The "binding arbitration" provision has been in the City Charter since 1978, when voters approved it as a way to prohibit Palo Alto police officers and firefighters from striking if contract negotiations stall. Since then, however, court rulings and changes to California's labor code have made it illegal for public-safety workers to strike, prompting city and county officials to take a fresh look at binding-arbitration provisions in their charters.
A new report from a Santa Clara County Grand Jury, which evaluated employee costs in local cities, criticizes binding-arbitration provisions and recommends that San Jose give its voters an opportunity to repeal the provision. The Palo Alto City Council is scheduled to discuss the report Monday night.
Mayor Pat Burt told the Weekly that the report's findings are relevant to Palo Alto, which last month began contract negotiations with Palo Alto Professional Firefighters, Local 1319. Burt said the city still has time to place a binding-arbitration repeal on the November ballot this year if the council decides to do so.
The issue of binding arbitration has become more pertinent because of the firefighters' own ballot initiative, which would require the city to hold a citywide vote any time it wants to reduce staffing levels in the Fire Department or close fire stations, Burt said. The firefighters collected enough signatures to place this initiative on the November ballot.
Binding arbitration has historically favored the firefighters' interests over those of the City Council, Burt said.
The three-member arbitration panel, which includes a member from each side and a neutral member, sided with the firefighters in 1999 when the union opposed an existing provision barring the city from hiring workers whose relatives also work for the city, according to City Manager James Keene. In 1980, the arbitration panel sided with the city on one issue relating to firefighters' salaries, but sided with the union in a dispute over pension formulas.
The Grand Jury report specifically recommends that the San Jose City Council prepare a ballot measure asking voters to repeal the section of the City Charter that addresses binding arbitration, a policy that according to the report "results in an adversarial process between the city and employee groups."
"Binding arbitration limits the ability of city leaders to craft solutions that work for the city budget," the report states. "The process has resulted in wage and benefit decisions that have been greater than the growth in basic revenue sources."
Other cities are also taking a new look at binding arbitration. In June, Vallejo voters repealed their city's binding-arbitration provision. The Gilroy City Council also considered scrapping binding arbitration but decided against it after it reached an agreement with its firefighters union.
The Grand Jury report analyzes a broad spectrum of issues relating to employee costs, including pension, medical care and negotiation mechanism, and summarizes its conclusion in 13 findings and its title, "Cities Must Rein in Unsustainable Employee Costs." The report concluded that a sagging economy and climbing wages and benefits have made employee costs "not sustainable" in Santa Clara County cities.
In Palo Alto, the median total compensation for police officers and firefighters has jumped from $89,059 in 2000-01 to $146,061 in 2009-10, according to the report. At the same time, the city's revenues have plummeted, leading to a series of annual budget deficits. Over the past two months the Palo Alto City Council wrestled with a $7.3 million deficit in the general-fund budget — a deficit the city closed through a combination of service reductions and position eliminations.
Burt said the combination of the firefighters' petition and the Grand Jury report has prompted the council's fresh look at binding arbitration. City Attorney Gary Baum said he's been getting many questions about the topic lately. He also released a report Wednesday concluding that the binding arbitration provision is no longer necessary to prevent strikes.
Tony Spitaleri, president of Palo Alto Professional Firefighters, Local 1319, defended binding arbitration and called the city's push against it a "red herring." He also dismissed the Grand Jury report as one "not worth the paper it is written on."
Spitaleri disputed Burt's notion that binding arbitration favors the union over the City Council. Instead, it helps the city avoid long labor disputes and gives workers who aren't allowed to strike a tool for reaching an agreement, he said.
"You'd be hard pressed to get rid of arbitration," Spitaleri said. "That would open the door to having long-term labor problems."