City passes 2012 budget, seeks union concessions

City Council expects $4.3 million in cost reductions from police, fire unions

Palo Alto officials approved the city's 2012 budget Monday night with little discussion, no protests and one glaring asterisk.

The $146 million budget includes $4.3 million in anticipated concessions from the city's public-safety unions -- concessions that the city could have a hard time achieving. The city remains in a standoff with its firefighters union over a new contract and the two sides are preparing for arbitration proceedings in the fall. The police union's contract expires at the end of this month.

The uncertainty over labor concessions has cast a shadow over what has otherwise been a relatively breezy budget season. Unlike in the previous two years, when the city cut employee benefits, outsourced services and reduced its workforce by about 10 percent, this year's budget was balanced with few major changes and no service reductions.

The budget includes a restructuring of the city's Public Works Department, a move that consolidates six divisions into three and is anticipated to save about $300,000. It also creates an Office of Emergency Services and an Information Technology Department (information technology was previously a purview of the Administrative Services Department). It achieves about $1 million in budget cuts from various departments.

But the City Council, which approved the document 8-0 with Nancy Shepherd absent, acknowledged that the difficult part is still to come.

"I know what this budget does highlight still is the anticipated movement without our public-safety negotiations," Vice Mayor Yiaway Yeh said. "That's a really important goal in terms of achieving equity across our labor units in terms of concessions and reaching an economically sustainable solution."

If the city fails to get the concessions from the public-safety unions by this fall, the council will consider other ways to cut costs in these departments, including staffing reductions and fire station brownouts.

Palo Alto officials have been adamant about achieving permanent, structural budget reductions rather than relying on one-time cuts or on reserves. Though this year's budget season has been relatively smooth, the city is projecting deficits of about $7 million in each of the next two years.

"The last couple of years have been very difficult as we struggled to bring costs and revenues in line," Mayor Sid Espinosa said. "It has meant we had to work closely with all departments to reduce staff sizes and see where we can become more efficient.

"That work is not done."

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Like this comment
Posted by Michael
a resident of Old Palo Alto
on Jun 21, 2011 at 3:11 pm

I've had enough of these public sector unions. They're overpaid as is; they need to cough up the needed concessions and then some (not so much the police as the fire department). Soldiers get 40% of final pay as a pension. Why do Palo Alto firefighters, whos jobs are outright cushy in comparison, haul in 6-figure pensions at our expense?

The Measure R result was a clear message from the public that we want this drain on our city brought into line.

Like this comment
Posted by Truth Seeker
a resident of Another Palo Alto neighborhood
on Jun 21, 2011 at 6:01 pm

This UC Berkeley report concludes that in general, public employees are not overcompensated compared to private sector: Web Link

Like this comment
Posted by Budget Reader
a resident of Charleston Meadows
on Jun 21, 2011 at 9:54 pm

Truth Seeker: Public sector workers in general are not overpaid, but the Palo Alto fire department pays more than other fire departments in our immediate area.

Stats for firefighter and police wages for the San Jose-Sunnyvale-Santa Clara metro area can be found at:
Web Link

Actual City of Palo Alto wages can be found at:
Web Link

It isn't unrealistic to expect something in the way of concessions here.

Like this comment
Posted by Ryan S
a resident of Green Acres
on Jun 22, 2011 at 12:30 am

The UCB report is an exercise in creative statistics. They selectively throw out data that doesn't agree with the point they set out to prove. When you go apples to apples, the public sector is nearly always bloated. If public workers are cheaper, why did the San Jose airport save so much money by privatizing its janitor service?

Another thing the report fails to mention is the gross difference in productivity between private workers (who are shown the door if they do not add value) and public workers (who are nearly impossible to fire, even if they produce very little). US private sector workers are the most productive in the world. The public sector is not only failing to match the productivity gains of the private sector, but headed the other direction.

