agenda of blaming public pensions for urban fiscal problems.

The Single-Bullet Theory

When I first learned that Jeff Adachi was trying to address spiraling pension costs, I applauded his political courage for taking on a tough issue. Unlike some who will oppose the initiative, I do not have a problem with addressing employee pension costs as part of a comprehensive strategy to address San Francisco’s structural budget problem.

But I never suspected that Adachi would use a pension reform measure to attack city employees’ ability to provide medical care for their spouses and children. That’s a strange strategy for somewhat with the title, “Public Defender.”

Adachi/Moritz exempts downtown corporations from helping solve the city’s budget crisis, despite these corporations’ prior litigation against the city’s business tax. This litigation, settled by the city in 2001, has cost San Francisco hundreds of millions of dollars and has not been adequately replaced.

It appears that Moritiz and his wealthy allies were kept out of sight so that the fighting Public Defender with strong progressive credentials could front for the signature drive. But the measure’s protection of corporate interests and targeting of union workers has all the fingerprints of the Schwarzenegger policies endorsed by Stephen Crane, one of the initiative’s drafters.

In targeting city employees and their families to “solve” the city’s budget crisis, Adachi/Moriz is counting upon big money and misrepresentation to foist Republican economic policies on the nation’s most Democratic city.

Randy Shaw is the Editor of Beyond Chron and the author of Beyond the Fields: Cesar Chavez, the UFW and the Struggle for Justice in the 21st Century. Follow Randy on Twitter: @RandyTHClinic

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