Fire union’s total requests spell approximately 26-percent
increase to current firefighter payroll; officials say city already
on its way to exhausting reserves without the hike
Gilroy – City officials say it would cost an additional $1.1 million annually to finance wage and benefit increases requested by Fire Local 2805, which triggered a binding arbitration process this week after six months of negotiations won few concessions on their demands.
The union has asked for a roughly 9-percent wage increase over three years, a retirement package identical to one police already receive, a monthly cash bonus for retirees, paid leave for union-related business, and the ability to allow multiple firefighters to vacation at the same time. Currently, two firefighters can only take vacation on the same days during five “non-peak” months of the year.
Those requests spell an estimated 26-percent increase in the current firefighter payroll, according to Gilroy Human Resources Director LeeAnn McPhillips. Officials say the city simply can’t afford the package.
Jim Buessing, secretary and treasurer for the 36-member union, said he would not comment on the numbers without seeing how the city came up with them.
McPhillips said the city’s math involved a complex formula that takes current salaries and estimates future costs based on successive wage hikes and associated benefit increases. Those calculations show that the biggest hit to city coffers will come from the union’s request for the 3 at 50 program, which allows public safety employees to retire at age 50 with 90 percent of their salary. The program is named 3 at 50 because it grants 3 percent of the employee’s last year’s pay for every year worked, up to 30 years.
While city officials have rejected all of the union’s other demands, they agreed to a scaled back version of the retirement program that would allow firefighters to retire at 55 with 90 percent of their pay.
The union’s request would increase the firefighter’s current payroll by 10.5 percent, according to city officials, whereas the city’s modified plan amounts to a 5.6 percent increase.
“They don’t necessarily agree with our methodology,” McPhillips said, “but at this point they have not produced anything that tells us our numbers are wrong.”
Buessing responded that “we are totally aware of what our wage and benefits costs are, but we’re not going to negotiate through the press.”
Union requests and city counter-offers are tightly guarded during closed-door negotiations, but city leaders began airing the information Thursday, the day after the union declared impasse.
At the same time, council members indicated their desire to ask voters to rescind binding arbitration through a new ballot measure, a move that would rob fire and police unions of their strongest bargaining chip during labor negotiations.
But city leaders are not trying to sway potential voters to their side by revealing union demands, according to Mayor Al Pinheiro.
“At some point in time we must let people know why it went to impasse,” he said. “Whether it’s the union declaring impasse or the city declaring impasse, people are going to want to know why.”
For the moment, a ballot measure is “secondary” to protecting the city’s financial health, according to Pinheiro. He said the city has had to dip into its reserve fund at an increasing rate over the last three years to avoid layoffs and program cutbacks.
A shrinking reserve fund means less safety during economic downturns. It also affects the city’s credit rating – a key factor when officials look to borrow money for public projects.
Finance Director Cindy Murphy confirmed that the city began dipping into its reserve fund in 2002, when it borrowed $400,000 to pay operating expenses. This year, the city expects to borrow more than $3 million, lowering the fund to a projected $20.6 million.
If all else remains the same, Murphy predicted the city would exhaust it’s surplus within five years. That estimate does not take into account any increases in firefighter wages or benefits.
“We have varied opinions on what the city’s able to pay and what they’re not able to pay,” Buessing said. “We brought in a professional last time that audited the finances and the answers came out.”
The city and fire union have met the first stipulation of the process, which requires each side to appoint a representative to an arbitration panel within three days of impasse. Ken Heredia, Local 2805’s chief negotiator, will represent the fire union, and labor attorney Charles Sakai will represent the city.
The next step, which involves selecting a third “neutral” arbitrator, is already under way, according to McPhillips. She said a union attorney has asked the state for a list of seven independent arbiters. Sakai and Heredia will select a third panel member from that list. If they cannot agree, each will take turns scratching off names until one is left.
Once formed, the panel will set deadlines for each side to submit a last offer of settlement on each item in dispute. The arbitrators will judge each item based on wage and benefit costs, the city’s financial status, and other factors.
Officials expect the arbitration process to last at least six months.
The last time the city and fire union went to arbitration in 2000, firefighters won an eight-person minimum staffing requirement, which meant that each of its two fire stations could staff an engine with at least four firefighters. In 2003, when Gilroy opened a third station, officials agreed to a general mandate requiring at least four firefighters to an engine.
“In the last arbitration process we lost things too,” Buessing said. “Last time we did this, our proposal included retired medical [benefits] and 3 at 50. We didn’t receive those benefits.”
As the city and union head into their second arbitration in seven years, Buessing defended the principle of third-party mediation: “The guy does what we should have been doing at the bargaining table.”
City’s shrinking funds
The city’s “rainy day fund” is shrinking as city officials dip into reserves to avoid layoffs and program cutbacks.
Year Surplus Borrowed
2001/02 $25.6 million ….
2002/03 $25.2 million $400,000
2003/04 $23.9 million $1.3 million
2004/05* $20.6 million $3.3 million
*Represents a projection
Source: Audited city financial statements