Like this comment
Posted by Resident
a resident of Downtown North
on Jun 22, 2011 at 7:52 am

Following is a link which details errors in the Berkeley report Web Link

So which report is more reliable? I am skeptical of a report from Berkeley regarding public sector labor. I am also skeptical of anything that mentions Karl Rove as a supporter.

I have worked in the private sector for large and small organizations. I have also worked in the public sector for the state of CA and locally for a city. There are capable dedicated individuals in both. The biggest difference is:
1.) in the private sector folks are terminated if they don't perform. in the public sector they are often allowed to slide for years doing virtually nothing.
2.) private sector workers in general are much more productive.

Fire dept employees are a whole different issue in this area. They are paid 2-3 times the national average, not to mention the ridiculous pensions. There is a fire approx every 3 days in PA, but we have 30+ ff's, sleeping, shopping, and lobbying politicians for more benefits. It is disgusitng and needs to change,

Like this comment
Posted by Les
a resident of Old Palo Alto
on Jun 22, 2011 at 9:08 am

Sorry, but I'm not hearing enough cuts taking place in other non-essential city services. The council is allocating funds for park and playground upgrades in the millions, while at the same time waving the fiscal emergency flag. I don't get it. Instead of closing a fire station, which has been discussed, how about closing one of the under-utilized city libraries. For its size, and the number of people it serves, Palo Alto is already off the chart for the number of libraries we have. Ridiculous.

I cherish the special services that we possess in Palo Alto. I also realize that our overall quality of life, and ability to enjoy those services is connected to public safety.

Like this comment
Posted by John
a resident of Old Palo Alto
on Jun 22, 2011 at 10:37 am

The firefighter's have made genuine offers to help the city with budget cuts....see yesterdays press release below.

June 21, 2011



PALO ALTO - Today, the Palo Alto Fire Fighters formally requested mediation in their contract negotiations with the City of Palo Alto. Last week, the City rejected a contract proposal by the Fire Fighters that included $3.1 million in givebacks to the City. The package presented by the Fire Fighters to the city would have closed nearly three-quarters of the $4.3 million budget gap in the budget passed by the city council last night.

"In the wake of the city rejecting our contract proposal worth $3.1 million in givebacks, we have asked the city to enter into mediation. We think that the $3.1 million package in wages, health care, and pension cuts that our fire fighters have offered to the city to help balance the city's budget is a generous one," said Tony Spitaleri, President of the Palo Alto Fire Fighters union, International Association of Fire Fighters, Local 1319.

The package presented by the Fire Fighters to the city includes a 4% wage decrease for Fire Fighters and Engineers and a 5% wage decrease for Captains and Fire Inspectors. Fire Fighters also offered a 90/10 cost-sharing for health insurance premiums - a change from the 100% now paid by the city. In addition, the Fire Fighters proposed a change in the pension formula to "3%@55" for new hires. The package offered by the Fire Fighters would have saved the City of Palo Alto $1.4 million in cuts to wages and benefit costs and $1.7 million in structural changes, including staffing and overtime changes, for a total of $3.1 million for this budget year and each year thereafter.

"Given the current debate around modifying binding arbitration, the Fire Fighters are showing good faith by asking the city for mediation as an alternative means of dispute resolution rather than going directly to binding arbitration, which is our right under the city charter. We hope the city will accept mediation so that we can move together toward an efficient and effective solution for the city and for our fire fighters," said Spitaleri.

Like this comment
Posted by Resident
a resident of Downtown North
on Jun 22, 2011 at 11:58 am

The fire union militants continue to expect the citizens of Palo
Alto to fund their exorbitant salaries and pension demand and exacerbate the city's budget problems....see todays press release below.


June 22, 2011



PALO ALTO - Today, the citizens of Palo Alto formally requested an end to binding arbitration in their dealings with the militant fire union. Last week, the City rejected a contract proposal by the union. The package presented by the union militants would have continued the excessive pay and over staffing that the citizens and managment of Palo Alto will no longer tolerate.

"In the wake of the union militants being unwilling to accept reality, we are going to put the proposal to eliminate binding arbitration on the ballot. We believe the union militants did not get the message when we rejected Measure R by a count of 4-1".

