This week, the city of Davis put to bed the longest contract dispute in the city, which had lasted over nine years. In August of 2017, the city reached an agreement with the firefighters’ union to put an end to their dispute, but it would take another 15 months to end the dispute with DCEA (Davis City Employees Association) and finally reach an agreement.
The city sent out a press release with positive statements from four of the five sitting city councilmembers and the city manager.
We look at the comment by Dan Carson, who has built his career on the notion of fiscal sustainability. He said: “The reform of retiree medical benefits will provide cost savings to the City in future years. The contract as a whole strikes the right balance between ensuring the level of service provision Davis residents expect and the level of fiscal responsibility and transparency the City needs.”
However, it is worth comparing that to the comments made last year by the Vanguard and Robb Davis with respect to the firefighters’ contract.
At that we pointed out that the contract was far from ideal from a fiscal perspective – but noted that the city set the stage for that agreement by granting a COLA to five other bargaining units in December 2015.
However, as with then, it is worth noting that we have a de facto deficit of between $8 and $10 million per year, perhaps higher, and that voters back in June “rejected” a parcel tax that would fund a key shortfall in roads.
Robb Davis in 2017 issued a statement: “This agreement rectifies some, frankly, poorly conceived benefits of past contracts, and adds brakes on future medical costs. It restores past salary cuts, requires increased PERS (Public Employees’ Retirement System) contributions. It provides a COLA (cost-of-living adjustment) but balances that with increased employee contributions to a medical trust fund. In the end, it is expected to cost the City more.”
But at the same time, he said “it sets the stage for important cost sharing going forward that we believe has the potential to keep costs in check. Because the City cannot impose these items we arrived at them through challenging negotiations that took time. I believe we have a stronger foundation for future negotiations than we had in the past with key issues corrected that need correcting.”
DCEA on the other hand receives a two percent COLA all four years of the contract. In exchange, they agree to a 1 percent pension cost share, or up to 1 percent additional salary, depending on actual PERS pension rates in 19-20 and 20-21.
This all needs to be put into perspective. This is the cost of labor peace, as it was last year with the firefighters. Given where we are fiscally, it is somewhat difficult to stomach ongoing cost increases that are not somewhere else offset either by cost costs or higher revenue.
Then again, it is important to put things into a broader perspective.
For one thing, we have talked about the compensation gap for teachers. But the compensation gap for DCEA-represented positions is fairly wide as well. The employee group has gone nearly a decade without a cost of living increase, and this group is among, collectively, the lowest compensated workers in the city.
Moreover, we are talking about a cumulative increase in salary of about two percent each year. We are not talking about a 36 percent four-year salary increase that characterized the last decade for the firefighters, with the other employee bargaining units getting between 16 and 20 percent increases.
This is not a return to the bad old days of blowing out the budget and pension funding. So, while the increase is less than ideal, it is important that we maintain perspective.
We can debate numbers all day, but at the end of it that day, this contract doesn’t change the fundamental bottom line. Our current situation is not sustainable.
Our labor compensation, therefore, is a statement of values from the Davis City Council. For the better part of the decade, the council held the line on new spending as a way to get their budget in order. Now with the Leland model and the work of the Finance and Budget Commission, we have a much better idea of what things look like.
If the council is stating that a more equitable labor contract is part of their goal – that’s fine, but in order for the council to be responsibility, that statement must come with a trade off.
If labor peace is important, than it must also be important to find ways to fund these costs. I’m disappointed that the city did not put more effort into passing its parcel tax. Merely putting it on the ballot and allowing the citizens to vote on it was not enough. The measure fell short with only 57 percent of the vote.
But the city and especially the council did not put on the full court press there either. There was no robust complaint. There was no door to door canvassing. There was no making the case about the $8 to $10 million shortfall.
The fiscal sustainability of this community rests on three planks: cost containment, taxes, and economic development.
Last week, I pushed forward with the idea of a renewed innovation park, one that would have a component for workforce housing. That could be a way to fund things like roads and employee compensation increases into the future.
We need to re-consider our approach to economic development coupled with taxes if we are going to support labor contract increases. That is going to be the key. The contracts that were signed are not going to break us by themselves, nor do they change the big picture of what we need to.
But they are a reminder that we cannot just sit back and allow the status quo to continue.
—David M. Greenwald reporting