Collective Bargaining Update

I am providing another update on the City’s collective bargaining efforts with the public safety unions.

On December 1, 2014, Mayor Ivy R. Taylor called for independent third-party reviews of the financial impact of the most recent collective bargaining proposals made by the City and the police union, as well as an analysis of the legislative changes proposed by the Fire and Police Pension Fund. The City contracted with three independent national firms to conduct the reviews, and the firms presented their findings to the Mayor and City Council on Wednesday, January 28, 2015. The three professional firms included Public Financial Management (PFM), Gabriel, Roeder, Smith & Company (GRS), and Coastal Securities.

The analysis and findings of these three national firms strongly affirmed the City’s financial practices and projections, and stressed the connection between these financial practices and the City’s excellent credit rating. They confirmed to the City Council that the City had correctly calculated the costs of both City and police union wage and healthcare proposals.  Independent reviews verified that the proposal made by the police union would cost $50 million more than the City’s proposal, and would effectively “crowd out” spending for non-public safety services.  If the police union proposal were to be accepted, the City would have to make significant reductions to other core services, such as streets, parks and libraries or significantly increase property tax revenue.

The independent analysis provided to the City Council also evaluated the long-term costs associated with the proposed legislative changes made by the Fire and Police Pension Fund. These proposed changes could save money in the short-term, but would double the number of years it would take the City to eliminate the current unfunded pension liability. The analysis concluded that extending the number of years needed to pay the unfunded pension liability would cost the City an additional $172 million.

During the January 28th presentation, the independent firms communicated that San Antonio is the only city with a population of over one million with the highest credit rating possible, and that prudent financial management should be a cornerstone in the ongoing labor negotiations and in the evaluation of any uniform pension legislative changes.

Following the presentations, the City Council made it clear that contract negotiations should resume immediately. The City has proposed several meeting dates in February to resume collective bargaining. The police union has agreed to return to negotiate on February 20 and 26, 2015.

At the heart of the issue is the fact that public safety expenses are growing faster than general fund budget revenues. One of the escalating cost drivers to the general fund budget is public safety healthcare. The police union has proposed paying toward healthcare, but only in conjunction with salary increases far in excess of any annual healthcare premiums. The City has proposed a combination of employee healthcare premiums with modest wage increases keeping the public safety budget within the policy guidelines established by City Council and at no more than two-thirds of general fund spending.

We look forward to returning to negotiations with the police union to reach an agreement that is fair to our public safety uniform employees and is affordable to the residents of San Antonio.

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