This means that either the police and firefighters unions agree to voluntary cuts or the city will be forced to reduce positions in one or both departments, which could take away vital emergency services from both departments in the years ahead.
But firefighters did not go along, and were the only employee group in the city to receive a wage increase last year. The police department received raises this year after agreeing to postpone bumps in the two prior years.
If neither union agrees to give up their increase, the city is stuck with the long outdated requirement that an impasse in contract negotiations with either public safety union must go to binding third party arbitration. In addition, firefighters' jobs are protected by a contract that sets minimum staffing levels for each fire station that cannot be changed unless the union agrees or the city wins an appeal in binding arbitration.
Last year, in an effort to further gain control of their own staffing, the firefighters' union put Measure R on ballot, which would have required a citywide vote any time the city wanted to reduce staffing levels in the department or close fire stations. Thankfully, voters did not agree and the measure lost by a wide margin.
Now, contract talks between the city and the firefighters are at impasse and it is expected that the two sides will go to binding, third party arbitration in the next few weeks. Once again, the city will be forced to accept an arbitrator's decision that could have a significant impact on next year's budget.
In our view, this outdated practice cannot continue. With all due respect to our public safety unions, staffing and deployment decisions must be left to the city manager and the elected city council, not the union boss or an arbitrator.
Since 2000-01, the median total compensation for police officers and firefighters has jumped from $89,059 to $146,061 in 2009-10. At the same time, the city's revenues have dropped substantially, which has lead to a series of annual budget deficits.
A City Council measure to place binding arbitration on the ballot last year failed on a 5-4 vote, but given the city's dire needs to close the current budget gap, it is encouraging that the council's Policy and Services Committee on Tuesday will discuss whether to amend or repeal the 1978 provision in the city charter.
The need to end minimum staffing, which is unlikely to happen unless binding arbitration is repealed, was also recommended by the consultants who last year conducted a major study of the fire department. In their report, the consultants said, "Though we understand the concern of the union to maintain an adequate staff to maintain safety, we disagree that the total minimum staff should be in the contract."
More support for eliminating binding arbitration came last year from the Santa Clara County Grand Jury, which evaluated employee costs in local cities and criticized the binding-arbitration provision, suggesting that San Jose give voters an opportunity to repeal the provision. At the time, then-Mayor Pat Burt said the report's findings are relevant to Palo Alto, where he said binding arbitration has historically favored firefighters' interests over those of the City Council.
It will be good for the council to discuss the public safety contracts in the context of the 2012 budget deliberations, which began with the city manager's admonition that he expects the two unions to make substantial contributions to close this year's budget gap.
But the council also must understand that there will be much tougher budget decisions in the years ahead, when slow revenue growth coupled with skyrocketing health care and pension costs are expected to produce ever-larger structural deficits in 2013 ($6.7 million), 2014 ($6.9 million) and 2015 ($7.6 million).
It is not a pretty picture and now more than ever, the council must make sure that all hands contribute to solving the problem. Last year every employee group except the firefighters took part in closing a $7.8 million deficit.
A year from now, the council will again be struggling with a budget shortfall. And it is likely that all city bargaining units, including the public safety unions, will be asked to contribute significant compensation or benefit reductions to help eliminate the ongoing deficits that are now built into the city's budget. If voters have an opportunity to end binding arbitration, it could assure that all the city's unions will take part in meeting the city's budget obligations.