CONTROVERSY FLARES OVER SAN JOSE PROPOSALS TO TAX POT, TIGHTEN POLICE
AND FIREFIGHTER PAY

Armed with a recent poll suggesting two-thirds of San Jose residents
would approve, city officials have recommended a November ballot
measure calling for a tax on medicinal marijuana.

But the proposal -- one of five possible measures the City Council
will consider next month -- drew fire from marijuana providers who say
the 10 percent level is excessive. Critics also question the morality
of taxing what they consider medicine.

"Ten percent is just ridiculous," said David Hodges, founder of the
San Jose Cannabis Buyers Collective. Dozens of similar operations have
sprouted in the past year since Councilman Pierluigi Oliverio proposed
licensing and taxing medicinal marijuana operations.

Hodges said the proposal "would make San Jose the city with the
highest medical cannabis tax rate in the state and put undue burden on
patients." Users say local dispensaries charge about $45 on average
for an eighth of an ounce.

The marijuana tax wasn't the only proposed measure drawing opposition.
City police officers and firefighters on Friday said they would
vigorously oppose a proposal by Mayor Chuck Reed to limit pay and
benefit increases that outside arbitrators can award them when
contract talks stall.

"As far as we're concerned, they dropped a nuclear bomb on us," said
George Beattie, president of the San Jose Police Officers'
Association.

Other measures under consideration would hike the city's sales tax by
a quarter of a cent; allow reduced retirement benefits for new city
workers; and permit city-owned land near the Diridon train station to
be used for a privately built baseball stadium.

The City Council's Rules Committee, which Reed heads, on Wednesday
will discuss putting all five proposed measures on the agenda for the
council's Aug. 3 meeting; that's the deadline to get them on the fall
ballot.

Only three are likely to make it to the ballot. While the ballpark
measure would be paid for privately, the city only has money budgeted
for two other measures.

Perhaps the least likely among them is the quarter-cent sales tax. The
same city poll that found two-thirds of respondents would approve a
medical marijuana tax found only "marginal" support for a new sales
tax.

The city poll of 800 likely city voters, taken July 6 to 11, found
support to raise San Jose's sales tax to 9.5 percent -- more than any
other city in the county except Campbell -- was just 48 percent. The
margin of error was 3.5 to 4.9 percentage points.

Reed was traveling and unavailable for comment, but spokeswoman
Michelle McGurk said: "He has serious concerns about the viability of
a sales tax measure."

By contrast, polling on a marijuana tax found 66 percent in support.
Respondents were polled on both a 3 percent tax rate, as Oliverio had
initially suggested, and 10 percent.

Oliverio said he has no preference on the rate. "That's a great
discussion for the council to have," he said.

The city is in the midst of developing a licensing scheme for medical
marijuana outfits, including how many the city should permit, but it
likely won't be complete until after the November election.

Complicating matters is a statewide initiative also on the November
ballot to legalize recreational marijuana use. Marijuana remains
illegal in federal law, though the Obama administration has said it
would not bust operators complying with state laws.

City officials said it's hard to say how much a pot tax could
generate.

But while advocates are sure to lobby against a 10 percent tax, that
fight may pale in comparison to the one police officers and
firefighters are likely to wage to preserve the right to have
arbitrators settle pay and benefit disputes with the city. City voters
awarded those rights three decades ago.

Reed, a recent civil grand jury, business and citizen groups have
criticized binding arbitration, saying it has saddled cities with pay
and benefits it cannot afford, forcing drastic cuts in other programs
such as parks and libraries.

Voters in Vallejo, which is struggling to emerge from a 2008
bankruptcy driven in part by rising employee costs, narrowly voted in
June to repeal arbitration.

San Jose police and firefighters, noting they are barred from
striking, say arbitration allows a fair resolution by an outside
observer and has been seldom invoked. Firefighters said the city has
given them bigger raises than arbitrators have. But Reed says even the
specter of arbitration forces city negotiators to offer sweet deals.

The mayor's proposal calls for limiting rather than repealing
arbitration. It would prohibit arbitrators from awarding pay or
benefits that exceed the rate of city revenue increases. Raises could
not exceed what the council has negotiated with other unions. The
proposal also would prohibit retroactive increases or operational
changes that conflict with decisions by department chiefs.

In addition, the arbitration clause would be suspended entirely if the
changes were ruled invalid by a court challenge.

Reed's office said it was a more moderate proposal than the outright
repeal many have urged, but officers and firefighters said the effect
is the same, and they were outraged the mayor didn't work with them to
develop the idea. Reed's office said ongoing contract talks prevented
a more collaborative approach.

"They're trying to gut the thing," San Jose Firefighters union
President Randy Sekany said. "They may as well say repeal it, because
it'll be worthless."