Tuesday, May 18, 2010

New TPPA agreement just postpones the inevitable

In March, the city of Toledo declared exigent circumstances and, as a result, stopped certain compensation for unionized workers. One of those items was the pension pick-up - the employee portion of their pension plan that the city has been paying for quite some time.

Following the declaration of exigent circumstances, several unions reached agreement with the city for new terms of their contracts and the city then revoked the exigent circumstances for those unions. After the voters approved (in the May 4th Primary) a diversion of the 3/4% payroll tax capital improvement allotment to the general fund, the fire fighter unions got their concessions back. The mayor had promised, as one of the terms of that approval, that the fire fighters would be reimbursed for the pension pick-ups they'd gone without and the city would, again, pick up the employee portions for the rest of the year.

The Toledo Police Patrolman's Association claimed the exigent circumstances were actually an unfair labor practice and ended up before SERB - the State Employment Relations Board. SERB found 'probable cause' to believe that the city had committed an unfair labor practice and the city and the union reached an agreement that was approved yesterday by the union. As it is a memorandum of understanding, it does not require city council approval.

That's too bad because, for the life of me, I can't see how this new agreement is good for the city - and especially for the taxpayers.

From the news reports so far, the agreement calls for the city to again pick up the employee portion of the pensions beginning May 27; no police officers will be laid off through April of 2011; the police will get their scheduled 3.5% pay increase beginning January 1; and the overtime that officers earn will not be paid until March 2011, though when it is paid out, it will be paid at the increased pay rate being earned at the time.

This means that the only 'savings' for taxpayers is the amount of the pension payments paid by the employees between the declaration of exigent circumstances and May 27th. That amount is estimated to be about $520,000, according to a quote from TPPA President Dan Wagner (link). However, the administration is claiming they're still saving $2.6 million as a result of this agreement.

How can that be?

I don't think it can. Perhaps they mean that there will be roughly $2.6 million that the city won't have to pay out in 2010. That could be. Deferring the overtime payments would result in a reduction in the amount of money expended this year. But there are no 'savings' if the money still has to be paid in 2011.

In fact, deferring the overtime payments to 2011 and then paying it at the 2011 increased pay rates means that this little deal will actually cost the taxpayers 3.5% more than it would cost us if we just went ahead and paid it when earned!

That's not a savings!

The city may have found itself in a difficult position with the SERB ruling. Declaring exigent circumstances and then revoking it upon partial concessions from the other city unions may have also weakened the city's position. Using the exigent circumstances as a bargaining chip to get minor - temporary - concessions from the other unions proved that the city wasn't serious about the major concessions being sought from the TPPA.

Now District 2 Councilman Mike Collins wants the city to give the exempt city staff the same 'give backs' the unions have received.

All this puts the city back into the exact same position we were in at the beginning of the year: unsustainable compensation terms, too much spending and not enough revenue - and no willingness from voters to give the city any more, especially when the voters don't have it in the first place.

So how has any of this helped? Well, the administration claims that they've got a balanced budget for 2010 even with all the concessions that didn't carry through to the end of the year. But that's because they're raiding the CIP account and they increased our trash tax to cover it.

The bottom line is that the unions won and the taxpayers lost. The unions are getting their employee portion of their pensions paid by the city - meaning you and me - and we're paying more in a trash tax in order for them to have this perk. Furthermore, the 2011 city budget will be much higher than in 2010 because of already agreed-upon pay increases as high as 3.5% - and especially because the police overtime earned this year will be paid out in 2011 at that higher rate.

In the meantime, being self-employed, I have to reduce the amount I put into my pension because my taxes have increased. I won't be getting a pay increase next year and I expect the 'trash tax' will again rise because the city just won't have the money to meet its obligations without it.

But don't expect the same bargaining tactics to work again next year. Wagner has already warned of the TPPA's concern about whether the city would again ask for concessions for 2011. And having just 'won' on the terms this year, they'll be much less likely to make such concessions in the future.

This is not a good deal for the taxpayers - all it does is postpone the inevitable. Eventually the city and the unions will have to face reality: the compensation terms are unsustainable. Something will have to give and when it does, it will be very ugly.


Roman said...

Another measure to "kick the can down the road", as you say, just delays the inevitable. The city/county is run by people in denial, somehow not connected to reality.

Long story short, YOU SPEND TOO MUCH!!!

The "temporary" 3/4% tax is now approaching 30 years old. Remove the tax, cut other taxes, make the elected officials do with less. The people running government act like the money they spend is not real.

The government cannot give you anything that has not been taken from someone first.

skeeter1107 said...

Whew! I thought it was just me when I read the TPPA agreement. Savings? What Savings?

In addition, Mike Collins efforts I suspect are a diversion. Leaving the non-unionized with lesser equivalent benefits/pay creates a small problem for the union when it comes to bargaining. There would be some pressure on the union to show that they too need to reduce their compensation. Not so if the non-union employees are equivalent.

As far as the future. A couple of thoughts.

1. Referendum to create a law forbidding defined benefit pensions for Toledo City employees.

2. Eliminate all pensions and health care for "part time" elected officials. Continue to pay salary and health only for full-time elected officials. No pension would motivate them to move along after "serving" the public.

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