Palo Alto Weekly

Spectrum - July 23, 2010

Binding arbitration needs a public vote

Palo Alto should place proposal to drop arbitration provision from City Charter on the November ballot as part of a cost-containment effort

Already faced with a firefighters' union initiative proposal on the November ballot, Palo Alto city officials are wrestling with a second proposal to seek voter approval to drop "binding arbitration" as a City Charter provision.

This would be a long-overdue clean-up of an anachronistic provision, initially intended in the 1970s to prevent strikes by police and fire personnel and perhaps assuage unions. It was likely unnecessary at the time. But it has since become completely established that such strikes are illegal, and this outdated provision needs to be dropped.

The City Council is to discuss the proposal again July 26 and on Aug. 2 decide whether to put it on the ballot.

The firefighters union proposal already on the ballot would require voter approval before the city could close any fire station or reduce staffing — an attempt to protect jobs under the mantle of preserving public safety. In reality, it would create a protected area within the city at the cost of other city departments and employees at a time when the city must severely control expenses and close a multi-million-dollar gap in the annual city budget.

As we've said before, creating such protectionist bubbles within any organization is a terrible idea, disruptive to the entire operation, and voters should reject this ill-conceived proposal.

The binding-arbitration ballot measure should not be perceived as a get-back at the firefighters union but as one action of many in a broad context of cities and counties re-taking control of their labor expenses (including retirement and health benefits) that have ballooned out of control in the past decade. Details were reported in the July 16 Weekly, (www.paloaltoonline.com/weekly/story.php?story_id=13278) and on Palo Alto Online on Tuesday (www.paloaltoonline.com/news/show_story.php?id=17613).

While binding arbitration initially was an insurance policy against public-safety strikes during labor negotiations, but in practice it tends to benefit unions because an arbitrator looks at comparables in other cities and deprives a city from making its own decisions on compensation. Comparing cities drives up costs for all, to the point of crisis, as now.

The magnitude of the crisis is outlined in stark detail in a new report by the Santa Clara County Grand Jury, initially published quietly in late May but circulated to Palo Alto city officials last week.

The report's title sums up the hard conclusion: "Cities Must Rein In Unsustainable Employee Costs." The report outlines in detail how costs got out of control and makes 13 specific recommendations for cities to follow to begin to bring costs into line with present economic reality.

The report notes that "reasonable, intelligent people" approved the wage, benefits and retirement packages during a flush economic time when it was difficult to recruit employees in a high-flying private-sector boom. But when the boom went bust the public-employee wages and benefits surged ahead of those for comparable jobs in the private sector — sometimes dramatically.

The full report is well worth the reading, and is available at: www.sccsuperiorcourt.org/jury/GJ.html .

The startling findings show that wage-and-benefits costs haven't just escalated but have in some cases increased by nearly 50 percent in the past decade, while available revenues to cities have plummeted.

In Palo Alto, for instance, the median wage/benefits for non-safety employees went from $75,814 in fiscal year 2000-2001 to $113,841 in 2009-2010, while costs for public-safety employees jumped from $89,059 to $146,061.

It is even worse in Mountain View, where non-safety compensation jumped from $79,033 to $123,754 and safety-employee costs soared from $106,654 to $190,591 during the same decade, according to the Grand Jury report.

Palo Alto has already begun to act on several of the recommendations in the jury's report, including enacting a two-tiered system for retirement and health benefits, in which new employees are on a lower scale than existing employees.

But it and other cities and public agencies have far to go, and the road there is laden with challenges of how to negotiate such scaling back with unions, how to deal with vested entitlements for existing employees and retirees, and how to respond to a crisis that is virtually unprecedented during what is becoming known as the "Great Recession."

For Palo Altans, pruning "binding arbitration" from the City Charter would be an excellent first step.

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