Monday, Oct. 26, 2009 | After three years of waiting, Tuesday’s San Diego City Council hearing is supposed to resolve one of the finals steps that could lead to the voter-approved privatization of city services.

Or it could result in more legal morass for a program not known for anything other than controversy and delay.

The city and its white- and blue-collar labor unions are at impasse over “managed competition,” the program that allows private business to compete with the city employees for public services. On Tuesday, the document that sets ground rules for how the city will contract out its services — if the city’s health care costs will be factored into the competition, for example — will be heard.

There’s more at stake on Tuesday than outsourcing. The hearing could be the first true test of City Attorney Jan Goldsmith’s new rules on breaking labor stalemates. His January memorandum gives City Council, not the mayor, the authority to resolve disputes.

Should council flex its muscles, it could set the terms of future negotiations between the city and its unions and set off an unprecedented chain of resolutions, vetoes and overrides. And that possibility assumes the mayor will play along with Goldsmith’s rules.

On Tuesday, after it hears testimony from the unions and Mayor Jerry Sanders’ Office, City Council could decide to impose the mayor’s offer on the unions or redirect both parties back to the negotiating table. In its direction, council could force the mayor to consider proposals it wants.

Council’s ideas could be contrary to the mayor’s. As such, the mayor long has held that Goldsmith’s opinion ties his hands at the negotiating table.

Asked if the mayor will recognize council changes to his offer on Tuesday, city negotiator and Human Resources Director Scott Chadwick replied, “if they are terms that are acceptable to the mayor. If they aren’t, I’m not sure what the outcome would be.”

However, Chadwick said he didn’t know if the Mayor’s Office would be able to modify his final offer.

Told the mayor’s stance, Damian Tryon, business representative for blue-collar Local 127, chuckled. He said if mayor wants managed competition, he should play by the rules.

“He either wants this thing to happen or not,” Tryon said. “I can’t allow for craziness anymore.”

Resistance from any party would test the new procedures in a way they haven’t been before and could set precedent for how these disputes will play out in the future.

The guidelines envision a series of council resolutions that send the parties back to negotiate, and if impasse is reached again, decide on a new proposal. These resolutions are subject to mayoral veto and council override.

“We tried to give the roadmap back in January,” Goldsmith said. “If things come up, we will be prepared for any eventuality while staying out of the way of policymakers.”

A potential impasse over the impasse rules was expected in April’s contract dispute between the city and its labor unions. But the overwhelming Democratic and labor-backed council shocked observers by imposing the mayor’s employee contract offer without changes.

But for Tuesday’s hearing, council redirection of the mayor’s offer could be the most likely outcome.

Health care could serve as an example of how the council could go against the mayor’s current proposal.

Organized labor wants the costs to provide health care excluded from bid comparisons between private companies and city departments. The rationale is that contractors shouldn’t win city contracts by reducing or denying workers’ medical benefits. U.S. Congress implemented this exclusion for the federal outsourcing program.

The Mayor’s Office position now is that health care should be included in the bid comparisons as the cost of doing business. But that wasn’t always the case.

Last July, City Council agreed to a mayor-supported proposal to eliminate health care costs from bids. That came before a labor law ruling nullified past managed competition decisions.

Four council members, Kevin Faulconer, Donna Frye, Ben Hueso and Tony Young, remain from that vote and three new ones, Marti Emerald, Todd Gloria and Sherri Lightner, have given strong indications they favor greater protection for city employees. Frye, Hueso and Young reiterated their support for a health care cost exclusion in a June memo.

Hueso, the council president, declined an interview request Monday through his spokeswoman.

The Mayor’s Office embraced the health care cost exclusion last year as well.

“We’ve definitely through our discussions have agreed to remove the cost of health care so that there’s a level playing field for both the private bid as well as the city’s bid on any of the proposals,” City Chief Operating Officer Jay Goldstone told Council during last July’s hearing.

The Mayor’s Office concedes it had agreed to exclude health care from the bids, but now says doing so would water down competition. Further, it emphasizes that the prior agreement didn’t occur within labor negotiations. This reversal has left labor representatives upset.

Regardless of the impasse hearing’s outcome, there remains a long way to go before the city begins outsourcing services, through managed competition or otherwise.

The city still has to pass an ordinance implementing the program, but both the Mayor’s Office and labor believe that process will take less time, given that most major areas of disagreement are addressed in the guide.

Please contact Liam Dillon directly at liam.dillon@voiceofsandiego.org and follow him on Twitter: twitter.com/dillonliam. And set the tone of the debate with a letter to the editor.

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