Operating Budget Not Quite There Yet

June 1, 2008
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GRAND RAPIDS — All the numbers are in the correct columns, the figures add up correctly, and the initial outcome has been corrected into a good one — at least for now.

The city’s 2009 general operating budget tops $122 million and finishes the fiscal year with a surplus of $75,000. But the budgeting process, which officially began in March with a shortfall of $3.3 million, is far from over.

Citizens are lobbying city commissioners to have certain budget items restored or raised. And city commissioners still have to decide what stays in the budget and for what amount, and what will be deleted from it or reduced.

City Manager Kurt Kimball, though, faces the biggest challenge to make all the numbers really work. He and his staff have to lock in employee contracts with 13 bargaining units. All those labor pacts have expired and new agreements have to include concessions on wages and benefits at a time when city workers, like everyone else, are paying more for gas, food and just about everything else.

Eight of the employee contracts ran their course in 2006 — two at the end of June and six at the end of December. The other five expired at the end of June last year.

The projected surplus vanishes without concessions that add up to at least 4.9 percent. But without negotiated contracts, the fairly amiable working relationship the city now has with its employees could also disappear and maybe even turn into a resentful labor affiliation.

“What has to be accomplished in this budget, and what has not yet been, of course, are the concessions that are needed from all of our bargaining units in order to make this budget work. That’s the biggest risk in this budget, if we fail to accomplish our goals,” said Kimball of the 4.9 percent reduction.

The concession percentage started out at 8.4 percent and then fell to 6.4 percent when a 2 percent wage hike wasn’t included. The figure fell even further after more discussions, to the current 4.9 percent.

“In making that concession, it worsens our problem by about $1 million,” said Kimball. “So in compromising at the bargaining table from 8.4 (percent) to 4.9 (percent), one could say that was responsible for our having to cut the positions that we did, because otherwise we would have another $1 million in savings, which could have been used not to have the cuts that are involved.”

The projected general operating budget has 17.5 fewer employees in it. The pay of three workers will be transferred to other funds, and another seven of those positions are currently vacant and won’t be filled. The city’s new fiscal year begins July 1, less than a month from now, so the time for talking has about run out and the city is seriously considering more drastic means to reach a resolution.

“It’s urgent that we get this done. We’ve had over 100 meetings with our various bargaining units that, so far, have produced very little,” said Kimball.

“So I think it’s fair to say we’re moving forward toward the use of mediation and fact-finding. And, perhaps, we’re headed to what we call 312 with our public-safety units.”

Public Act 312 is a state law that sets up compulsory arbitration when talks between a municipality and its police and fire departments are stalled. The law allows an independent authority to make the compensation decision, which ends a dispute but removes all control of the situation from the city and the unions.

“That appears to be where we’re headed with our police and fire unions at this time,” said Kimball.

Of the 881 employees who are compensated by the general operating fund, nearly two-thirds, or 566, are in the fire and police departments.

Mediation and fact-finding is the route the city might take with its other workers. Unlike compulsory arbitration, the city isn’t bound to a fact-finding outcome. If the city doesn’t like that decision, it can continue to talk with the unions for 30 more days. If a contract isn’t reached during that time, the city can impose an agreement on the rank-and-file.

“For other non-312 units, meaning rank-and-file employees in the so-called management union, it’s a different path that includes mediation and, eventually, fact-finding. But in the end, the city can impose a contract on the non-312 units, if we can’t successfully negotiate something,” said Kimball.

“The voluntary agreements have been elusive, so, regrettably, we’re on a course to go through the process of Public Act 312, compulsory arbitration for police and fire units, and a process that takes us to fact-finding with our other units.”

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