From The Contra Costa Times, March 15
VALLEJO, CA – A bankruptcy judge has ruled that the city of Vallejo may be able to void contracts with two key employee groups as a way to escape bankruptcy and looming deficits.
Stopping short of ordering the contracts voided, however, U.S. Bankruptcy Judge Michael McManus urged both sides to continue to try to settle the wage-and-benefit dispute before he intervenes.
He set a further hearing for March 23.
McManus, in an 11-page ruling issued late Friday, held that neither state labor laws nor a 1979 state Supreme Court ruling in a Sonoma County case prevents the federal bankruptcy court from setting aside the city's contracts with firefighters and electrical workers.
Mayor Osby Davis said Saturday that he, too, hopes that city and union negotiators will reach a conclusion before the court hearing.
"Maybe what the judge's ruling says is it's incumbent upon the unions to sit down and work it out with the city," Davis said.
Two months ago, the City Council reached agreements with city police and a union representing management workers that yielded concessions on wages in exchange for contract extensions beyond June 2010. But the International Association of Firefighters, Local 1186, and the International Brotherhood of Electrical Workers, Local 2376, have not yet settled with the city.
"I am hopeful that the court's opinion regarding the law will be a factor that would cause the unions to sit down and work out a solution," Davis said.. "I would be foolish to say that the same terms would be available to the remaining unions as to the first unions. The sooner we get to the table the better it is for our labor groups."
Davis noted that the worsening economy paired with continued court challenges from the union have resulted in a financial "double whammy."
"We need to stop spending money in bankruptcy court so we can start talking about contract resolution," the mayor said.
McManus also asked the city to explain how much money from other accounts outside the general fund might be available for employees and regular operating costs. He noted that in hearings last month the city indicated that it had drawn from a pool of $136 million contained in about 100 so-called special purpose and enterprise funds to pay workers.
While McManus reiterated a previous belief that such funds can't be used to offset most labor costs -- contrary to what the unions have argued -- he said he wants a hearing on March 23 to further discuss how much can be used. Such a hearing would not be held if the city and the two unions settle, he indicated.
Ken Shoemaker, vice president of the IBEW, said McManus' request for cost allocation information bears directly on his membership. Shoemaker estimated only about 40 to 50 of the IBEW's 234 members are funded through the city's bankrupt general fund; the rest are paid by intact funds.
"I was pleased to see that the judge asked for that specific information on the different funds because that shows that he's paying attention to our issues," Shoemaker said.
Shoemaker said negotiations with the city are hung up on employee health benefits, an area he does not see easily changing, because IBEW members are already paying a portion of their health care costs.
Attempts to reach firefighter union officials Saturday were not immediately successful.
Vallejo City Councilmember Stephanie Gomes said Friday's ruling was bittersweet news.
While the ruling will somewhat ease Vallejo leaders' work to balance the city budget, Gomes said Saturday that the city lost some of its power to restructure its employee benefits and salary contacts by approving the two earlier contract changes. She and Councilmember Joanne Schivley cast the two dissenting votes when the two agreements were approved in January.
"We can't solve the problem on just fire and the IBEW," Gomes said. "We went into bankruptcy to change the structure of our contracts -- salary and base pay -- from top to bottom.
"It's still good news for the city -- it doesn't solve the problem, but it's something."
