Council set to change binding-arbitration law

Palo Alto City Council majority favors modifying rather than scrapping provision; decision deferred until late July

Palo Alto voters could still have a chance this year to tweak the binding-arbitration provision in the City Charter, though a downright repeal of the controversial law now looks less likely than ever.

The 33-year-old provision, which empowers an arbitration panel to settle disputes between the city and its public-safety unions, has become a hot topic of debate over the past two years. Last August, a proposal by council members Greg Scharff and Karen Holman to place binding arbitration on the 2010 ballot failed by a 4-5 vote, with several council members saying they needed more time to study the issue further.

A year later, the council remains just as split on a possible repeal of binding arbitration. But council members agreed Monday night that the existing provision is unacceptable and voted 8-0, with Nancy Shepherd absent, to send it back to a committee that would come up with potential modifications. Changes could potentially include tying the arbitration process to the budget cycle and requiring the arbitration panel to consider issues such as the city's long-term financial future and equity among employee groups.

The full council would then decide in late July whether to send the proposed modifications, or a repeal, on the ballot.

Scharff and Holman once again proposed putting a repeal of binding-arbitration on the ballot, but they withdrew the proposal when it became clear that the council majority favored modification. Holman maintained that the provision strips the council of its power to oversee the city budget and called the debate an "issue of accountability."

Scharff, who chairs the council's Finance Committee, was even more blunt. He noted that the city is facing a projected deficit of $6.7 million in fiscal year 2013 and said repealing binding arbitration is the "only solution" to the city's financial troubles.

"Modification isn't going to work," Scharff said. "What we need to do is repeal it."

Councilman Pat Burt agreed that now is the time to give the voters a say on the matter. Like Holman, he said the city has already had a year to decide the issue. Palo Alto, he said, is one of only about 5 percent of the cities in the state that have binding-arbitration provisions. This doesn't seem to create a major problem elsewhere, he said.

"One of the things I admire about my neighboring cities, Sunnyvale and Mountain View, is that they have excellent public-safety departments," Burt said. "And they're able to do that without binding arbitration."

But caution once again prevailed. Councilwoman Gail Price said she was concerned that the city is moving too fast and proposed that the item go back to a committee for a two-to-three month discussion and a recommendation on how to modify the provision. The city, she said, is well known for putting time and attention into difficult decisions and this one should be no different.

Larry Klein characterized the argument over binding arbitration as a clash between "two conflicting undemocratic principles."

"It's certainly undemocratic to have an arbitrator make a decision when that arbitrator is unknown and probably doesn't even live here," Klein said. "But it's also undemocratic that public-safety people can't strike. Everybody else can."

Klein proposed sending the issue back to the council's Policy and Services Committee, which would draft possible changes to the city's binding-arbitration provision by late July. He also said it's important for the whole council to weigh in on the issue, given the close split last year.

Under Klein's proposal, which the council approved 8-0, the council would then consider in late July whether to place the proposed modifications -- or a possible repeal -- on the ballot.

Tony Spitaleri, president of Palo Alto Professional Firefighters, Local 1319, urged the council not to repeal the binding-arbitration provision. He said the union is open to modifying the provision and called for the city to create a committee of stakeholders who could come up with potential changes.

"Elimination of arbitration in our opinion would not create a system of fairness and would create a strenuous atmosphere which would not be good for employer-employee relations and would not be in the best interests of the citizens of Palo Alto," Spitaleri told the council.

The council has until Aug. 1 to decide whether to place an item on the November ballot. This means the council's committee will have to move at a brisk pace over the next five weeks to come up with a compromise on the modifications. Mayor Sid Espinosa said the city is now moving at a "very quick clip." Like Scharff, he argued that changing the provision is necessary to keep the city's finances in order.

But Espinosa said he wouldn't support the repeal measure at this time and called Klein's suggestion to send the decision back to committee a "good compromise."

"Binding arbitration is not working for Palo Alto -- that's clear," Espinosa said. "It's crippling us.

"We have deep structural issues that cannot be addressed with binding arbitration as it is. It either has to be reformed or repealed."

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Like this comment
Posted by Milt
a resident of Old Palo Alto
on Jun 21, 2011 at 8:51 am

According to this article Greg Scharff believes that repealing the arbitration process is the "only solution" to the problem. The only solution? Really? Whenever I hear someone speaking in absolute terms such as "only" I have to wonder. The council just approved a 1.4 million project to upgrade El Camino Park. I think it's hardly the "only" solution to the budget problem.

