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Budget Woes - City, Police Near Impasse

POSTED June 30, 2010 3:18 a.m.

Negotiations remain ongoing but representatives of the Oakdale Police Officers’ Association (OPOA) have revealed that the membership unanimously rejected the city’s last, best and final offer, sending negotiations in the direction of an impasse as the June 30 deadline looms.

“The last, best and final offer has been the city’s only offer,” Joe Parreira, OPOA President contended, regarding the difficult back-and-forth between the city and the labor group. “They’re only willing to discuss the 5 percent of PERS (California Public Employees Retirement System) as the primary offer and until we’re willing to give that up, they’re not interested in anything else we have to offer. The city refuses to budge from what they want.”

Parreira expressed his frustration with the tone and direction of the negotiations as he addressed city council members during public comment at the June 21 meeting. He rebuked the council for choosing “money in the bank over cops on the streets” and questioned their decision to put public safety at risk.

As of July 1, the city will implement one of two adopted operating budgets for the 2010-2011 fiscal year. In both proposed budgets, sworn officers would be let go, in addition to the requested concessions.

“The tone has never changed and there’s never been a dialogue back and forth on how we can work together. It’s been very difficult for us. They’re not interested in money unless it comes from the PERS,” Parreira said.

Steve Hallam, Oakdale City Manager, could not comment on the specifics of the negotiations, stating confidentiality concerns, but he did recognize some of the significant hurdles faced by the city during these tough economic times.

“Some of the employees among all employee groups do question why the city is asking for savings through concessions from city employees, yet they see work demands increasing, less co-workers alongside of them available to perform the work, and a feeling that the public expects employees to also bear the burden and be a part of the overall reduction in city spending,” Hallam said. “As difficult as it is for anyone to ‘agree’ to a reduction in wages and/or fringe benefits, most of the employee groups do understand that the times are dictating fundamental changes in the way the employer and the employee must work together to address the rising cost of many of the benefits employees have negotiated over the years. And no one has to ask twice to hear most taxpayers rally the cry, ‘Don’t increase my taxes — live within your means’.”

The sentiment was taken to heart by council members as they struggled to maintain an ever-shrinking General Fund Reserve, which will rest at 17 percent regardless of whether Budget A or Budget B is implemented.

“The main objective of the city is reflected on the city website: financial stability, however, I don’t think the citizens are more interested in money in the bank more than cops on the streets,” Parreira said. “I’m not putting the council down. I think they want what’s best for the community but I don’t think they’re getting the best advice from the city manager. People don’t necessarily care if their city has an abundance of money in the bank. They want a police officer to show up if there’s a crime and a firefighter to show up if their house is on fire. The OPOA has gone above and beyond in negotiations. Don’t take our word for it. See for yourself. Look at what we gave last year. Last year, we really stood up and we were applauded for it.”

Hallam contends employee costs in the public sector are simply “out of control” and unsustainable in the long term.

In 2001, the City of Oakdale followed the State of California and most other cities and agreed to provide “enhanced retirement benefits” to city employees who are members of the PERS, Hallam explained. The city’s public safety employees successfully negotiated to receive a retirement benefit package that provides up to 98 percent of their highest annual salary each year for the rest of their life, upon retiring after 30 years of city service. In 2000, the total retirement premium payment the city paid to PERS for the public safety employees was $371,460 which constituted approximately 7.56 percent of the total General Fund budgeted spending for that fiscal year. As PERS investment returns have suffered, the State retirement agency is passing the full premium costs to the member agencies (including the City of Oakdale). In the city’s budget proposed for FY 2010-2011, this PERS retirement premium payment from the city will be $1,265,211. Hallam added that the PERS public safety retirement benefit premium payment to PERS will now consume over 15 percent of the total General Fund budgeted costs.

“That’s 15 percent of all General Fund spending — strictly to make the PERS retirement premium required for our police and firefighters,” Hallam said. “That pace of retirement cost increases can simply not be sustained in the long term.”

As it stands, council members agreed to draw $204,000 from reserve to balance the FY 2010-2011.

“Without that transfer of $204,000, it would be expected that even more police officer and/or fire fighter positions might have been forced to be cut,” Hallam said.

The reserve for the entire Oakdale General Fund budget will stand at approximately $1.3 million dollars in order to balance next year’s budget. Just three years ago the city’s reserve stood at more than $3.7 million.

While the city has maintained resources are uncomfortably tight, the OPOA openly disagrees, pointing to funds couched within Redevelopment areas that other cities have tapped to help pay for their public safety. To that end, they hired consulting economist Peter Donohue, Ph.D. to review the city’s Annual Financial Report for Fiscal Year 2008-09 and its most recent trial fund balances for the current fiscal year 2009-10 to see if, indeed, the city cannot and should not use alternate funds for public safety.

Donohue concluded in his report, “…From a bookkeeping standpoint, City officials’ logic is no different than homeowners making double mortgage payments to reduce their total payments to lenders. But, as (a) result, if homeowners are unable to pay for their children’s school lunches, such ‘savings’, like those proposed by City officials, hardly seem prudent from the standpoint of homeowners’ children, or Oakdale residents and businesses expecting services commensurate with taxes they pay…”

Donohue continued, saying, “…This (is) especially incongruous as property tax increments in redevelopment areas continue to be redirected from the City and other property dependent jurisdictions like schools, county et al to financing improvements to increase property values in City redevelopment areas. If this is not the ‘rainy day’ for which the City has accumulated unrestricted net assets to maintain City services and facilities, how big must the downpour be before tapping reserves?”

But Hallam and the city’s stance is to look to the future and that future is grim with even less revenue expected from the usual channels.

“With new reports received last week, sales tax reports and property tax assessments will fall further than anticipated throughout fiscal year 10/11,” Hallam said, adding, “I fully expect that the City Council will be faced with a need to draw further from these declining reserves as we review the new budget at the mid-year point in January 2011. It would take only one unexpected emergency, say from a wind or rain storm or unexpected accident, and this reserve would become critical to maintaining the fiscal solvency of our City.”

Parreira believes the city’s decision to hold the line will have a disastrous ripple effect throughout the community as the five officers penciled in to be let go produced 30 percent of the citations/arrests. They were decorated officers, recognized as Police Officers of the Year and consistent in their police work.

“Oakdale is losing all that,” Parreira said. “What’s so frustrating is that the city has money. We’re trying to tell them that we’re getting away from adequate safety for the citizens of Oakdale and that makes me feel really bad. I’m going gray over this. I’ve been scouring for ideas and we’re still looking for different ways to fund this but short of us walking in and giving them $600,000 they’re going to lay off officers.”

On July 6, the Oakdale City Council will be asked to approve new employee agreements with two of the five city employee bargaining groups: the fire fighters and the senior management employees. Each of these employee groups have reached agreements with the City that include the employees beginning to pay a portion of the “employee” share of the PERS premium payments, Hallam shared.

“I continue to be extremely impressed with the attitude and commitment by many of the men and women I have the privilege to work with as we do our very best, day in and day out, to keep this special community running smoothly and respond to the requests for services and help from our residents and businesses. Heaven knows that we are all ‘in this together’,” Hallam said.

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