Fire union representatives claim money is there
– and that City Administrator Jay Baksa has overestimated rate
of reserve fund depletion
Gilroy – For months, Gilroy officials have warned about the city’s inability to withstand a big-time budget hit, especially in the form of the retirement benefits and salary increases requested by firefighters. Officials have repeatedly sounded the alarm about budget reserves, which they say will vanish within six years at the current rate of spending.
On Monday, representatives for Fire Local #2805 sought to demonstrate before an outside arbitrator, called in to resolve a year-long labor dispute with City Hall, that such warnings are more hype than reality.
The most significant challenge to official claims about the city budget centered on the fund balance, or reserve fund. City administrator Jay Baksa and other officials have warned that the city would tear through the reserves, which now stand at $24.7 million, if it continues to draw down on the balance at its current pace of roughly $4 million a year.
Union attorney Chris Platten pointed out, however, that Baksa has consistently over-estimated the rate of depletion in recent years by millions of dollars. The 2002 budget projected, for instance, that reserves would stand at $18 million in 2005 – more than $6 million shy of its current figure.
“Even through the dot-com crash, the city has held up very well financially,” union representative Jim Buessing said in an interview after the hearing. “All the items that were supposed to drive us into the red did not occur.”
Arbitrator John Kagel of Palo Alto skeptically questioned Baksa on his budget calculations, at one point asking if projecting the cost of all of the union’s salary and benefit requests was “a realistic” budgeting method, given the improbability that any bargaining group receives all they ask for.
“One must budget for the worst and hope for the best,” Baksa replied.
While Platten assailed the city’s budgetary forecasts, city attorney Jeff Sloan sought to puncture union arguments about the quality of their pay. Union officials say they are being denied the same level of compensation enjoyed by both local police and other fire departments in the region. In order to remain competitive, they say they need an 11 percent pay increase over three years and an expensive retirement package that would allow them to retire as early as age 50 with 90 percent of pay, assuming they work 30 years.
Geoff Rothman, a city-hired compensation expert, testified that Gilroy firefighters already earn better than average pay when compared to their peers in the region. He said that city firefighters earn double the salary of state firefighters working for the South County Fire Protection District, which also has a contract with Gilroy to provide supplementary fire service. The South County firefighters earn significantly less even after accounting for standard overtime earnings, Rothman said.
In coming months, arbitrator Kagel will sort through complex budget projections, economic indicators and historical trends in pension fund returns to determine what the city can and can not afford to pay the 36-member fire union. He also likely will take into account the prevailing wages and benefits enjoyed by firefighters in other areas.
On Monday, Kagel showed little patience for even the hint of skewed data.
When Rothman was testifying about the above-average pay enjoyed by Gilroy firefighters, the arbitrator interjected to ask if the figures accounted for the city’s recent decision to begin deducting a small pension contribution of less than 1 percent from firefighter salaries.
Rothman said the salary projections did not factor in the deduction, which the city plans to start taking from firefighters this month. City officials could not be reached later in the day for comment on the decision, which was not previously disclosed to the public.
Baksa’s testimony, which lasted two hours, marks the last major phase of the hearing process. Kagel, as head of a three-person arbitration panel, is expected to mete out binding decisions on five outstanding contract items in coming months. The union and city are free to negotiate a settlement outside the arbitration process. They have settled 14 contract issues since hearings began in January, but five of the most contentious items remain unresolved.
City officials have said they would accept a modified version of the union’s retirement package request if the union agrees to pay future increases in health care costs and to eliminate minimum staffing levels. Union leaders have called the latter request a “deal-breaker.”