Like this comment
Posted by Peter Carpenter
a resident of Atherton
on Jun 21, 2011 at 9:21 am

Crazy. Other jurisdictions do well without binding arbitration so it is not an essential element of democracy.

Why not give voters a range of choices including getting rid of aritration or modifying it or doing nothing. Certainly Palo Alto voters are smart enough to choose between three options.

Like this comment
Posted by Ryan
a resident of Green Acres
on Jun 21, 2011 at 10:59 am

We need to vote out anyone on the council who is bought and paid for by the public unions. Self serving public unions will wreck this city like they wrecked Vallejo if they aren't contained now. 200K firefighters. Ridiculous overstaffing requirements. Give me a break.

Like this comment
Posted by pat
a resident of Midtown
on Jun 21, 2011 at 10:59 am

“Councilwoman Gail Price said she was concerned that the city is moving too fast…”

Oh yeah, moving fast is definitely one of the city’s major problems.

I’m surprised they haven’t handed this off to a consultant.

Like this comment
Posted by David Pepperdine
a resident of Another Palo Alto neighborhood
on Jun 21, 2011 at 11:14 am

Dear Ms. Price,

Palo Alto may have many problems but let's be honest here... moving too fast is not one of them.

This binding arbitration nonsense needs to be repealed. Forever.

The future lies in balanced budgets, efficiency, value for public dollars spent, and flexible allocation of resources among competing priorities.

Not in binding arbitration.

Like this comment
Posted by Alphonso
a resident of Los Altos Hills
on Jun 21, 2011 at 12:20 pm

I watched the meeting last night and I still do not understand why binding arbitration impairs the abiility budget or to even come to reasonable agreements. I did hear that binding arbitration adds time to the budget process - I can see that being an issue but added time should built into the planning calendar. As I watched the arguments is seemed the issue is really more symbolic than real.
Based on what I have heard (perhaps biased) the real problem is the lack of a meaningful budget process - they do not have the ability to sit down and hammer out agreements. Look at the Fire contract for example - the City Manager provided Fire with a Tops Down target and told Fire to figure it out. Fire worked on it and came back with the savings asked for but not exactly in the same form the City Manager had suggested - the proposal was submitted. Last night I heard several council members claim they "still do not have a budget proposal" but that was simply not true. The may not like the proposal but indeed they have the proposal. More important nobody from "management" has sat down with Fire to to review and challenge the Fire proposal. You can not build a budget unless you are willing to meet with people and explore the details.

Like this comment
Posted by Bill
a resident of Barron Park
on Jun 21, 2011 at 1:16 pm

Alphonso. It's true the Fire Dept. has submitted a proposal but doing so does not mean the problems are solved. This and earlier ones were considered by City staff but found they did not solve the budgetary crisis caused by the Fire Dept's excessive costs. This problem has been addressed in sit-down meetings between the City and the Fire Dept. to no avail. That's why arbitration is being resorted to.

The overriding difficulty with binding arbitration is it removes the Council's authority to set terms and conditions affecting wages for two departments of the City's employed personnel. Instead it transfers that authority to unelected people who have no stake in the long term effects of their decisions.

If binding arbitration is such a good idea, why not have all of the City's departments use the same technique? When the vast majority of other cities do not find it to be a useful tool, why should Palo Alto use it?

Like this comment
Posted by Alphonso
a resident of Los Altos Hills
on Jun 21, 2011 at 2:16 pm

Bill said"Alphonso. It's true the Fire Dept. has submitted a proposal but doing so does not mean the problems are solved"

I understand - I have not seen the proposals. I have been told that the Fire proposal did meet the Target they were supposed to hit. Another thing, i thought they just turned it in so I do not understand how there was time for sit down meetings. Do you feel good about the information you are relying upon?

My view has been the Elected Officials have consitently not demonstrated much interest in the long term effects of their decisions (at least past elected officials). I hear people blaming the Safety Workers but it was our elected officials who gave away too much for too long. Unions may be part of the problem but there are always two sides to a labor contract

Like this comment
Posted by Lupe
a resident of Ventura
on Jun 21, 2011 at 3:34 pm

Councilman Scharff has my vote if he runs again. Councilwoman Price, absolutely not. Let the people vote on a repeal. The firefighters are overpaid and overstaffed and they're circling the wagons because the public has figured it out. We need a council that will stop insulating them from the public will.

