Contract changes approved
October 13, 2014
It was an emotional City Council meeting at Lake Tahoe Airport on Friday, as new contracts were approved for nearly all of the city's employees in a moment described as "transformational" by officials.
Helping the city reduce millions of dollars in future debt brought on by rising health care costs, employee bargaining units have agreed to eliminate retiree health coverage for those who have not yet retired, as well as other changes to benefits and wages.
The overhaul will result in a positive net fund balance of about $500,000 in the first year of a three-year contract period, while also reducing the unfunded liability for retiree health care from $25 million to about $15 million.
The $500,000 will be set aside to fund the changes in year two and three.
In short, the contract restructure helps in moving the city away from a looming financial crisis.
"I think we need to recognize that these employees have made decisions that are going to help our city," said City Manger Nancy Kerry, fighting back tears as she addressed the council.
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The new contracts also include raises, which vary depending on each employee group, but range from 2.5 percent to 4 percent starting in October of this year and continuing in the 2015-16 year. Raises of up to 4 percent are provided in year three as well.
Funding for the wage and benefits changes comes from the elimination of retiree medical benefits, the elimination of contributions into a Retiree Medical Savings Account, changes to employee medical plans and the restructuring of the city's debts earlier this year.
In other words, the city will not be knocking on taxpayers' doors for the employee raises. Rather, the funds will come from anticipated available resources.
"I am tired of people talking about public employees (being) not deserving of raises," she said. "Every industry has their own system. It's a great call — public service. I encourage people to join it. They do a great work, and they deserve to be paid."
The last time most city employees received a raise was five years ago.
Kerry went on to say that the city is still recovering from the recession and that increases could only come from a shift in expenses.
Mayor Hal Cole said the changes are probably the "most transformational action" the city council has taken in the 20 years he has served, but that "it has come with a cost."
He said he understands why employees are disappointed with the changes, but the old model wasn't sustainable.
"When you have something given to you, something you expect, something that when you were hired you expected — to have to negotiate that is something that is very hard to accept," he said. "And I understand that."
"We postponed this decision as long as we could. We want to compensate our employees. And until this point in time, we've done everything we could to keep your benefits packages in place."
Cole added that the council didn't want to address the problem with the usual methods used by governments, such as laying off employees or asking taxpayers for more money.
Instead, a different solution was sought.
"We've put our negotiators and our employee groups in a very difficult situation," he said at the meeting. "There's been a lot of anger. There's been a lot of disappointment. This could only have been overcome by trust and partnership, and it took a long time. You have to believe that are negotiators were telling you the truth, that it could not have been solved in any other way."
Councilmembers unanimously adopted the resolutions to implement the changes to wages and benefits.
Agreements were approved for all of the bargaining groups except one. A tentative agreement has been reached with the Police Employees Association, but it will have to come before the city council at a later time to get final approval, Kerry said.
For complete details on the changes, go to http://www.cityofslt.us.
"This is going to benefit the community for years to come," she said.
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