The council members voted 7-1 Monday night to adopt a resolution imposing an offer that entails scaling back health care and retirement benefits for about 600 members of Service Employees International Union Local 521. Councilman Yiaway Yeh voted against it.
The proposal would cut $2.5 million from the city's $10 million budget deficit by requiring workers to pay an additional 6 percent toward their retirement and an additional 10 percent to cover medical costs.
Kelly Morariu, assistant to the city manager, said the proposal addresses the city's financial challenges.
"We presented what we think is a reasonable and fair contract to SEIU," Morariu said. "The proposal did not eliminate any jobs or benefits. We're asking them to contribute small amounts towards their medical premiums and retirements."
Councilman Larry Klein, who voted for the contract, said the city cannot afford to continue paying health care and pension benefits that the workers have received in the past.
Members of SEIU, including city road maintenance workers, librarians, office workers, parks maintenance workers and electricians, will meet tonight to discuss the contract and their next plan of action. The meeting began at 5:30 p.m. at the Cubberley Community Center, located at 4000 Middlefield Road. A strike vote is likely if members decide to go that route, a spokesman for the union said.
In the event of a strike, Morariu said the city has a contingency plan in place to provide public health and security services.
"We hope that a strike does not occur," Morariu said. "We value all of our employees."
Members of SEIU called the process undemocratic. According to union spokesman Jerry Jimenez, after five months of negotiations, city officials called an impasse a few weeks ago, stating that they had decided to end negotiations because it was not proceeding the way they would have liked it to. Jimenez said the workers offered to bring in a mediator to help them find a resolution, but the city rejected the offer and decided to bypass that process.
He said workers have also offered a plan that would save the city $6 million over the next two years by taking furloughs, not taking salary increases, giving up holidays, and implementing a lower wage scale for new employees.
Klein said council members could not see the purpose of mediation and felt that it would only delay matters. He said the workers' plan to save the city $6 million was a short-term solution to a long-term problem.
"The city sees these problems as long-term and continuing, the union sees these issues as short-term," Klein said.
SEIU member Vic Farisato has worked in marketing services for the Palo Alto Utilities Department for 14 years. He said he believes the City Council's vote will affect morale among workers in the city.
"I felt that the city from the onset had a mission to cut medical, increase our retirement costs and our feeling is that they did not bargain in all fairness," Farisato said. "I think the City Council's vote is only going to hurt morale. And it will be a direct detriment to the city. A lot of people work very hard to keep the city as nice as it is and it hurts when you're not appreciated."
Klein insisted that the contract is necessary and fair.
"There's a saying that all labor disputes end. I'm looking forward to the time that occurs," Klein said. "We do value our city employees and look forward to the day when we can come to an agreement.
Negotiation talks will resume next spring, Morariu said.