By Joshua H. Silavent
December 4th, 2012 – Long Beach city management and union representatives remain deadlocked on a new contract for members of the International Association of Machinists and Aerospace Workers (IAM), the city’s largest non-public safety employee union, as of November 30. If an agreement cannot ultimately be reached, Long Beach residents might decide the fate of the ongoing labor dispute.
IAM officials told the Business Journal that they are ready to make a deal and have a proposal in place that addresses the city’s concerns about spiraling pension costs. “We’re willing to give the city the pension reform that they’re asking for,” said IAM chief spokesperson Ray Rivera.
The Business Journal obtained a copy of the latest IAM proposal, which includes an agreement for members to pick up the full 8 percent of CalPERS retirement contributions (known as the “employee fee”). In addition, it proposes an adjusted compensation formula for new employees, which includes raising the retirement age to 62 from 55.
IAM is asking for a two-year contract extension through the 2015 fiscal year (the current contract expires September 30, 2013), which remains the key sticking point in negotiations, according Rivera. “I can’t understand why they’re not willing to accept another year if it’s not going to cost the city anything,” he said.
The latest proposal also asks that city officials commit to no further layoffs in the 2014 fiscal year and that the city council not proceed with a proposed ballot initiative that would have Long Beach voters decide whether to cap workers’ salary range at 2010 levels for fiscal years 2014 and 2015.
This initiative, which must still survive a vote of the city council if labor negotiations break down for good, seeks about $29 million in annual savings. It is viewed as an alternative way to address IAM employee compensation if no deal is secured on pension reform. If it goes before the voters, a special election will be held in the spring at a cost of between $1.1 and $1.4 million, according to City Clerk Larry Herrera.
While agreeing to a wage freeze for fiscal years 2014 and 2015, IAM has not budged on rolling back salaries for its employee members – which include librarians, street sweepers and clerks, among others – to 2010 levels. City management reports that IAM members will receive an 18 percent salary raise over the life of their current contract, which was approved before the Great Recession hit and spans fiscal years 2008-2013.
“I will tell you that if we can reach an agreement on pension reform, I do believe this ballot measure will be unnecessary,” Mayor Bob Foster told IAM representatives during a November 13 city council meeting. “I do not prefer to do pension reform, or any other kind of employment reform, this way. But it does need to be done. I’m committed to it. And if we can’t reach an agreement, I will do everything I can to make sure it’s on the ballot.”
According to city staff reports, employee pension costs topped $98 million this year, an unfunded liability that potentially threatens the city’s long-term fiscal stability.
IAM business representative Dave Sterling told the Business Journal that the union had agreed to withhold a 2 percent wage increase due to members during the current fiscal year until November 30 in lieu of negotiations, but that concession was expected to be retracted since a deal could not be hammered out by the end of the month and the pay raise would take effect retroactive to October 1.
The latest IAM proposal concludes, “The city states that the deal no longer saves as much money as it would have, but the fact is, for every month the city delays this deal, they are costing taxpayers $1 million a month in savings.”