Labor talks set to resume in one year
Gilroy – Two years of contract wrangling between City Hall and Fire Local #2805 ended Friday, with the announcement that an outside arbitrator has awarded the union a 10 percent pay hike.
The salary increase was chosen by arbitrator John Kagel, of Palo Alto, as the fairest of competing final offers by the city and fire union. Kagel dismissed the city’s proposal for a 4.5 percent raise over a three-year period ending Dec. 2007, saying it failed to keep pace with cost-of-living increases and the city’s own budget projections.
“The union prevailing here is not because of elevated expectations” borne of confidence in the arbitration process, Kagel wrote, “but because the city came in too low” with its offer.
Wages were the only issue the two sides failed to agree on earlier in the year during arbitration hearings, a process that helped settle differences on health care contributions, retirement benefits and minimum staffing levels. The salary decision capped a nine-month arbitration process which, in turn, followed on a year of unsuccessful labor talks.
“The council has the responsibility to the community to balance our city finances with safety and all civic needs and we kept that focus throughout the process,” Mayor Al Pinheiro said in a statement. “We know it took a long time to get a final answer, but we felt that we needed to weigh all of the city’s needs. … Throughout the total process we have always stated that we truly appreciate and respect our firefighters, and now that this is over, we can all get back to the work of providing the highest quality (emergency) services for our community.”
Union spokesman Jim Buessing said firefighters were pleased with the decision but stressed that both sides made gains through arbitration.
“I would say it’s a very fair contract for all parties involved,” Buessing said. “The process did it’s job. It was very positive. It brought forth benefits for everybody – the city, the union membership and the community.”
The wage increase enhances the value of a retirement package negotiated by union members during mediation sessions. The benefit package allows firefighters to retire with 90 percent of their highest annual income as early as age 55. In exchange, the union agreed to free the city from picking up the entire cost of spiraling health care premiums and loosened its grip on staffing minimums.
The latter concession will permit the city to transform a medical response outpost in northwest Gilroy into an engine station with only three firefighters. It does not, however, free the city from staffing its other engines with four firefighters, as mandated by an arbitrator five years ago.
The city’s insistence on rolling back staffing minimums was among the reasons union officials declared impasse in labor talks and called for arbitration.
“The proposal made by the city in regards to that was a blanket proposal to remove the entire agreement (for minimum staffing levels),” Buessing explained. “When we finally sat down as part of the mediation process with Mr. Kagel, we got the specifics of what they wanted to do.”
The agreement hammered out in mediation sessions will allow one three-person engine to operate starting in January, with the caveat that if the engine company shows up for a house fire, “they can’t make an interior fire attack unless there’s imminent danger of a loss of life,” Buessing said.
The staffing concession allows the city to expand fire services while limiting the hit to the city budget.
The 10 percent pay hike will cost the city an estimated $500,000 annually, but will have no short-term effect on budget projections, according to City Administrator Jay Baksa.
“We had, in formulating our budget, kind of known what they were asking for,” said Baksa, explaining that the city budget accounts for a three-year, 3-percent increase in the fire union payroll. “I was able to factor in a worst case scenario.”
In siding with firefighters on the wage issue, Kagel pointed out that the city budgeted for a 3 percent annual increase. Baksa said, however, that the 3 percent accounted for all potential increases in payroll, including retirement benefits and health care costs. Kagel dismissed the argument that the 3-percent payroll figure should include the costs of the new retirement package, pointing out that the benefits do not take effect until one month before the contract expires.
Under the terms of the new contract, firefighters will get an immediate raise of 7 percent, along with back-pay based on the various “effective dates” of the pay increases. The final 3 percent raise takes effect July 2007.
A month later, the city and union expect to once again sit down to negotiate another contract. Neither side would specify the issues they plan to pursue next year.
They also remained silent on the prospect of another round of battling over the fate of arbitration. In the wake of the labor impasse, Mayor Pinheiro led a push to uproot binding arbitration through the ballot box. He and other city officials painted a bleak financial picture and argued the city could not afford to give an outsider control over Gilroy’s budget. Union representatives, meanwhile, accused the city of using scare tactics to rob them of their strongest bargaining chip.
Council support for the effort fizzled as November elections approached and the union threatened political retribution.
On Friday, Pinheiro declined to say if he would revive the effort to repeal arbitration: “That’s a discussion for a different time and different place.”
