Shires writes: “Most public employees automatically receive a three to five percent “step” increase each year. The raises we hear discussed in the limited public releases about these negotiations are increases on top of these basic increases — the so called COLA or cost of living adjustment.

“For example, in Vallejo, a city which recently filed for bankruptcy protection, some unions were scheduled for 21 percent COLA increases over three years — on top of their regular step increases of 3-5 percent.

“These kinds of increases are unheard of in the private sector (try asking your boss for a 12 percent guaranteed raise for each of the next three years), but have become ubiquitous in California?s state and local governments.

“And this is just the salary portion of the conversation. Add on top of it full medical benefits for the rest of their lives, extensive overtime and an amazingly generous retirement system and you have a public finance system that is destined for bankruptcy — a destination rapidly approaching for the state and many local communities.

“While the result is shocking, the real failure is the secretive process that lead to it. The total lack of public information about these negotiation processes prevents the public from holding their elected officials accountable. Add in the fact that many of these very officials are elected due to major investments by these very employee unions (a topic for a later day), and you have a recipe for fiscal disaster. And taxpayers across the state are about to taste the fruits of that recipe.”

KICKER

SFGATE: Californians pessimistic about budget fix

With an eye toward similar potential disaster in Contra Costa County, some wonder if it’s even possible to void such contracts. One observer opined that pro-union Democrat legislators have helped install safeguards against such
action, while another informed source quoted the California League of Cities, saying it was possible.

Meanwhile, an Open Letter that appeared in a recent edition
of Police Pay Journal, defends firefighters and police against poor municipal management and bad PR.

According to far flung reports around the world, “Fearful of contagion, municipal officials across the US are looking with nervousness at the precedent-setting experience of Vallejo, a city of about 120,000 people, 30 miles north of San Francisco. in a region that was once synonymous with economic prosperity”.

Indeed, Vallejo’s motto was and may yet be,”City of Opportunity.”

Because so few public entities have declared bankruptcy, no one’s sure how labor contracts will be affected. Vallejo’s public safety unions have vowed to fight the proceedings, arguing that the city has plenty of money stashed in hidden accounts and is using bankruptcy to avoid paying police and fire fighters what they’re owed.

The unions commissioned a report by Harvey Rose auditing firm in San Francisco that concluded the city has other ways to balance its budget besides slashing salaries, staffing and benefits, union leaders said. The report has not been made public because it’s part of ongoing labor negotiations.
Meanwhile, the unions would like an independent state audit of Vallejo’s books.

“We don’t believe they’re insolvent,” said Vallejo police Detective Mat Mustard, vice president of the police union. “But by declaring bankruptcy, they’ve taken a financial crisis and turned it into a catastrophe. It’s like using an elephant gun to shoot an ant.”

It’s very possible a judge will void Vallejo’s labor contracts, George said. When airlines began filing bankruptcy several years ago, judges allowed them to renegotiate their union contracts, making bankruptcy an attractive option across the airline industry, he said.

Even so, bankruptcy is an extreme measure for a public entity, he said. Thousands of cities across the United States are in the same boat as Vallejo, but nearly all of them find other ways to avoid Chapter 9. They cut and outsource services, share services with neighboring cities, sell property and raise taxes and fees.

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Looking for answers, Vallejo leaders have chosen to reduce services and increase fees to close an $8 million shortfall. The unions have reluctantly agreed to accept smaller raises than provided by their current contracts and they have agreed to personnel cuts. The city is asking bond holders for more time to pay which only increases future interest costs. Spending on infrastructure and much needed road maintenance will be curtailed indefinitely. CFFR recommends immediate adoption of the following steps toward fiscal responsibility:

1. Stop Illegal Payments for Extra Pension Benefits Related to Services Rendered Years Earlier
2. Adopt a Second Tier Pension Plan for New Hires
3. Reduce Compensated Absences
4. Discontinue Allowing Employees to Purchase Years of Service

An emergency plan would cut city salaries to 5 percent lower than June 30, 2007 starting on March 28. Police and firefighter salaries under the existing labor agreements would be reduced 15 percent, by 8 percent for the electrical workers and 5 percent for confidential, management and un-represented employees.

Thirty general fund positions would be eliminated, 16 of which are currently filled and will require layoffs.
Other vacant positions could be filled by transferring employees but the reductions would reduce the general fund positions from 494 to 411, or by 17 percent. A single fire engine company would be closed each day on a rotating basis and there would be a three-month temporary reduction in truck company staffing from four to three.

What can we say…call your Congressman?