Despite a brightening budget forecast, Palo Alto officials indicated Monday that they are in no rush to raise employee salaries that have been largely flat since the outset of the Great Recession.
The City Council was considering on Monday City Manager James Keene's proposed budget for fiscal year 2014, which begins July 1. The budget recommends allocating enough funds for a potential 2 percent raise for the city's non-public-safety employees, even though this compensation increase has yet to be negotiated with the labor unions. This didn't sit well with Councilman Larry Klein and Mayor Greg Scharff, who characterized this budget increase as poor negotiating.
Klein said he was concerned about the "psychological" impact of including the 2 percent increase, which would apply to the city's largest labor group, the more than 600 workers represented by the Service Employees International Union, Local 521, and to the roughly 200 non-unionized workers in the "managers and professionals" group. The city is preparing to enter into negotiations with the SEIU on a new contract.
Keene said the inclusion of the compensation adjustment is a way if indicating that the city's financial outlook has improved.
"It would be disingenuous for us to act like there's nothing available," Keene said.
But both Klein and Scharff argued that the 2 percent increase should not be assumed. Scharff called the inclusion of the raise a "horrible negotiation strategy" and said it makes "absolutely no sense" to include it in the proposed budget, which the council is set to formally adopt on June 10.
"We have to go negotiate with SEIU," Scharff said. "To say 'We want to start with 2 percent ...' It might be zero, it might be 1, it might be 2. It's all about what the package is."
"That's not the way you enter negotiations with a bargaining unit," Scharff said. "That's why I think we should take it out and actually bargain with them on what the number is and what the package is and other rule changes. I'm sure there is a group of things they (SEIU members) want, and they'll tell us, and we'll bargain."
Councilman Pat Burt, who chairs the council's Finance Committee, challenged Scharff's characterization of Keene's recommendation. The debate, he said, is a legitimate one with good points on both sides. Ultimately, he agreed that it would make sense to take the funds from salary increases and put them into a reserve for the time being. It voted 7-2, with Gail Price and Greg Schmid dissenting, to do that.
Price argued the city's lowest-paid workers are overdue a raise.
"It seems to me that without an adjustment over many, many years -- COLA (cost of living adjustment) and everything else -- the purchasing power for take-home pay is less and less over time," Price said.
The council will revisit the issue when it adopts the budget on June 10.