Like this comment
Posted by common sense
a resident of Midtown
on Jun 21, 2011 at 4:25 pm

This issue has was first bought up one year ago; most people will feel that one year is an adequate time to study this issue. I don't understand Gail Price wanting more time, except that it's a stall tactic to help out her union supporters. Gail Price ran for city council actively seeking the union endorsement, and this can be viewed as payback for their support.

The article did not enumerate all the council members positions, unfortunately. From the article, I would guess Scharff, Holman & Burt wanted the citizens to vote on this issue. The anti-democratic council members were Price, Yeh & Klein. Which sides did Schmid & Espinosa support?

Like this comment
Posted by Alphonso
a resident of Los Altos Hills
on Jun 21, 2011 at 5:44 pm

Actually the news story was not well written and did not reflect what really happened last night. The Council decided to review possible changes to arbitration and then consider what will happen next. On or around July 25 (depends on vacation conflicts) the Council will decide what will be voted on. If the arbitration changes are accepted the voters will vote to approve the changes. If the changes are not accepted then the voters may get a chance to kill arbitration.

Like this comment
Posted by John
a resident of Old Palo Alto
on Jun 22, 2011 at 10:47 am

Palo Alto has only used binding arbitration 3 times since 1978. The City won twice, the firefighters won once which provided nepotism rights allowing another family member to work within the same department. Binding arbitration, rarely used, keeps the playing field fair. The firefighters are working hard to avoid binding arbitration. See 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 Citizen
a resident of Barron Park
on Jun 22, 2011 at 11:10 am

The FF union didn't offer nearly enough. They are still highly overpaid, and the proposal did nothing to address minimum staffing requirements and other self-serving systemic inefficiencies that they have introduced into the system over the years.

There shouldn't even be public sector unions in the first place. Killing Binding Arbitration is just the first step we have to take or our kids will be paying the bills down the road.

Like this comment
Posted by Resident
a resident of Downtown North
on Jun 22, 2011 at 12:04 pm

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.




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 that continually sap resources and provide poor benefit for dollars spent."

Like this comment
Posted by Jake
a resident of another community
on Jun 22, 2011 at 4:16 pm

The FFs and City have used arbitration 3 times in 33 years, 3 times. Those 3 times were not all for pay and benefits either. So I find it hard to buy into the "It's crippling us" (City, line.
I keep hearing about "minimum staffing issues", the fact is that the City of Palo Alto has chosen to staff above and beyond the number agreed upon between the City and the Union! for over 20 years the City has done this. The City staffs units on a daily basis with overtime workers. This overtime the City then uses against the FFs because it drives up the FFs yearly wages. Which in turn is then published in papers. FFs get ordered to work OT to staff these additional units the City never hired for. OT is the main reason most people even take notice of FF pay. If not for OT wages most FFs salary would be below 100,000. They work 56 hour week before OT.
The FF union has offered up cost savings options, the City has not been willing to work out a solution. People should be asking City Council why they chose to staff extra units in PAFD for over 20 years above minimum staffing number? The City keeps crying about minimum staffing being a Union mandate when the fact is the CITY has decided to staff above that number! The CITY forces FFs to work OT so the CITY can staff above the minimum staffing number?

Like this comment
Posted by JT
a resident of Crescent Park
on Jun 23, 2011 at 3:17 pm

Council won't have the guts to put binding arbitration on the ballot. They need union support to get elected, so they will talk tough, but crumble at the last minute. It's like their view of high speed rail. They community is against it, but they still support it "in concept" (what ever that means) or "done right" (again, whatever that means), because they know the unions are behind it. Pat Burt and the rest of them won't say "absolutely not" to HSR because he has a political career to think about. He'll never get into the legislature or on the board of supervisors if he turns against the unions on council. The rest of them think the same way. So they'll talk tough, to make the community think they're finally cracking down on these unions, and then they'll wimp out. Just watch!

Like this comment
Posted by JT
a resident of Crescent Park
on Jun 23, 2011 at 3:19 pm

One more thing about binding arbitration. Everyone makes it sound as if a union doesn't have the right to strike, it must get binding arbitration. Union members have another way to deal with a contract proposal they don't like. THEY CAN QUIT. That's right, if they don't like their jobs, they can walk out. But they never do, because they know nobody would ever pay them as much as Palo Alto.

Like this comment
Posted by Mike
a resident of Crescent Park
on Jun 23, 2011 at 4:41 pm

Maybe the controversy on this arbitration and unions will bring that cool Mr Trumka to town and we can hear the voice of reason...

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

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