According to a fiscal note prepared by city Finance Director Brian Silvia, the three-year tentative firefighters contract to be considered by the City Council this coming Monday has a net savings of $395,856 and will result in an OPEB trust fund paid by future employees that will result in a 30 percent co-payment of their health care costs in retirement.
While that is all positive, in the opinion of City Council President Steve Merolla, the contract fails to address immediate fiscal concerns and based on the projections for escalating school and health care costs of current retirees, the city won’t be able to raise the funds to meet demands. By state law, the city can’t raise the tax levy by more than 4 percent without legislative approval, meaning the maximum it can raise from increased taxes is $8 million.
Mayor Joseph Solomon anticipates there will be critics of the contract and those who will say it doesn’t go far enough to rein in costs.
“There’s a lot of negatives out there and naysayers,” he said in an interview Wednesday. He said for that reason, he doesn’t plan to attend the council meeting and will depend on his financial team and his chief of staff, who he called the “best of the best,” to outline the contract and answer questions.
The tentative agreement was not announced until it had been approved by firefighters.
Solomon said he learned his lesson this summer when he announced the administration and the union leadership had reached a three-year agreement of zero raises, only to have it rejected by the membership.
He didn’t draw comparisons between the two agreements, but added, “I’m very proud of [the latest] contract.”
The tentative agreement calls for a reduction of two personal days, one holiday and four sick days, and the increase by a year between new hires and Grade 1 as well as a year’s increase between Grade 2 and Grade 3.
For a first time, the contract would establish a trust to pay for post-employment benefits other than pensions, known as OPEB. This would require new hires to pay 2 percent of their pay into the trust. There would be no city contributions to the trust.
Solomon sees the provision as “setting the stage” for contract negations with police and municipal employees and addressing the long-term liability of health care costs for retirees.
Merolla agrees the fund would do that.
“The problem is not the new employees,” he said in a telephone call, “the problem is the current employees.” He said the issue extends beyond OPEB as firefighter pensions still have compounded cost-of-living adjustments, or COLAs.
He said he expects the City Council to “do our due diligence and tell [the administration] what we can afford.”
Given the projections of an independent school audit that were presented to a joint meeting of the council and School Committee last Wednesday, Merolla pointed out that schools alone are projected to need an additional $8 million next year. He notes that amounts to what a maximum tax increase would yield.
“And we have four contracts with provisions that we can’t pay,” he said.
In addition, the tentative firefighters agreement would end arbitration, with the exception of salary increases, for the contract ending during the administration of former mayor Scott Avedisian. Going forward, there would be no increase in the first year followed by 2-percent increases in the second and third years.
Solomon was critical of those critical of the contract.
“They don’t possess the knowledge of an actuary or a bonding agent. They don’t have the tools. Maybe they should look into them,” he said.
Merolla made of point that the financial forecasts he’s using are from actuaries and financial advisors.
Solomon feels the “crisis” is trumped up and the situation sensationalized. He says he’s bitten his tongue.
“I’ve been uncharacteristically a very quiet person,” he said.
The council meeting is slated to start at 7 p.m. in Council Chambers, but the debate over the contract, which will set the stage for a vote, will start with the Finance Committee at 5 p.m.