The new package to be presented by the city to the union boss and his militants includes a 25%% wage decrease for all union members. The city is also offering a 50/50 cost-sharing for health insurance premiums - a change from the 100% now paid by the city. In addition, the city is offering a change in the pension formula to "2%@65" for all union members, with a cap of 50%. In addition to bringing spending in to a more reasonable range (although still too high and will be corrected in future budget sessions), staffing will be reduced to a max of 25 employees on any shift (to be likely adjusted down once the city outsources hazmat and ambulance services). The savings from these long over due policies will be used to fund valuable services including parks and libraries.

"Given the current debate around excessive government sector union salaries and their influence peddling with politicians, the citizens and management are incredibly disappointed that the union militants and their union boss continue to play games with the city. We hope the city will will look in to long range plans (including regionalization and outsourcing) that will allow the city to rid themselves of organizations tht continually sap resources and provide poor benefit for dollars spent."

Like this comment
Posted by Alphonso
a resident of Los Altos Hills
on Jun 22, 2011 at 1:14 pm

So the City asked for $2 million and the Union gave $3 million - that seems like progress. I am sure the City does not like the 3 at 55 change - they probably wanted 2.5 at 55. Addtionally, the City wanted no (zero) min staffing. Why don't they sit down at a table and figure it out? - why all of this Drama? The City Manager makes a big salary - why not have him demonstrate what he is being paid for?

Like this comment
Posted by Michael
a resident of Old Palo Alto
on Jun 22, 2011 at 5:35 pm

Resident, very well put. And a great start.

And while I'm sure the public union apologists will scream as they do, the firefighters should actually consider themselves very lucky to even get what you propose. Soldiers get 40% pension maximum, for a job infinitely more dangerous. Plus, most workers get fired if they do a bad job. Not public employees.

Look no further than the Alameda firefighters who are still collecting ridiculous wages...

Like this comment
Posted by Resident and Employee
a resident of Midtown
on Jun 22, 2011 at 7:17 pm

What is arbitration?
n 1. (Law) Law the hearing and determination of a dispute, esp an industrial dispute, by an impartial referee selected or agreed upon by the parties".

The publicized information about arbitration fails to address the issue of what arbitration (by law definition) is (see above).

Note, The arbitrator is mutually chosen and per Palo Alto there is a rep from both sides

The outside objective input f the "arbitrator" is a protection mechanism for objective decision making based on factual information and reasonable outcome.. In the case that politics of the management, unions, or pubic forum can be "tilted" - arbitration provides a reasonable and objective forum.

Like this comment
Posted by Gordon
a resident of Downtown North
on Jun 22, 2011 at 10:49 pm

Let's hope the city can finally bring the fire department under control! After all the stunts they've tried to pull, I wouldn't give them one inch.

Like this comment
Posted by Deep Throat
a resident of another community
on Jun 23, 2011 at 3:21 pm

I don't believe the City wants to come to an agreement with the firefighters.

I believe the City wants to impose new conditions of employment on the firefighters, just as the City did with the employees represented by SEIU.

The current Charter provision for binding arbitration prevents the City from imposing its position and requires the City to choose between bargaining in good faith with the firefighters or going to arbitration where a neutral third party casts the deciding vote if the other two arbitrators can't agree on an issue.

Like this comment
Posted by Alphonso
a resident of Los Altos Hills
on Jun 24, 2011 at 9:26 am

In the Merc this morning the PA City Manager was quoted - he said one of the remaining contract hurdles was minimum staffing. I assume the FF's think all of the stations should be functional all of the time. What is the City Manager's position? There has to be a number - if it is not all of the stations then what is the number that also maintains some reasonable safety level?

Like this comment
Posted by Carlito Waysman
a resident of Old Palo Alto
on Jun 24, 2011 at 10:30 am

This is the most up to date info regarding actual public employees salaries. Look up for your respective city.

Sorry, but further commenting on this topic has been closed.

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