Palo Alto residents could be asked to choose between their elected leaders and their firefighters in the November election.
After a long and wide-ranging discussion stretching into early Tuesday morning, the City Council asked the City Attorney's office to draft an ordinance that would repeal the "binding arbitration" provision in the City Charter. Palo Alto voters approved binding arbitration in 1978 as an effort to prevent strikes by police officers and firefighters.
State law had since made strikes by public-safety officers illegal.
Binding arbitration came up during the council's review of a report from the Santa Clara County Grand Jury, which evaluated employee costs at cities throughout the county.
The report -- which bears the title, "Cities Must Rein in Unsustainable Employee Costs" -- offers 13 findings and 22 recommendations to cities in the county for reducing employee costs. Key recommendations are to provide less generous pension formulas, increase retirement age and eliminate binding-arbitration agreements with unions.
Binding arbitration "limits the ability of city leaders to craft solutions that work for the city budget," the report concludes. It specifically recommends that San Jose prepare a ballot measure asking voters to repeal binding arbitration from its City Charter.
Shortly before 1 a.m. this morning, council members voted 8-1 that Palo Alto should also discuss repealing binding arbitration, based on a motion by Councilman Greg Scharff, with Councilman Yiaway Yeh dissenting.
If the council chooses to place the ordinance on the ballot, Palo Alto voters would become arbiters in the tense negotiation between the city and Palo Alto Professional Firefighters, Local 1319. The firefighters union has already gathered enough signatures to place its own measure on the November ballot.
The measure would require the council to hold a citywide election before it could close any fire stations or reduce staffing levels in the Fire Department.
Councilwoman Gail Price urged the rest of the council to delay voting on an issue as important as binding arbitration without more discussion. The competing ballot initiatives could worsen the disagreement between the city and the union, she said.
"The firefighters' proposal as well as binding arbitration I don't want any of those on the ballot," Price said.
The only two members of the public who spoke to the council about binding arbitration were council watchdogs Bob Moss and Herb Borock. The two split on the subject.
"Just put in on the ballot to repeal it," Moss said. "It's not necessary and it creates major problem."
Borock urged the council not to place the binding-arbitration measure on the ballot.
"That would just follow the firefighters' bad example of negotiating on the ballot," he said. "Just let their measure be the only one that's there."
The council also discussed at length some of the other cost-cutting measures the Grand Jury report recommends, some of which the Palo Alto has already adopted. The city recently instituted a two-tiered formula for retirement payments and has asked employees to make contributions toward their health care.
The council also approved a budget last month that includes outsourcing park maintenance, janitorial services and printing operations to cut costs.
City Manager James Keene presented charts Monday night showing the increase in expenditures at various city departments. While the city's spending on community services, libraries, public-works projects and planning has dipped in recent years, the Fire Department budget has increased from $23.4 million in fiscal year 2009 to $27 million in the current fiscal year.
According to the Grand Jury report, the median total compensation (including benefits) for Palo Alto police officers and firefighters increased from $89,059 in 2000-01 to $146,061 in 2009-10. For other employees, the median total compensation went up from $75,815 to $113,841.
The city's pension costs are rising even faster than salaries. In 2003, pension expenses added up to $2.4 million. In 2010, the city's pension expenses are about $23 million. They are projected to rise to about $33 million by 2014.
The council will further discuss repealing binding arbitration at its July 26 meeting. It is scheduled to vote on putting the ordinance on the November ballot on Aug. 2, the final meeting before its August recess.