Last month, San Diego Municipal Employees Association General Manager Michael Zucchet held a press conference pushing for five-year labor deals.
The Promise: To sign five-year contracts with the city’s six employee unions.
Determination: Working On It
Mayor Bob Filner has nearly reached the finish line on one of his boldest campaign pledges.
As a candidate, Filner promised to reach five-year deals with the city’s labor unions that incorporate pensionable pay freezes, an element key to the budget savings associated with the city’s controversial pension initiative. Though the mayor opposed Prop. B, he said he’d try to implement it despite an ongoing legal battle.
To do so required a five-year freeze in salary increases factored into staffers’ pensions. Filner appears likely to achieve that.
At a Tuesday press conference, Filner announced the city had secured tentative deals with all six of its labor groups. All include pensionable pay freezes.
This is significant. The city could see considerable savings if the unions and the City Council give final approval to these deals. An outside analysis found that the city could shave $25.2 million from its pension bill for the year that begins in July with six five-year deals.
These savings are possible because the pension system assumes an annual 3.75 percent increase in staffers’ pensionable pay. Five-year deals allow the system to assume no pay hikes, thus saving significant cash over the long haul.
Filner sought the long-term deals with those savings in mind but they do come at a cost. The city’s tentative packages provide the average staffer a 5.25 percent increase in non-pensionable, take-home pay over the next three years. (Police, however, are set to receive a 7 percent increase over five years.)
If the current contracts are approved, city workers would see an average pay hike of 1.75 percent to 2.25 percent beginning in July.
Expenses associated with those increases, which largely come in the form of benefits, will significantly offset the savings Filner has repeatedly cited. City staffers said Tuesday they expect to have roughly $10 million in new cash if the six five-year deals are approved.
Filner already has some plans for that extra cash.
“We are going to use the money that would have gone to the pension fund on services, infrastructure repair and reducing our reliance on one-time funds to balance the budget,” he said.
Regardless of any budget changes Filner makes, the five-year deals are unprecedented. A handful of state and San Diego area labor experts who spoke to Voice of San Diego earlier this year couldn’t point to deals with employees that endured for more than three years.
Even three-year labor deals are rare among local governments.
Filner’s success may also allow him to avoid wage-related battles with the city’s labor unions for much of his mayoral term. The contracts guarantee the city’s unions can’t approach officials about potential non-pensionable wage increases until the 2017 fiscal year. Labor leaders are all but certain to take advantage of these clauses but the contracts they’re expected to sign are for five years.
This means the city’s bill for outside attorneys who assist with labor talks will also significantly decrease.
The road to five-year deals was far from smooth. Filner repeatedly said some council members were reluctant to sign off and at one point, most of the city’s union leaders called a press conference to share their own proposals after talks stalled.
But while Filner appears likely to keep his promise, a few steps stand between the mayor and a “promise kept” rating.
Members of the city’s labor unions will need to sign off on the deals in coming days. Then six City Council members must approve the deals, a task expected to become easier after labor-friendly soon-to-be District 4 Councilwoman Myrtle Cole is sworn in next week.
Finally, to achieve the budget savings Filner has described, an actuary must run the numbers and share them with the city’s pension board, which will then decide whether the five-year deals and the resulting pay savings merit changes to the city’s long-term pension bills. The board would need to agree to the change before July 1.
Filner is very close to keeping this pledge, but for now he earns a “Working On It.”
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