LB City Council agrees to look into pay-cutting ballot measure and bargain for pension reform

Sean Belk
Staff Writer

With few options left to avert continual budget cuts, the Long Beach City Council has agreed to look into an initiative that would ask voters whether to turn back wages for non-public safety workers to 2010 levels in the next two fiscal years.
The action, approved in a 6-2 vote at the City Council’s Sept. 18 meeting, also directs city staff to immediately start a collective-bargaining process with miscellaneous employee unions, including the city’s largest union, the International Association of Machinists (IAM).
But it could be a while before the so-called “compensation reform” proposal ever makes it to the ballot, according to City Attorney Robert Shannon, who said state law requires that public employers go through a “meet and confer” process before proposing any changes to employee contracts and must not interfere with existing contracts. Only if negotiations reach an impasse would the City be allowed to propose such a ballot measure, he said.
Consequently, City Manager Patrick West is scheduled to meet with IAM and other employee unions in closed session during a special meeting on Oct. 2.
The ballot proposal, however, drew sharp criticism from union members and some city councilmembers, who said the initiative appears to single out non-public safety employees, such as street sweepers, trash haulers, clerks and librarians, for taking pay raises, while the City has had to make deep cuts to services during the economic downturn.
According to a staff report by Seventh District Councilmember James Johnson, non-public safety workers took as much as 15-percent pay raises while city management employees accepted a “wage freeze” since the recession hit in 2008– an assertion IAM union members refuted.
The ballot proposal comes as both city officials and IAM have failed to come to an agreement on pension reform in recent weeks. Police and fire department unions have already agreed to start paying more toward their retiree benefits, a move expected to save the city more than $100 million over the next decade.
Johnson warned, however, that, if further labor cost-cutting measures aren’t taken, city services will continue to be reduced for the foreseeable future.
“For the last nine years … we’ve cut $209 million and 857 positions in our General Fund alone, eliminating 25 percent of our workforce and even laying off city employees … yet we are still faced with cuts, year after year,” he said. “The answer is simple. Until we control the growth of total compensation, such as skyrocketing pension costs, we will continue to cut services every year with no end in sight.”
Councilmember Al Austin, who was sworn in just two months ago to represent the 8th district, coined the proposal brought by Johnson, co-sponsored by three other councilmembers and backed by Mayor Bob Foster as “political grandstanding.” Austin insisted city staff should instead continue bargaining with IAM members in closed session to reach an agreement.
Ninth District Councilmember Steve Neal, who made a friendly amendment requiring that the City “immediately and concurrently” start negotiating with unions, voted against the proposal, along with Austin.
Fifth District Councilmember Gerrie Schipske, who also spoke out against the action but ended up voting in favor of it, said the drafted proposal “demonizes” non-public safety workers, who account for 20 percent of the General Fund and are paid the least of all city employees. “These people are not the problem,” she said. “You open this door, and you’re going to have citizens saying, ‘Why aren’t we rolling everybody’s salaries, pensions and skill-pays back?’”
Foster said he has faith in the collective-bargaining process but stressed that negotiations with IAM in recent years have fallen flat and promoted the idea of putting the decision to voters. “We’ve been through a lot of discussions, we’ve been through negotiations, and they have not been successful,” he said. “I think we need to move this along.”
Dan Gonzalez, president of IAM Local 19, said union members voted down an offer by city officials last month because the City provided no information on how many employees would be let go if the union agreed to the City’s terms.
“The only guarantee we were given was that layoffs would continue,” he said. “It seems to us that the sentiment has been: if you don’t give us what we want, we’re going to lay you off, and you’re going to pay. If you do give us what we want, we’re going to lay you off, but we’ll feel bad about it.”
Furthermore, it was confirmed that the City turned down a counter offer made by IAM that would have created $3.9 million in savings for the city’s General Fund and $12.2 million in savings across all city departments.
Janet Wright-Schabow, a representative for IAM, said proposing a ballot measure without conforming to the state’s collective-bargaining laws would be considered “unfair labor practices,” similar to the City’s previous action in 2009, when it imposed a furlough initiative.
Even though unions and city officials are expected to negotiate terms next week, Wright-Schabow told the Signal Tribune that “there’s a potential where nothing could happen, if [city officials] decide they really don’t want to save jobs.”
Some city councilmembers, however, pointed to new state legislation, known as AB 340, which Gov. Jerry Brown recently signed into law. The legislation mandates that public workers pay half of their pension costs by 2018, instead of having public employers or taxpayers pick up the tab.
The landmark legislation, which primarily applies to new employees hired after Jan. 1, 2013 but also includes provisions for existing employees, is an attempt to sort out unfunded pension systems that are financially burdening the state and local jurisdictions.
Major state pension funds, such as the California Public Employees’ Retirement System, known as CalPERS, are dealing with massive shortfalls after being hit by low rates of returns on investments during the recession, causing the state to force employers to pay a higher percentage toward retiree benefits.
In Signal Hill, city officials negotiated deals in July 2011 with both miscellaneous and police unions, where existing employees now pay 5 percent of their retiree benefits, instead of having the City pay for their share, according to Charlie Honeycutt, Signal Hill’s deputy city manager.
The City has also negotiated one-year contracts with employee unions, which allowed the City to make contract changes more gradually, he said. Honeycutt added that the City has not granted any cost-of-living increases in the last three years and has been “responsible in hiring” by leaving about seven full-time positions unfilled.
As for Long Beach, Schipske stated in a press release that the City should be focusing on implementing the state’s new mandate of “full pension-cost-sharing” rather than studying proposals to roll back employee salaries. She said gradually imposing pension reform over the next six years would produce savings that could eventually be used to pay off the city’s $1.2-billion unfunded liability.

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