Vallejo Uses Bankruptcy Courts to Renege on Firefighter Contract
What looked like an important victory last November with the election of a more responsive city council has turned into the fight of their lives for the men and women of Vallejo Firefighters Local 1186.
Rejecting all offers of assistance - including substantial labor concessions as well as help from the state and from a private financier - the City of Vallejo filed for Chapter 9 Bankruptcy in late May, becoming the largest city in California to declare bankruptcy.
Then in June, the city asked a bankruptcy court judge to void all four of its city employee contracts, including those for firefighters and police.
Firefighters, police and other city workers asked the judge to reject the bankruptcy petition. "This petition reflects an attempt by the city to avoid its contractual obligations to city workers and retirees, without reasonable efforts to address other costs and revenue sources," the workers said in a court filing. "The city created its own financial problems by not taking steps easily available to it and should not be allowed to avoid those fiscal responsibilities."
Unfortunately, the courts allowed the bankruptcy to proceed, setting the stage for a fight that could shape the future of collective bargaining in California.
In February, the Vallejo City Council reached agreement with the public safety unions on pay cuts, fire station closures and other short term measures designed to avert the financial crisis. And in May, Local 1186, the Vallejo Police Officers Association, and International Brotherhood of Electrical Workers Local 180 gave the city a proposal for a $10.6 million salary reduction that would have made the bankruptcy unnecessary.
The unions' proposal included:
• Reducing police and firefighters' salaries by 6.5 percent;
• Eliminating 11 percent of scheduled 2008 and 2009 fire and police raises;
• Limiting future police and firefighter raises;
• Reducing general city employee salaries by three percent;
• Eliminating 10 percent of scheduled 2008 and 2009 general city employee raises; and
• Additional cuts to complement the city's current plan to eliminate 26 police officer and 26 city employee positions and close two fire stations.
Despite these concessions, the city council and mayor voted unanimously to file for bankruptcy. "It has been obvious from the beginning that the real reason the city filed for bankruptcy is so it can void labor contracts fairly negotiated by firefighters, police and other public employees," said Jon Riley, Local 1186 Vice President and Chair of the Napa/Solano Central Labor Council.
"State Controller John Chiang has offered to independently review the city's books to help it avoid bankruptcy," Riley said. "He's even offered to have his staff help the city obtain hundreds of thousands of dollars in (SB 90) funds it hasn't bothered to apply for. But apparently the council isn't interested."
According to union officials, the city-projected $16 million deficit for the coming year is a false figure because it does not take into account, among things, current staff reductions already in effect and the closure of the two fire stations.
The unions commissioned an audit of city finances by the Harvey Rose auditing firm of San Francisco, which concluded that the city can cut costs and generate revenue without slicing into police and fire salaries.
"While we strongly support our brothers and sisters in Local 1186 on this issue, we are also very concerned about the kind of precedent Vallejo's bankruptcy would set," said CPF President Lou Paulson. "If Vallejo succeeds, other jurisdictions also may try to use bankruptcy as a weapon to void negotiated contracts with their public servants."
Bankruptcy attorney Douglas Provencher, who has worked on several public agency bankruptcies, agrees. "If Vallejo is allowed to do this, I can't imagine how many cities and counties in the state would file for bankruptcy," he said. "But this really is unchartered waters. I've never heard of any public entity, ever, succeeding in rejecting its union contracts."