Salary, pension talks holding up final budget

Final public sessions on the City of Healdsburg’s 2010-11 budget
are being delayed while labor union negotiations with all five
bargaining units continue this week.
City leaders are asking police, fire, electric and all other
city workers to accept “concessions” to help balance a budget that
continues to be strained by a lagging economy, rising costs and a
stingy state government.
With the bulk of the city’s general fund allocated to wages and
benefits, almost all budget sessions begin and end with talk about
pensions, payroll and people.
The city has 109 full-time employees and 255 total employees.
That’s a $10.7 million annual payroll with another $6.7 million to
be spent on fringe benefits.
Almost all of the city’s proposed $7.1 million General Fund is
being allocated to wages and benefits, including $5.8 million for
fire and police personnel.
Healdsburg’s City Council last month amended several budget
items to reinstitute several fire and police positions due to be
cut. They also proposed funding about $400,000 in promotional
programs directed by the Healdsburg Chamber of Commerce, lodging
coalition, local merchants and the Healdsburg Auto Dealers
group.
The “put backs” to the tentative working draft were based on an
early indication of “willingness” by the city’s fire and police
unions to accept a 6.8 percent reduction in salaries and benefits.
Also, one-time use of wastewater and other utility reserves were
tentatively placed in the General Fund.
“We are looking for an amicable solution for both sides,” Matt
Jenkins, head of the Healdsburg Police Officers Association (HPOA)
told The Tribune last week. “We said we’re willing to accept
concessions if that helps us find a middle ground.”
More labor talks between the city and the HPOA and fire safety
(International Association of Firefighters) were taking place this
week. An opening session with the city’s electrical workers
(International Brotherhood of Electrical Workers) also was
scheduled to take place.
“We hope to wrap up our talks with the fire and police
units,” Mayor Jim Wood said. “There’s been some back and forth and
some delays but we’re close to final language now. I think the
other three bargaining units are waiting to see what happens with
the fire and police (units.)”
The city council and City Manager Marjie Pettus orignally had
planned to hold another public session on the budget last week.
That public budget review is now tentatively set for June 21 or
28.
Last year a “wage freeze” was put in place by the city council
at the same time they made nearly $1 million in “across the board”
cuts to staffing hours, training, swimming pool operations and
other programs. Several job duties were consolidated among fewer
staff at City Hall.
“I think we’re seeing what’s been happening in the private
sector finally catching up to the public sector,” Wood said. “It’s
been dramatic trying to deal with this economy and I think we’re
seeing a big disparity between the private and public sectors.”
The mayor said “structural changes” are needed at the city,
similar to changes now being made at the county government and city
of Santa Rosa. The county is proposing to cut 177 jobs to solve a
$61 million budget deficit and Santa Rosa is instituting a two-tier
retirement system, providing smaller pensions for newer
employees.
“When you look around, we’re (Healdsburg) doing better than most
but maybe not as good as some. I think the most important thing for
the council to do right now is close up these (labor) talks and get
busy going forward with the next several years of budgets,” said
Wood.
“What’s absolutely killing is retirement and medical insurance
costs. The cost and impact of CalPERS is huge.” The city is paying
the CalPERS retirement fund $2.86 million this year for retiree
pensions and current employees contributions.
Healdsburg’s city workers’ annual salaries compare very close to
“average” with other nearby cities and government agencies, based
on a study completed for the city late last year. Such
non-scientific surveys do not account for the overall size of each
government or length of service in each specific job position.
The compensation survey looked at wage levels among 15 cities of
all sizes in Sonoma and Marin counties, and in some charts included
a wider survey of Bay Area cities.
Pettus and HPOA’s Jenkins both agreed most Healdsburg employees
are “at, or just below” the mean level, based on the survey
findings.
“The public often perceives we are paying our city employees too
much,” said Council member Gary Plass. “Do we pay too much? Maybe
we do, but we have to run the city and we have to offer competitive
wages. We don’t want a revolving door. Right now we’re losing
department heads left and right.” Healdsburg’s police and fire
chiefs are retiring this month and the city’s electric and planning
department directors also are departing.
“We have to ask for concessions from our labor unions. In the
end it’s how we can save jobs,” said Plass, who negotiated from the
other side of the table for 20 years when he served as a police
officer. “We need structural change, possibly a two-tier retirement
system and a change in health insurance benefits. When we get fat
again — and we will — we need to remember what we’re doing right
now and what we’re going through. It can be the same or like it
once was when we come out of this.”
A long term financial forecast by city Finance Director Heather
Ippoliti sees city revenues declining by nine percent over the next
five years while expenses rise by eight percent. Without major
budget adjustments or improved tax revenues the city’s reserves and
other funds would be depleted in two years.
“We’re not going to let that happen,” Wood repeated this week,
“but that is why we need to ask our employees for these concessions
and make the other required structural changes.”
The fastest growing expenses are in employee benefits and
retirement plans. Currently, the city pays 100 percent of qualified
employees health, dental, vision and CalPERS retirement
contributions. Dependent coverage is also paid by the city.
Non-public safety employees can retire after age 55 with 20
years of public agency employment and receive 50 percent of their
final salary level each year until their death. Police and fire
retirees receive 90 percent of their final pay level in annual
pension payments. Pension levels are awarded an annual
cost-of-living increase of about two percent in most years.
Besides the General Fund, the city has separate funds for its
electric utility, redevelopment agency, streets, water, wastewater,
parks and a Capital Improvement Program (CIP), plus a few much
smaller funds.
Added together this represents about a $125 million budget, the
vast majority of which is “nondiscretionary” operations to provide
electric, water, sewer, street and park maintenance and services.
The city also has an annual $6.8 million debt service obligation
that has to be paid on current bonds and loans.