New contracts with two of its major unions are expected to save the city $1.5 million over the next two years, though an ongoing general fund deficit of over $6 million promises to force "painful cuts" on city services next year.
In contracts approved June 30, the City Council was able to cut scheduled pay raises in half over the next two years with the SEIU and the EAGLES, unions representing a total of 359 city employees who originally were getting a 3.2 percent annual raise. About eight police managers also agreed to reduce scheduled raises by 50 percent over two years.
No deal was reached with the major police and fire unions to renegotiate existing contracts with pay raises of over 3 percent a year.
"We worked real hard" over many "Tuesday afternoons at 5 p.m." to come to an agreement, said council member John Inks. "We did try with the POA and the firefighters," he added, "but we just couldn't get it done."
In a scheme unique for city government but not for the private sector, members of the SEIU, confidential employees and police management will receive bonuses only if the city's revenues turn out to be higher than expected for 2009-10. If city revenues are $1 million higher than projected, the employees get 1 percent of their base salary as a bonus. If city revenues are $3.5 million higher than projected, the employees get 3 percent of their salary.
The deal was hatched after union leaders criticized city manager Kevin Duggan for consistently being "overly pessimistic" about city revenue projections during the annual budget process.
"I'd love our revenues to grow 3 percent more than anticipated," Duggan said. "If our estimates are overly pessimistic we will be sharing a portion of that" revenue increase.
While the city's revenues are expected to remain flat, before the deals were made it was projected that personnel costs would increase by $3.8 million a year. Under the new contracts, the general fund will see a savings of $1.2 million over two years.
The city's eight department heads and the city manager, city clerk and city attorney have agreed to forgo raises of 3.2 percent for 2008-09 as well as merit bonuses in 2009-10.