Worrying that an annual $1.7 million in public safety pension
costs could drain the city’s budget, the City Council delayed
voting on a long
–planned increase to police and firefighter retirement programs
this week.
Hollister – Worrying that an annual $1.7 million in public safety pension costs could drain the city’s budget, the City Council delayed voting on a long–planned increase to police and firefighter retirement programs this week.
In 2002, the city negotiated with the Hollister Police Officers’ Association to increase their retirement benefits from 2 percent to 3 percent at age 50, a deal slated to take effect on July 1. A similar deal for Hollister firefighters would begin in July 2006.
But Monday, Hollister’s Administrative Services Director Robert Galvan told the City Council that the deal could create problems for the city’s projected $13 million general fund budget for fiscal year 2006-2007.
“I fully acknowledge the operational need of fire fighters and police officers,” he said. “My obligation is to advise you that with 2006-07 being what it is, we do have a serious problem. We are in trouble, we need to take action.”
Currently, Hollister police officers and fire fighters receive 2 percent of their highest salary for every year they served upon retiring at age 50. For example, if an officer has 20 years of service when they retire at age 50, those years would be multiplied by 2 percent, giving them 40 percent of their pay as final compensation, according to the California Public Employment Retirement System Web site.
If both contracts increasing the multiplier to 3 percent take effect, the city will be paying about $1.7 million per year for police and firefighter benefits.
“No way can we exist by having 13 percent of our budget go for pensions for two groups,” Council Member Doug Emerson said at Monday’s meeting.
The council chose to put the issue on hold until its June 6 meeting, when council members will discuss the increase further and look into possible legal ramifications that might arise if the city is unable to increase its contribution.
“We can’t afford it, even though we may have to follow through” Mayor Pauline Valdivia said. “Right now we’re at an impasse in terms of funding.”
“I don’t know if it’s possible to sit at the table with them (police officers and fire fighters) and talk about this any more,” Valdivia said. “Hopefully it will have a positive outcome.”
If the city does have to honor the agreement made three years ago, programs funded through the general fund, such as parks and recreation and street maintenance could face cuts, Emerson said. Police might also need to be laid-off to pay for the pensions, he said.
“We have to cut from somewhere,” Emerson said.
Representatives from the police department and the fire department unions could be reached for comment. But Hollister Fire department Chief Bill Garringer said that he was unsure if the city could decided not to pay the increased retirement benefits.
“It’s an interesting dilemma,” he said. “We’ll see how it works out over the next few weeks.”
This current situation highlights the city’s need to attract more revenue, said Council Member Brad Pike, who is also a fire captain in Santa Clara County.
“My opinion is it’s going to be a huge financial problem if we don’t find revenue in the next couple of years,” he said, adding that the council has been talking with different groups that might want to do business in Hollister.
“It’s a very tough area,” Pike said. “We need to take pressure off ourselves as a community and let revenue come in.”
Pike said he hopes the council can sit down again with the police and fire departments and work to renegotiate and come to an agreement that the city can afford – such as pushing the retirement age back five years to age 55.
Council members acknowledged that police officers and fire fighters perform an essential and difficult job and deserve benefits, but they also said that the money just wasn’t available.
“The writing is pretty clear on the wall,” said Council Member Robert Scattini. “If this goes through and we stay at the status quo where we are, we’re going to be depleted of reserves.”
Luke Roney covers politics and agriculture for the Free Lance. Reach him at 831-637-5566 ext. 335 or at [email protected].
