Gilroy’s non-unionized, high-ranking staff have joined two of
the city’s four unions in taking furlough days and temporary pay
cuts rather than layoffs, city officials said. The deal will
effectively shut down City Hall on the first and third Fridays of
the month starting in July.
Gilroy’s non-unionized, high-ranking staff have joined two of the city’s four unions in taking furlough days and temporary pay cuts rather than layoffs, city officials said. The deal will effectively shut down City Hall on the first and third Fridays of the month starting in July.
City Administrator Tom Haglund announced Thursday night that Gilroy’s eight un-represented employees – who include himself and other high-paid department heads – agreed to take furloughs over the next two years and forego any raises over the next fiscal year, which begins July 1. The announcement comes on the heels of a closed session Wednesday night in which the council voted 4-3 to accept a proposal from the Gilroy Management Association and voted 5-2 to accept a proposal from the American Federation of State, County and Municipal Employees Local 101 – Gilroy’s largest union with 100 members ranging from city engineers to emergency dispatchers – according to Human Resources Director LeeAnn McPhillips. Councilmen Perry Woodward and Craig Gartman voted against both proposals, and Council member Cat Tucker joined the pair in rejecting the managers’ proposal.
The deals will save Gilroy $1.6 million annually over the next two fiscal years. Nearly 70 percent of that money will go back into the general fund – narrowing next year’s expected deficit from $4.7 million to $3.6 million out of $37 million in expenses. The rest of the money – about $500,000 – will replenish the city’s water and sewer accounts that pay salaries for associated employees. The same cost reductions will occur the following fiscal year.
The bulk of the savings come from the furlough days, which will happen the first and third Fridays of every month, beginning July 1, Haglund said. Everyone, from Gilroy’s janitors to its top boss, will have to take the days off, effectively closing City Hall twice a month – save the police and fire departments.
The forced unpaid days will reduce every employees’ annual earnings about 9 percent, Haglund said, and AFSCME employees also voted Thursday to forfeit a previously agreed-upon 4 percent “cost-of-living adjustment” over the next year – worth about $400,000.
This wage freeze comes after the city council already halted additional merit-based pay hikes earlier this year for all employees through at least June 30, 2010. The move prompted the Gilroy Police Officers’ Association and Fire Local 2805 to file grievances with the city because they said it violated labor laws, but AFSCME and the managers’ group agreed to accept the merit freeze. Police and fire unions are still negotiating.
Both the un-represented employees and the recently formed managers group had not yet negotiated their cost-of-living raises, but they also agreed to forego any salary hikes over the next year. AFSCME also agreed to give up tuition reimbursements – a cost of about $10,000 for the city, Haglund said – for employees who take classes to bolster their value at work.
Not paying AFSCME employees for one day will save more than $22,500 in salary and benefits costs – or $540,000 annually under the agreed-upon furlough arrangement – AFSCME Business Agent Tina Acree said.
Officials with knowledge of the negotiations said the two proposals fell short of the council’s demand for each union to cut 16 percent of personnel costs, and Tucker said she rejected the managers’ proposal because she was looking for permanent pay cuts. The approved AFSCME proposal avoids 13 layoffs and GMA’s proposal spares four of its 23 members – who range from fire battalion chiefs to budget officers – who were slated to be cut, sources said.
The council will formally vote on the union deals June 8, when the body will also vote on next fiscal year’s budget. Mayor Al Pinheiro said he hopes to have resolutions with police and fire unions by then, as well.
“You now have two unions that have been able to meet the council’s request,” Pinheiro said Thursday. “I certainly hope the other two will do the same.”
Local 2805 Representative Jim Buessing said he was glad to hear two bargaining blocs reached a deal with the city, and he said his team would continue negotiating with city officials Friday and possibly over the weekend to reach a solution for the council to approve Monday night.
Buessing has declined to detail his unions proposals, but a 16 percent cut to the 33-member union equals about six firefighters. Four firefighters and other support staff were among the 48 full-time employees across the city who lost their jobs Jan. 31, bringing Gilroy’s workforce down to 227 people. Police Representative Mitch Madruga has also declined to detail his union’s proposal, but a 16 percent cut equals about 10 of the department’s 57 sworn officers.
No officers lost their jobs in January, but two took jobs with the Watsonville Police Department earlier this month amid uncertainties surrounding their positions, which will remain unfilled, Police Chief Denise Turner said. As he was walking out of the station Thursday morning, Sgt. Jim Gillio said he and his colleagues were still concerned. Councilman Dion Bracco said the council’s decision to accept two union proposals showed its commitment to its employees.
Without going into details about the AFSCME and GMA proposals the council approved, Woodward said he rejected them because furloughs only create temporary cost reductions to help narrow next year’s expected deficit. Haglund is also recommending Gilroy’s fiscal calendar span two years along with the furlough period.
Compared to last year, sales tax receipts have fallen off by more than 18 percent, or $2.6 million, and Haglund has warned that property tax revenues will fall nearly 15 percent, or $1.4 million, next year as more resident re-value their homes. The state could further knock property tax receipts if lawmakers borrow $1.2 million in local property revenues, which staff expects to total $8.4 million next fiscal year, Haglund said.
While Gilroy has typically relied on its robust reserve fund to resolve financial hiccups, council members have said they are unwilling to further drain the rainy day fund after a $4.7 million hit last year and an expected $8.4 million reduction by the end of the current fiscal. The fund will hold about $13.6 million next fiscal year, or about 36 percent of expenses. The fund will also have to cover any general fund shortfalls left after union talks.
