After winning the city council’s approval late last year for a 2011-12 budget proposal that largely hinged on a plan to freeze city wages, Tacoma City Manager Eric Anderson today informed city employees that the city is now backing down on at least part of that plan.
In an email sent to all city employees this morning, Anderson informed them that the city now plans to grant annual personnel time off cash-outs and step increases due to eligible city employees after all:
Date: February 16, 2011
To: All City Employees
From: Eric Anderson, City Manager
Subject: Step Increases for All Employees
Late last year, the City Council directed staff to negotiate with all bargaining units to withhold step increases and annual Personnel Time Off
(PTO) cash outs.
In negotiations, it became clear that this would not work.
As a result, the City Council has directed staff to withdraw this proposal, which means that all eligible represented and non-represented employees will receive their step increases during the 2011-2012 biennium.
Thank you for the work you do every day to serve our citizens and customers.
While other parts of the city’s proposed wage freeze, such as employee merit pay raises, remain on the bargaining table and still could be halted, the amount of savings the city had budgeted by freezing step increases is significant. Meaning: the city must now find other ways to make up those cuts.
City spokesman Rob McNair-Huff did not have the exact dollar figures for step increases due to eligible employees among the city’s roughly 2,900 union workers, (I’ll update the post when he gets them to me). But he estimated today that eligible employees among the city’s roughly 900 non-union positions are due about $1 million in step raises over the next two years (McNair-Huff noted that only newly hired city employees — not all workers — are eligible for step increases, which top out after about five years on the city’s pay scale).
(UPDATE 3:53 p.m: McNair-Huff just informed me that the total impact all step increases — union and non-union — will have on the 2011-12 general fund budget is $1.7 million. The city will now need to make up that amount by cutting elsewhere to balance its budget.)
So where does all this leave the city’s budget?
“What I understand is that the instructions are going out to the departments that they need to manage their budgets to absorb those costs,” McNair-Huff said.
“The impact on each department will be different depending on how many newere employees they have … they’re going to have to find ways to trim costs elsewhere. They might have to hold vacant positions open.”
Asked if the cuts could mean lay-offs, he added: “I’ve not heard that.”
McNair-Huff noted Anderson plans to give a quarterly update on the budget to the council in the coming weeks.
Although Anderson’s email today notes the council directed staff to negotiate the wage freezes, it was Anderson’s budget proposal that first raised the idea. In fact, some council members — notably Jake Fey – raised concerns that the budget plan was largely predicated on the risky proposition of winning a wage freeze buy-in from the city’s various public employee bargaining units.
In this story about the city’s budget planning from September, Fey sounded the alarm this way about basing the budget on unsettled labor negotiations:
I’m concerned about the timing and whether we can count on those savings. The budget is predicated on a lot of those assumptions.
(I’ve left a message for Fey and other council members for comment today and will update this post once/if I hear back from any.)
(UPDATE 2 4:39 p.m: Councilman Ryan Mello just called, saying he fears this might only be the beginning of an unraveling of the city’s budget based on too many risky assumptions.
“This is one of many reasons why I think Jake voted no on the budget,” Mello said. “Eric brought us a budget that was predicated on a whole slew of assumptions that were no where near negotiated with collective bargaining.
“From my vantage point, it was based on a bunch of hopes and prayers,” he added. “Now it looks like a lot of those hopes and prayers are falling apart. Now we’re going to have to make a whole lot of tough decisions…
This might not be the only thing that unravels in Eric Anderson’s budget plan.”
Asked why then he voted for the plan, Mello responded: “I was agreeable to try to give it a shot. I think I raised lots of tough questions. I’ve gotten into lots of disagreements with Eric and we have a fundamental disagreement over how budgeting is done in the City of Tacoma. At the end of the day, I said to myself that it’s a huge budget document. Do I agree with all of the assumptions? No. But at the end of the day, I had to make a judgment call and stand behind the greater budget.)
In the meantime, city employee unions are hailing today’s news as a complete victory for collective bargaining. Local IBEW 483, which represents hundreds of city workers, posted the following note on its website today:
THANK A UNION MEMBER!
Thanks to the solidarity of the members of IBEW Local 483 and the rest of Tacoma Joint Labor the Tacoma City Council saw that a freeze in step increases for represented city workers was not going to work. Therefore, the Tacoma City Council has restored the ability of all City workers to receive their step increases for 2011 & 2012. Thanks for your support and solidarity in these negotiations. This shows the POWER OF COLLECTIVE BARGAINING!