The city of Sacramento has seen its finances improve over the past year. And for the first time in six years, city firefighters are about to see a significant increase in their paychecks.
However, city budget documents show that a new four-year contract between the city and the firefighter union could eventually contribute to a citywide deficit of more than $10 million by 2016. The City Council is expected to approve the new contract on Tuesday.
Under the contract’s terms, front-line firefighters will receive cumulative raises of 12 percent phased in between now and December 2016. Higher-ranking fire personnel and fire investigators will get smaller raises also spread out over the next two years.
The contract will require firefighters to pay larger shares of their pensions and contribute – along with the city – to a trust that will help fund retiree health care benefits. But city budget officials said savings from those concessions will be offset by the raises and that the firefighter contract will cost the city more than $8 million a year by 2017.
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Asked if the deal was a good one for taxpayers, City Manager John Shirey said, “I think ‘a good deal’ would not be the way to describe it. I think it could be seen as a fair deal for both sides if the union cooperates with the city in finding ways to save money and to run that department more efficiently. That could make it a win-win.”
Shirey said he never expected to reach an agreement with the firefighters that “had zero costs to the city.”
The city manager said he has asked the firefighter union to explore cutting back on some of the numerous “special pay” incentives firefighters receive for training and certifications, and to look at allowing civilian personnel to work on paramedic units. While city officials and the firefighter union have had a combative relationship in the past, Shirey said the relationship is now “very positive” and that he is hopeful the union will help find ways to save the city money.
Brian Rice, president of the firefighter union, said the organization was committed to “sitting down and doing something meaningful” in addressing the incentive pay. He also agreed that the deal with the city is fair, noting that the union did not get all that it wanted. No raises are scheduled in the fourth year of the contract, and the pact includes adjustments to firefighter overtime pay that will save the city money.
“Economically, this was the best deal that we could negotiate that was fair,” Rice said, adding that the union’s membership approved the pact by a slim margin.
City officials got one concession they have long sought from public safety workers: pension contributions.
Firefighters agreed in 2012 to contribute 9 percent of their salaries toward their pensions, making them among the first city employees to agree to those concessions. The pension contributions will increase to 10.5 percent effective immediately under the new contract and to 12 percent in December.
The city will save nearly $1.6 million a year once firefighters are paying that 12 percent share, documents show. Reining in future pension costs has been a focus for Shirey.
Shirey has repeatedly warned the City Council that despite relatively stable budget conditions in the city today, deficits and a potential “fiscal cliff” are on the horizon.
A report from Shirey to the City Council in November projected that the city would face a $6.6 million deficit in the 2016-17 fiscal year, although that number could narrow if tax revenue rises above projections. The gap was projected to increase to $8.5 million the following year.
CalPERS, the state’s public employee pension fund, has also ordered cities to make larger contributions to retirement funds. And Measure U, a city sales tax increase approved by voters in 2012, is set to expire in 2019. The new firefighter contract, combined with the added pension costs and the expiration of the sales tax, could lead to a deficit of more than $50 million by 2020, budget officials said.
Craig Powell, a frequent City Hall critic and president of local watchdog group Eye on Sacramento, said the contract with the firefighter union shows “city management officials have learned nothing from the city’s experiences in the Great Recession.”
“How could anyone with a shred of fiscal responsibility agree to hand out city pay hikes of up to 12 percent over the next two years in the face of our coming budget nightmare?” Powell said in an email. He also criticized firefighters for being among the highest-paid employees in the city and for “inefficiently” responding to medical calls.
Call The Bee’s Ryan Lillis, (916) 321-1085. Read his City Beat blog at www.sacbee.com/citybeat.