Let’s see if this makes sense. The city’s recommended budget for the upcoming fiscal year adds nearly $2 million in services and two full-time positions, and the city has given raises to nearly all employees the past several years. Now they will be looking to reduce employee costs as negotiations with all three labor unions will begin soon.
The contracts between those employees and the city expire in June 2013, and that’s a key area where the city will look to save some money through some combination of lower wages, a tiered retirement system, more of a contribution from employers to their benefits and other personnel costs.
So on one hand, as rising sales tax revenues which have already jumped 24 percent this year and are expected to keep increasing, the city feels justified in giving raises employees haven’t seen for years, while on the other hand they’ll begin looking for concessions from those same employees.
Meanwhile, in an effort to maintain recreation facilities and a “high quality of service,” the recommended budget proposes raising rates paid by users of the Centennial Recreation Center and the Aquatics Center. Monthly membership fees for those facilities will go up by $3 for individuals and $4 for families, if the council approves the changes. Day use fees are proposed to be increased as well. To the public that reads as “we need to raise fees to cover our raises.”
Hope that plays when it comes time to negotiate, because the costs of the general fund’s contribution to CalPERS retirement benefits for city staff and retirees, continues to rise.
The city currently pays 32.5 percent of salaries for sworn personnel to CalPERS, and 16.2 percent for all other employees, staff said. The rates are likely to go up another 4.7 percent by 2017 for sworn personnel and 3.1 percent for others.
For the 2012-2013 fiscal year, that amount equates to about $3.8 million paid for retirement costs out of the general fund, or about 13 percent of the general fund.
As negotiations begin, the city should look hard at what Palo Alto recently accomplished.
The city accepted an agreement with the Palo Alto Police Officers’ Association that forces the police officers to contribute 10 percent of their medical costs, trims salaries by 1.3 percent, eliminates three of the 12 paid holidays and creates a second pension tier for newly hired employees. Those changes are meant to address the same factors Morgan Hill and nearly every other governmental agency under the CalPERS umbrella – ever increasing employee costs.
That’s a goal the city should strive to achieve.
