Three acrimonious years and more than $1 million in legal fees later, council members in Costa Mesa are calling for a “clean slate” in their relationship with the city employees’ union, in light of a new labor contract that increases employee pension contributions and outsources street sweeping services.
“I know that both sides really pushed hard back-and-forth, but the document is in front of us, and I think this is a new era of cooperation,” Mayor Jim Righeimer said at Tuesday’s public hearing of the contract. Negotiations with city employees began last August.
“I know what we’ve been through and you might be thinking, ‘I don’t know, it’s Jim Righeimer,’ but from the bottom of my heart -- it's a clean slate,” he said.
Since 2011, Righeimer and members of a newly-elected council majority have attributed the city’s dire financial straits to the rising cost of employee compensation and pensions. They advocated for the outsourcing of 18 city services, and in March of that year, issued tentative pink slips to more than 200 employees.
The situation became especially heated after Huy Pham, a 29-year-old city maintenance worker, jumped to his death from the roof of city hall the day employees were issued layoff notices.
That galvanized council critics and the city employees’ association, which later sued and blocked outsourcing efforts for more than a year. The court case, which the city has spent more than $1 million fighting, is still ongoing.
Tuesday’s $24.7 million labor contract was discussed at the first of two public hearings, a requirement of a 2012 city ordinance aimed at greater transparency in labor negotiations. The council will vote at a second hearing Sept 16.
The agreement, which was ratified by the union last month, includes no salary changes for current employees, a 10 percent reduction in starting salaries for new hires, and a plan for employees’ to pay 60 percent of yearly retirement rate increases, saving the city $507,000 annually just in pension costs.
The contract also reduces the total unused vacation and sick leave hours that employees can accrue and requires them to cash out those hours on an annual basis. Unused vacation and sick pay can be expensive for cities if employees, who can add hours to their bank any time, cash out years down the road when they are earning a higher wage.
Participation in the Retirement Health Savings Plan (RHS) will also be eliminated, including matching city contributions to the program.
The deal also includes the outsourcing of street sweeping services, which CEO Thomas Hatch characterizes as a cost-savings move that doesn’t impact employees.
As the city needs to replace at least four old street sweeping machines, the option of contracting out avoids the cost of acquiring and maintaining new equipment, Hatch said.
If the labor deal is approved later this month, the council could approve the contract with Athens Services as soon as October. The part-time city employees that currently provide street sweeping services will be absorbed into the Public Services department.
Last year, the city also voted to outsource its jail services to the British multinational firm G4S Security Services at $743,329.60 a year, against the protests of its employee union.
Orange County Employees Association representatives, who represent Costa Mesa city employees, have declined to comment on the labor contract until the council votes on the terms later this month. The contract would be valid through June 30, 2016.
This new deal has come a long way since last August, when the city offered the union a 5% across-the-board pay cut, 5% increase in pension contributions, and major reductions to paid vacation and sick hours. In a news release, the union said the city put forth “a draconian and unprecedented initial proposal” that “is typical of a City Council majority that has torn apart the community and wasted millions of taxpayer dollars advancing their extreme agenda."
Righeimer, whose first term on the council will be tested at the polls in his bid for re-election this November, acknowledged that fraught history.
“This has been a long, long process. Even before negotiations started there was a massive amount of tension and acrimony between the council and association, and I will myself take responsibility for some of that,” Righeimer said.
Councilmembers Wendy Leece and Sandra Genis also called for the city to go further in disclosing contract negotiations, to include ex parte communications. Leece said the ordinance should include all city contracts, not just negotiations with city employees.
“I appreciate our employees’ hard work and willingness to solve problems -- but now that the slate is clear, we need to make it 100 percent transparent on all contracts, for all negotiations,” Leece said, citing for example any campaign contributions given by companies that receive city contracts. “We can figure that out ourselves but that needs to be forthright at the start of the process.”
Councilman Steve Mensinger, a member of the council majority who authored the transparency ordinance, said the new labor deal is a “positive first step.”
However, his language from the dais still had elements of the past.
“If we don’t mind the store, we’re going to run out of cash. The cost of pensions is going to go up 50 percent or more in the next five years. If we just speak in platitudes, and we don’t look at the numbers, we’ll be back at the same place we were before,” Mensinger said.
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