January 8, 2013
City fact-finding representative rejects proposed 12.3% single-year increase in employee pay
In early test of state-mandated fact-finding process, panelist recommends major increase in employee compensation despite on-going City deficit
In a written statement, Concord's representative on a state-mandated fact-finding panel has rejected a recommendation by the panel's chair that city employees receive an average single-year compensation increase of 12.3 percent.
Two bargaining units of Concord City employees, represented by Teamsters Local 856, have been at impasse with the City since their contract expired in June. As a result, the Teamsters and the City have engaged in a new, state-mandated impasse process.
The fact-finding process includes a three-person panel: one City representative, one union representative, and one third party member appointed by the Public Employee Relations Board (PERB), who chairs the panel.
On Monday, Carol Vendrillo, the chair of the fact-finding panel, issued an opinion that calls on the City to disregard its 10-year fiscal planning process, shift funds from its fiscal reserve and increase employee compensation by 12.3 percent this fiscal year, with the potential for even more increases in the next year.
City officials rejected the recommendation, noting that a double-digit increase in compensation is out of line in this recessionary era, especially in the public sector where the recent economic crisis has seen cities file for bankruptcy under the weight of rapidly increasing employee costs. Ultimately, an increase of that magnitude would jeopardize both city services and city jobs.
"The chair's recommendations are so out of touch with the reality of Concord's finances that we were shocked," said Kay Winer, the City's representative on the panel and interim Assistant City Manager. "The City already faces a $5.5 million structural deficit. It would be fiscally reckless to give our employees a 12 percent raise in one year."
If the City implemented the chair's recommendation for all of its non-sworn employees, it would increase the structural deficit by $2.5 million to $8 million.
In 2010, Concord voters passed Measure Q, a five-year, half-cent sales tax increase, specifically designed to plug the City's structural budget deficit and protect city services from severe cuts while the economy recovered. Unfortunately, Concord's economy has not yet recovered from "The Great Recession." In fact, assessed valuations in Concord are in a continued decline, resulting in lower property tax revenues. Meanwhile, Measure Q revenue will cease in just over three years.
"We value our employees, their hard work, and their dedication to this city," said Mayor Dan Helix. "We recognize that they have given up raises, agreed to furloughs, and continue to make contributions to their retirement and pension costs to help the City get through the fiscal crisis. This is respected and appreciated. But the bottom line is that the City simply cannot afford to give them a 12 percent increase in compensation without jeopardizing the fiscal stability of the City."
Since 2009, Concord reduced its workforce by 119 positions, with only eight layoffs, and was able to give the union no-layoff guarantees in fiscal years 2011 and 2012.
"We've always sought to protect the interests of our employees," said interim City Manager Valerie Barone. "That's why the City Council chose to use attrition, an early retirement incentive program, and reserve funds to protect both services and jobs through the recession. We understand why employees are pushing to regain some of the ground they have lost in recent years. But adopting the view that the City should give them a 12 percent increase in compensation in a single year would mean that the deficit will continue to grow and Concord will face its own Fiscal Cliff in just a few years when Measure Q revenue runs out."
This was Concord's first test of the fact-finding process. AB 646, which went into effect statewide last year, can only be triggered by employee organizations. If local employers and their employees are unable to reach agreement through negotiation, the employee organization (but not the employer) "may request that the parties' differences be submitted to a fact-finding panel."
Although AB 646 mandates that the city participate in fact-finding if the union requests it, the panel's chair can only make recommendations; her findings are not binding.
"In this case, the City and the Teamsters entered fact-finding far apart," Barone said, "and unfortunately, this out-of-touch recommendation will do nothing to bring us closer together. We will continue to work with our employees in hopes of reaching a resolution."