Council rejects firefighter pension boost

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BY DEENA WINTER / Lincoln Journal Star

A proposal to boost firefighter pensions with annual cost-of-living increases went down in a blaze of acrimony at the City Council on Monday, with Republicans rejecting the plan and sending negotiators back to the table.

Longtime city employees could not recall a situation where the City Council rebuffed a labor agreement worked out by city and union negotiators.

That leaves the firefighters the only city employees working without a contract and raises the specter they may end up going to the state Commission of Industrial Relations to mediate the labor dispute.

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Public employees are not allowed to strike in Nebraska, but the state mandates that their salaries be comparable to their colleagues in peer cities. The CIR acts as a mediator, dictating comparability.

“I think we’re rolling the dice, we’re spinning the roulette wheel, we’re gambling on what we’re going to end up with if we reject this contract,” said Councilman Jonathan Cook, indicating the city will likely end up with a more expensive alternative.

Lincoln firefighters — who don’t get Social Security benefits — have long sought automatic annual increases to their pensions, as many plans have. Social Security benefits, for example, went up nearly 6 percent this year.

Rather than negotiate the typical salary increase this year, city and union negotiators agreed to a one-year labor contract that would have begun applying a  cost-of-living adjustment, or COLA, to the pensions in 2010 at a rate of either 1.5 percent or the percentage increase in the Consumer Price Index, whichever was less.

Mayor Chris Beutler has said this plan would save the city money because the city estimated firefighters were entitled to about 4 percent raises, while the union believed they were owed about 8 percent increases. The mayor has lobbied hard for the proposal, making a personal plea to the council last week.

But the Republican-dominated City Council voted down the proposal 3-4.

Republicans argued it’s not a good time to commit to COLAs given the economic crisis and the effect it’s having on the police and fire pension fund. The pension fund’s value has dropped from about $200 million a year ago to an estimated $148 million now.

City employees said such peaks and valleys are expected and planned for, and the pension fund should be viewed more long term.

Councilman Jon Camp, who once owned an actuarial consulting firm and who has a rocky relationship with the fire department, said taxpayers would be on the hook to guarantee the COLA, regardless of the pension fund’s performance.

“It just definitely isn’t the right time now,” he said. “One month, I know, doesn’t make a year, but we are now entering some troubling times.”

He also criticized the Beutler administration for not getting the council more involved in the union contract until the last few weeks, when it was what he called the “11th hour.”

“Essentially, we were not involved,” Camp said. “I will not be a rubber stamp.”

But Democrats argued the cash-strapped city likely will have to ante up more money now, possibly millions more.

“I don’t think there’s a lot of wiggle room in the budget and I don’t know what we’ll get in Plan B,” Councilman Dan Marvin said. “I think it’s going to cost taxpayers either in services or otherwise.”

Democrats also pointed out that during former Republican Mayor Mike Johanns’ administration, in 1991, the city established a fund to eventually help pay for a COLA. That’s where part of the funding would have come from. Firefighters also would help fund the COLA by increasing their contribution to the pension plan from 8 percent to 12 percent of their salaries.

Republican Councilman Ken Svoboda said he wouldn’t have supported that idea, had he been on the council then.

Councilman John Spatz said if the city doesn’t pay “a little bit more now” to get firefighters’ salaries comparable with their peers, it will just end up with a bigger liability in the future.

The COLA proposal did include a provision specifying that the city’s COLA contribution would count toward wage comparisons in future labor negotiations.

Dave Engler, president of the Lincoln Firefighters Association, said his union will return to the negotiating table. However, he questioned whether negotiators would be able to come up with any agreement that satisfies the council, which he implied was micromanaging the contract.

He noted that fire department issues have a way of getting controversial.

“I don’t know how many contracts we’re gonna have to negotiate (before it gets to the point where) obviously we’ll have to go somewhere else where they make the decision for us,” Engler said.

The CIR doesn’t just look at wages, either. It also examines whether things such as vacation time, sick leave and working conditions are comparable to other cities.

“There’s a lot more than just wages, but I’m not sure they’re seeing the forest for the trees,” Engler said.

Reach Deena Winter at 473-2642 or dwinter@journalstar.com.