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Right now, the projected all-fund city deficit moves from about $9.4 million in 2004-2005 to $19.6 million in 2008-2009. If the recently-triggered Vehicle License Fee (VLF) increase is somehow repealed, as threatened, the city will lose an additional $6 million annually, bringing the all-fund deficit to about $15.4 million next year and $25 million in just five years. Between now and fiscal year 2008-2009, the cumulative city deficit (excluding the VLF and other potential state impacts) is projected to be $71 million. These figures do not account for other likely losses due to additional cuts in outside fund infusions (foundations and federal and state grants) and additional losses resulting directly or indirectly from the effects of economic recession on our taxpaying residents. 

Clearly, we have an enormous budget problem that will require very painful actions. The city’s increased labor costs are the biggest part of the problem. Labor costs account for about 80 percent of the City budget of $250 million. Due to the recently negotiated labor contracts, the annual increases in city labor costs appear to average out at about $20 million annually for the next several years. Our initial overview of these contracts has convinced us that they are excessive, that our city employees, while generally exceedingly competent, are now being overcompensated, and the labor contracts are the proximate cause of the city’s budget problem. 

We are now in the process of more closely examining these contracts and we hope that our city leadership will do the same. These contracts should be compared to other relevant labor contracts and current practices, and to the actual Bay Area CPI increases. The contract subparts that need closer examination include pay raises, equity adjustments, rapidity of step increases, treatment of overtime, health and welfare benefits, and pension contributions and benefits. This article is a first step in the closer examination.  

City of Berkeley employees, while they may not get rich on the job, enjoy most of the “cradle-to-grave” benefits that have been the hallmark of the Western European welfare states and, in the United States, that are mostly limited to public employees and tenured professors. This comprehensive employment package includes almost total job security, generous defined-benefit pension plans, regular super-CPI adjustments, employer-paid family health insurance that extends beyond retirement, liberal disability and workplace injury policies, excellent working conditions, liberal leave policies, and many other job-related benefits. Meanwhile, huge numbers of Americans, including not a few Berkeley residents, are coping with unemployment, job insecurity, loss of retirement assets, increasing health care costs, and all of the stress and ill effects of economic uncertainty and insecurity. 

There are seven operational city labor contracts plus a manual for unrepresented employees, as follows. All of these items are available online as well as city manager summary reports to Council. 

1. Memorandum of Understanding Between the City of Berkeley and the Berkeley Police Association, July 8, 2001-July 30, 2007 

For city manager summary, see Council item #9, 11/13/01. 

2. Memorandum of Understanding Between the City of Berkeley and the Berkeley Firefighters Association Local 1227 I.A.F.F., July 9, 2000-Jully 1, 2006 

For city manager summary, see Council item #9, 10/22/02. 

3. Memorandum of Understanding Between the City of Berkeley and Social Services Union, Service Employees International Union Local 535, July 7, 2002-June 28, 2008 

Covers about 380 employees in health care, welfare and social service, nursing, library employees, and miscellaneous professional, technical and administrative employees. 

For city manager summary, see Council item #3, 11/12/02. 

4. Memorandum of Understanding Between the City of Berkeley and Public Employees Union Local 1, July 7, 2002-June 28, 2008 

Covers about 160 management and professional employees in all city departments and engineering paraprofessional in Public Works, and Parks, Recreation and Waterfront. 

For city manager summary, see Council item #8, 11/19/02. 

5. Memorandum of Understanding Between the City of Berkeley and the International Brotherhood of Electrical Workers Local 1245, AFL-CIO, July 7, 2002-June 28, 2008 

Covers about 20 employees in electrical occupations in Public Works. 

For city manager summary, see Council item #6, 11/12/02. 

6. Memorandum of Understanding Between the City of Berkeley and Service Employees International Union Local 790, July 7, 2002-June 28, 2008 

Covers about 560 employees in manual field operations in Public Works and Parks, Recreation and Waterfront, nonsworn paraprofessionals in the police department, and clerical and paraprofessional employees in most other city departments. 

For city manager summary, see Council item #4, 11/12/02. 

7. Memorandum of Understanding Between the City of Berkeley and the Part-time Recreation Leaders Association (Affiliate of SEIU Local 535), July 7, 2002-June 28, 2008 

Covers about 80 employees in Parks, Recreation and Waterfront. 

For city manager summary, see Council item #5, 11/12/02. 

8. City of Berkeley Unrepresented Employee Manual, Resolution 60,777-N.S., Effective Sept. 26, 2000 (Amended to Jan. 2002) 

Covers confidential executive, management, professional and clerical employees. 

For city manager summaries, see Council item #15, 9/26/00; #16, 6/19/01; #8, 10/22/02; #7, 11/12/02; and #10, 11/19/02. 

Covers confidential executive, management, professional and clerical employees. 

The additional costs of the six-year contracts for the contracts numbered 3-6 above total $83.2 million, and break down as follows: 

3. SEIU Local 535, Nov. 12, 2002 Council meeting: $30.32 million in additional costs (380 employees, $13,300 additional per year for six years). 

4. Public Employees Union Local 1, Nov. 19, 2002 Council meeting: $16.1 million in additional costs (160 employees, $16,800 additional per year for six years). 

5. IBEW Local 1245, Nov. 12, 2002 Council meeting: $1.8 million in additional costs (20 employees, $15,000 additional per year for six years). 

6. SEIU Local 790, Nov. 12, 2002 Council meeting: $35.1 million in additional costs (560 employees, $10,500 additional per year for six years). 

Not included in the $83.32 million above are the amounts for police, fire, and unrepresented employees (contracts numbered 1, 2, and 8). These latter contracts (and related Council items) need to be reviewed to factor in these costs. 

Thus, the new contracts for approximately 1120 (70 percent) of the city’s 1600 employees are costing the city $83.32 million extra in a six year period (average $12,400 annually extra per employee). If the costs of the remaining 480 public safety and other employees are included, the total of extra cost will be about $120 million for a six year period, or $20 million annually (average $12,500 annually per employee). We are already into year two of this cycle. The deficit for year one has been addressed by the normal two to three percent growth in city revenues combined with about $3 million in cuts and some amount of sleight-of-hand. It is clear that normal city revenue growth, serious service cuts, and more sleight of hand will be totally inadequate to address the huge projected deficit. 

So readers, please look at the city’s labor contracts, look at the city’s deficit, and then, please, connect the dots. 

Barbara Gilbert and Viki Tamaradze are co-chairpersons of the Berkeley Budget Oversight Committee.