The Santa Rosa City Council approved $2.1 million in concessions from its employees Tuesday, including a divisive deal that gives firefighters 6 percent raises but requires them to contribute most of that increase over the next two years toward the cost of their pensions.
Supporters characterized the changes as a major short-term money saver for the city and a key move toward long-term pension reform.
"It's very important that we look at this contract for what it is, and it's a step in the right direction," said Councilman Jake Ours.
But critics blasted it as a short-sighted move that locks the city into a bad contract for another year and unfairly doles out raises to a group that has already enjoyed nearly 20 percent increases over their six-year contract.
Dennis Morris, a retired Santa Rosa resident who served as human resources director for the city of Vallejo before it went bankrupt in 2008, said the one-year contact extension and the decision to grant firefighters raises while other employees are taking pay cuts reminds him of the policies of his former city.
"What it reminded me of, to my shock, were the very things that staff was advising the Vallejo City Council not to do before they went bankrupt," said Morris
Morris, 64, said the fact that most of the 6 percent raise will be used to offset the city's pension costs ignores the ripple effect on everything from pension costs to disability insurance to vacation payouts.
He also argued that extending the contract another year, instead of allowing it to expire next year when all other city contracts will be open, gives away some of the city's only leverage.
Paying firefighters more when hundreds of people apply for every opening "makes no sense," he added.
But the council majority strongly refuted any suggestion that the city is on a path to insolvency.
"We are not Vallejo. We are not Oakland. We are not on the brink of bankruptcy by any means," Councilman Scott Bartley said.
City Manager Kathy Millison said the deal was good for the city because it accomplished three goals that have been key in its concession negotiations with employee groups: wage concessions, pension reform and health plan cost containment.
Firefighters are in the final year of a six-year contract. They have twice deferred raises due under that contract, one for 3.5 percent, another for 2.5 percent. If the council rejected the compromise, the city would be required to pay the 6 percent this year, at a cost of $1.2 million.
Chris Sliz, the city's employee relations manager, reminded the council the city has no choice in the matter because "this is a legal and binding contract."
Instead of sticking to that contract, however, the firefighters agreed to negotiate changes the city says will save it $944,000 next year.
Firefighters will take their 3.5 percent raise this fiscal year, which began July 1, but 3 percent will go to reduce the city's share of their pension costs, which have been soaring in recent years. The following year, they would get 2.5 percent raises, with 2 percent going for the same purpose. Next year's savings is pegged at $1.2 million.
In future years, the savings from having firefighters pay 5 percent toward the city's pension costs will save about $700,000 annually.
In addition, they have agreed to open discussions about a two-tiered pension system that offers less generous pension benefits for future firefighters, another long-term goal of the city.
Councilman Gary Wysocky wondered why the firefighters wouldn't just start paying their own share of their pension costs, instead of picking up 5 percent of the city's share.
Currently, the city picks up the 9 percent that firefighters are supposed to pay toward their pensions, known as Employee Paid Member Contributions.
Years ago, firefighters gave up raises in exchange for the city picking up their share, and they're philosophically opposed to reversing course on that, Sliz said.
Morris, the retired Vallejo official, said he thinks he knows another reason. There are significant pension overhaul efforts underway in the state, including preventing cities from paying the employees' share of pension costs.
"They want another year of a shield to try to avoid those things," Morris said.
In the event that does happen, the city has agreed to give firefighters a 4.5 percent raise to help cover those costs. It also has agreed that 4.5 percent of the 5 percent they will be contributing to the city's pension costs next year will be shifted to cover the remainder of the 9 percent, Sliz explained.
But Wysocky, a CPA who said he must frequently advise clients to adapt to changing financial circumstances, urged his colleagues to let the contract expire next year.
"When you have a bad deal, the best thing you need to do is to get out of it," he said.
That view was echoed by Bob Williamson, a member of the Sonoma County Taxpayers Association, who urged the council to "bite the bullet" and look for more cost savings from firefighters next year.
Mayor Ernesto Olivares said he understands the frustration at the slow progress in reining in employee costs. But the process is complicated and there are no shortcuts, he said.
"It took many years for us to get to the position that we are in and yet we continue to look for overnight fixes," Olivares said.
The deal passed 4-2, with Olivares, Ours, Bartley and John Sawyer in favor and Wysocky and Marsha Vas Dupre against. Councilwoman Susan Gorin was absent.
Most of the other concession deals passed with little debate. Four of the five involved mostly changes to health care plans and extension of furloughs for another year. Those agreements all passed 6-0.
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