SAN JOSE -- Mayor Chuck Reed issued budget recommendations Friday that credited his controversial fiscal reforms with stabilizing the finances of a city pared by a decade of cutbacks but acknowledged a need for limited raises for officers, firefighters and other workers whose pay cuts helped the city weather past shortfalls.

Reed's "budget message" said the city's finances remain precarious, with employee retirement costs continuing to rise, if more slowly, and urged the City Council to be "cautious with the limited funds we have available, rebuilding reserves and spending in ways that will not add to future deficits."

"By taking bold and difficult actions, we have been able to bring our expenses under control and are in a position to adopt a second consecutive budget without service cuts or layoffs," Reed said in the budget message that will be discussed at Tuesday's council meeting.

But Reed also acknowledged that those actions -- 10 percent pay and benefit cuts and voter-approved pension reforms that employee unions are fighting in court -- have cost the city cops and other key workers. Though he said the city "cannot yet afford to restore the 10 percent pay cuts," the mayor said the city should do what it can to keep veteran employees on the job with limited pay increases.


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"We've lost some good people," Reed said. "Fortunately, there are lots of great people that stayed, and I'd like do something to keep them."

Reed also proposed the city work with the county to seize some 1,200 guns from more than 500 owners that state authorities say should not own them. He suggested increased funding for homeless encampment cleanups, phasing out San Jose's $2.1 million annual contribution to the county's Children's Health Initiative in light of the county's increased revenues from an eighth-cent sales tax, shifting card room oversight out of the police department and raising the city's marijuana tax from 7 percent to 10 percent.

"He strikes an appropriate balance of caution and optimism," Councilman Sam Liccardo said, "recognizing the imperative to restore public safety and other critical services, but maintaining fiscal discipline to make sure we're not passing unpaid bills on to our children."

The council will vote on the budget message, which guides the city manager in preparing a draft budget, on March 26.

Critics have blamed Reed's fiscal agenda for driving away critical employees including police officers, public safety dispatchers and wastewater plant technicians, and predicted the city will have a hard time keeping workers who now feel devalued by city leaders.

"After years of unnecessary austerity, the mayor is finally finding a way to do what we've been advocating all along -- improve city services," said Ben Field, executive officer for the South Bay AFL-CIO Labor Council.

Councilman Ash Kalra said the city's "war" against its workers has made them feel unwelcome. While he conceded the city doesn't have the money to fully restore the pay cuts, he said the mayor should have made a promise to do so as soon as possible to give employees a reason to stay.

"If we can't do it in one year, at least let employees know we want to restore them to where they were a few years back," Kalra said. "To simply say we can't afford it, I think, is not going to stop the damage being done by very talented employees leaving our work force. His strategy to retain our work force is not enough."

Reed countered that the alternative to the pay and benefit cuts he had asked all city workers to take -- right up to himself, the city manager and council -- would have been even deeper layoffs. He noted many unions, including the police officers, agreed to the cuts to save jobs.

"The alternative was to lay off 150 police officers," Reed said. "That doesn't make it any easier to absorb 10 percent cuts, but we're better off because we'd have had even fewer officers than (we) have today."

Reed suggested increasing the budget and limit for overtime as a stopgap measure that could allow officers limited to six hours of overtime per two-week pay period to earn extra money. He also suggested one-time retention bonuses and signing incentives for cops who transfer to the city from other departments. And he wants to continue pushing to use reserve officers and civilians to stretch the capacity of the police force.

Reed further suggested adding additional salary "steps" for officers and other workers who have reached the top pay scale for their position as an alternative to across-the-board raises. He noted that many employees have continued to receive "step" raises as they advanced toward top pay for their position, while more veteran workers already at that level got no increases.

The proposals however didn't cheer Jim Unland, president of the San Jose Police Officers' Association, which has sought 16 percent raises over the next three years.

"Given the escalation in crime and violence in our city, we were expecting to hear bold leadership from the mayor, but instead we heard a whimper," Unland said. "The message contained in this budget is that Chuck Reed wants to rely on a rehash of tired ideas with no specifics and hope for the best. Many of the proposals made by the mayor are about as clear as mud and will do nothing to keep critical city workers on the job."

Contact John Woolfolk at 408-975-9346. Follow him on Twitter at Twitter.com/johnwoolfolk1.

SAN JOSE BUDGET
Some highlights of Mayor Chuck Reed's March Budget Message
  • Reed credited his fiscal reforms with stabilizing city finances after a decade of deficits, citing $81 million in total annual savings including $59.5 million in the city's general fund. City retirement cost growth, which more than tripled from 2002 to 2012, slowed and will be $100 million less in 2015 than originally projected.
  • Reed called for increasing overtime limits and funding, one-time bonuses and raises limited to workers already at top pay scale to retain veteran employees including police officers, dispatchers and wastewater plant technicians.
  • Reed also called for opening a newly built but mothballed police substation in the city's south end next year.
  • Reed called for raising the tax on marijuana businesses from 7 percent to 10 percent.
  • Reed called for the city to work with county officials to seize 1,200 illegally owned firearms.
  • Reed called for shifting card room oversight out of the police department.
  • Reed called for phasing out San Jose's $2.1 million contribution to the Children's Health Initiative in light of Santa Clara County's new funding from an eighth-cent sales tax passed last year.
  • The City Council will hold a hearing on the budget message Tuesday and vote on it March 26.