Cities, counties shouldn't ignore Vallejo

By Thomas Elias

The late spring headlines about labor negotiations in the San Bernardino County city of Rialto were absolutely stunning, considering the context. "Rialto pension plan OK increases city obligations," blared one local newspaper.

The details were even more remarkable in this time of strapped municipal and county budgets. For Rialto city council members voted 3-2 to give the local police officers' union a "3 at 50" pension plan, which will let any officer retiring at age 50 or above collect three percent of his or her highest annual salary each year, multiplied by the number of years served. Firefighters were expected to get the same plan.

So 20-year police veterans can retire at 50 with 60 percent of their annual salaries, while 30-year veterans get 90 percent. Stay 40 years and you can get paid 20 percent more in retirement than for working. For police officers, the plan represents a 50 percent increase over their current 2-at-50 system.

This stunningly generous pension plan, combined with a somewhat lesser one proposed for non-public safety employees, would start off costing the city of 101,000 about $3.3 million per year, more than 5 percent of its $57 million annual budget. Immediately there were fears around City Hall that this agreement could lead to layoffs.

Also, Rialto's action quickly raised the worry that other San Bernardino County cities would soon be coerced to follow suit, thus imperiling their own budgets. And if cities there adopt this plan, it might soon become a bargaining template for public employee unions all over California.

That's exactly what cities and counties don't need just now. About the only good thing in Rialto's bargaining process is that it has involved some openness: Citizens know how much their public safety employees will be getting and they know who voted to give it to them. So they can vote out those officials if they like.

But it's hard to understand what were in the minds of both union officials and City Council members during this bargaining process. They knew about the fiscal catastrophe in the slightly larger city of Vallejo, just northeast of San Francisco, which declared bankruptcy in May because it can't meet pension and salary obligations to police and firefighters.

Vallejo is just the second California city ever to declare bankruptcy, following the 2001 case of Desert Hot Springs in Riverside County, which emerged from bankruptcy about a year later with more manageable contracts. Orange County also famously went bankrupt in 1994, but that was caused by more than $1.5 billion in investment losses, not labor costs.

Realizing this might be even worse his them than a lesser labor agreement - bankruptcy has the potential to cause suspension of all union agreements with the city - Vallejo union bosses at the last moment before the official filing offered to take $10.6 million per year worth of pay cuts for two years, with police and firefighters offering a 6.5 percent giveback of pay and benefits and other employees proposing a 3 percent reduction, plus foregoing two years worth of 10 percent raises.



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