Despite a brightening budget forecast, Palo Alto officials indicated Monday that they are in no rush to raise employee salaries that have been largely flat since the outset of the Great Recession.
The City Council was considering on Monday City Manager James Keene's proposed budget for fiscal year 2014, which begins July 1. The budget recommends allocating enough funds for a potential 2 percent raise for the city's non-public-safety employees, even though this compensation increase has yet to be negotiated with the labor unions. This didn't sit well with Councilman Larry Klein and Mayor Greg Scharff, who characterized this budget increase as poor negotiating.
Klein said he was concerned about the "psychological" impact of including the 2 percent increase, which would apply to the city's largest labor group, the more than 600 workers represented by the Service Employees International Union, Local 521, and to the roughly 200 non-unionized workers in the "managers and professionals" group. The city is preparing to enter into negotiations with the SEIU on a new contract.
Keene said the inclusion of the compensation adjustment is a way if indicating that the city's financial outlook has improved.
"It would be disingenuous for us to act like there's nothing available," Keene said.
But both Klein and Scharff argued that the 2 percent increase should not be assumed. Scharff called the inclusion of the raise a "horrible negotiation strategy" and said it makes "absolutely no sense" to include it in the proposed budget, which the council is set to formally adopt on June 10.
"We have to go negotiate with SEIU," Scharff said. "To say 'We want to start with 2 percent ...' It might be zero, it might be 1, it might be 2. It's all about what the package is."
"That's not the way you enter negotiations with a bargaining unit," Scharff said. "That's why I think we should take it out and actually bargain with them on what the number is and what the package is and other rule changes. I'm sure there is a group of things they (SEIU members) want, and they'll tell us, and we'll bargain."
Councilman Pat Burt, who chairs the council's Finance Committee, challenged Scharff's characterization of Keene's recommendation. The debate, he said, is a legitimate one with good points on both sides. Ultimately, he agreed that it would make sense to take the funds from salary increases and put them into a reserve for the time being. It voted 7-2, with Gail Price and Greg Schmid dissenting, to do that.
Price argued the city's lowest-paid workers are overdue a raise.
"It seems to me that without an adjustment over many, many years -- COLA (cost of living adjustment) and everything else -- the purchasing power for take-home pay is less and less over time," Price said.
The council will revisit the issue when it adopts the budget on June 10.
Comments
Another Palo Alto neighborhood
on Jun 4, 2013 at 10:56 am
on Jun 4, 2013 at 10:56 am
Everybody in Palo Alto knows that once you include the value of PA employees' fat retirement/healthcare packages, many of which amount to many millions of dollars apiece, PA employees are massively overpaid relative to PA residents doing comparable work. And it's those PA residents who pay for those packages too. Certain PA staff think we're all either arithmetic-illiterate, or asleep, or both.
Go to a rational retirement/healthcare system, and retire at the same age all the rest of us do, and then let's talk about pay raises.
Old Palo Alto
on Jun 4, 2013 at 11:13 am
on Jun 4, 2013 at 11:13 am
Before raises for SEIU employees, the council should check the salaries for similar positions in the private sector. Raises if needed, which is highly doubtful considering the fact that we have tree trimmers making $100K, should be based on merit, not across the board.
Old Palo Alto
on Jun 4, 2013 at 11:15 am
on Jun 4, 2013 at 11:15 am
I find it humorous and highly ironic that the same night the council removed dollars from the budget for possible employee raises that they also directed the city attorney to draft an ordinance that would eliminate the Council's current 2 term limit(8 years total) and allow unlimited terms. The Weekly missed that this Charter amendment, if passed, will guarantee LIFETIME healthcare benefits to council members who serve more than 2 terms. Currently newer council members are now prohibited from receiving retiree healthcare because the minimimum years of service for retiree healthcare is currently 10 years. Kniss and Klein already have this time in the system. But the others do not. By allowing the Mayor and others to run beyond 2 terms allows them access to lifetime benefits for them AND their families. A sneaky way for the Mayor to get the retiree healthcare he can't get on his own as a sole practitioner. I guess benefit cuts are ok with Scharff as long as his own benefits are increasing.
Palo Verde
on Jun 4, 2013 at 1:02 pm
on Jun 4, 2013 at 1:02 pm
Shouldn't we use the money to pay down the City's unfunded liabilities due to the employees' retirement/healthcare plans we are contractually obligated to fulfill?
That makes more sense than digging a deeper hole.
Another Palo Alto neighborhood
on Jun 4, 2013 at 2:50 pm
on Jun 4, 2013 at 2:50 pm
It is hard for me to find sympathy when I have not had a raise since 2007, my husband has had two payouts since 2001. We did not get a bailout. is there such a thing as too small to fail?
Barron Park
on Jun 4, 2013 at 5:31 pm
on Jun 4, 2013 at 5:31 pm
Mr. Keene. The City's financial outlook has not improved enough to spend money we really don't have. This money should be allocated to hundreds of millions of unfunded retirement and health care obligations. It is short-sighted to think the current increase in revenue will continue indefinitely. Plan ahead - 10 or more years - not one or two.
Old Palo Alto
on Jun 4, 2013 at 5:33 pm
on Jun 4, 2013 at 5:33 pm
Cut salaries 7% and freeze them. Any city employee that wants to leave may do so. If a replacement is needed I'm sure there will be a line out the door for a qualified applicant willing to work for a reasonable salary and a scaled down benefits package.
Midtown
on Jun 4, 2013 at 7:06 pm
on Jun 4, 2013 at 7:06 pm
The managers & city employees already got a big raise - it's the increased cost of the city contributing to their pensions. If they want an increase in their salary, then the council should negotiate with the city employees to reduce their pensions.
Another Palo Alto neighborhood
on Jun 5, 2013 at 3:12 pm
on Jun 5, 2013 at 3:12 pm
Having had no vacation since 2004, pay cuts in 2002 and 2008, and no real gain in income since 1999, I have to say,"Let them eat cake,"
Midtown
on Jun 6, 2013 at 11:22 pm
on Jun 6, 2013 at 11:22 pm
Every job listed in Palo Alto has comparable jobs in public and or private industry. It is a myth created by the media and management that employees outside of management get excessive wages and benefits.
#1 Palo Alto contractors do not have to pay prevailing wage. That means Palo Alto is able to take contracts and assigning them to contract employers who do not pay prevailing wage and pay no healthcare or benefits.
#2. The salaries for Palo Alto employees in the trades are not investigated for their salaries and their salaries are far lower than union wages and benefits and other cities.
THE DAY Palo Alto starts providing affordable housing for teachers, fire, police, and workers is the day Palo Alto Management, City Council, and citizens have an ethical or moral right to say anything negative about about wages and benefits, and/ or call themselves a "green city".