Vallejo Reaches Deal With Unions Avoids Bankruptcy

The San Francisco Chronicle reports:

Vallejo's leaders moved Thursday to avert the city's financial ruin, striking a cost-cutting deal with powerful public safety unions just hours before the City Council was to vote on the extraordinary action of declaring bankruptcy.

Officials did not disclose details of the proposed agreement, which was intended to help trim the city's projected $9 million deficit this fiscal year, which ends in June.

Mayor Osby Davis said the 11th-hour negotiations dealt entirely with cutting costs in labor contracts for public safety, which make up three-fourths of the city's general fund spending.

"This was about working out a solution to our financial condition to avoid bankruptcy," Davis said. "Bankruptcy (means) throwing in the towel and saying we can't do any more, and we can always do more."

Although the labor deal could keep the city of 117,000 residents solvent for the time being, Vallejo's financial troubles are far from over. The Solano County city must make dramatic cuts to services and possibly salaries and benefits to not exceed the $80 million in its general fund.

"It's heartbreaking," said Councilwoman Stephanie Gomes. "We've already been cutting for 15 years. There's hardly anything left to cut."

Thursday's agreement, which is subject to votes next week by police and fire department union members and the City Council, came after four hours of negotiations at a conference center on Mare Island, said Craig Whittom, an assistant city manager who was involved in the talks.
Council to vote on accord

The council will meet Monday to vote on the cost-saving labor agreement, and Capt. Jon Riley, vice president of Firefighters Union Local 1186, said he will take the deal to 78 members of his union for a ratification vote on Tuesday and Wednesday. Police union officials could not be reached for comment.

"Our main objective is to keep the city out of bankruptcy," Riley said. "The ramifications of that would be widespread."

Like many cities in California, Vallejo has been slammed by the skyrocketing costs of public employee packages. The plummeting housing market, meanwhile, has torn into tax revenues.

The threat of bankruptcy has harmed the city in recent days. Since the council first discussed bankruptcy at its Feb. 13 meeting, 20 police and firefighters have retired, concerned that their retirement packages would be jeopardized by the city's precarious financial state.

The packages - including payouts for unused sick and vacation time - totaled more than $3 million, union officials said. It's unclear how or when that money will be paid.

The financial meltdown has intensified debate over whether Vallejo's firefighters are overpaid and exert too much power at City Hall.

The starting salary for a Vallejo firefighter is about $70,000 a year, among the highest in the state. Ten firefighters earned more than $200,000 each last year, including overtime, city officials said.

Vallejo firemen are becoming famous for not being underpaid.