Mayor Mike McGinn announced a tentative agreement with 19 city unions, representing about 6,000 city employees, this afternoon that will save more than $3 million in general fund expenses and more than $5 million in non-general-fund expenses next year, for a total of about $9 million. The city faces a general-fund budget shortfall of $67 million.

If the unions ratify the agreement, their members will take a 0.6 percent pay increase next year instead of the usual minimum increase of two percent. In addition, the unions will agree to 2012 and 2013 increases that are indexed to inflation, rather than a set minimum, with a zero-percent "floor." Together, those actions will save an estimated $2.3 million in the general fund next year and $3.4 million for non-general fund expenses.

Asked why, given that city wages have risen faster than inflation the last few years, the city isn't asking the unions for a wage freeze, McGinn said, "We've agreed to actual inflation. We believe that's a fair agreement. We could ask for zero, and we probably did, but I think we settled on something that's fair."

In exchange, the city has agreed to keep union members' health care benefits the same through 2013, to give union members access to arbitration if they don't like the outcome of complaints about work going to outside contractors, and to continue to look to managerial positions for savings.

Additionally, McGinn announced that the city is freezing the wages of managerial and senior-level employees, saving $700 from the general fund and $1.5 million in non-general fund savings.

Of the $9 million in savings McGinn and the unions identified, $3 million, plus some portion of $1.1 million the city plans to save by rolling back projected cost increases due to inflation, will come from the general fund and thus help with the $67 million shortfall.

The savings announced today won't prevent layoffs and service cuts; as we reported earlier this week, the city will probably have to cut positions, reduce services, combine community centers, reduce hours at libraries and parks, and charge more for basic services like the use of city pools.

"The magnitude of the budget [shortfall] means that there will be reductions in the number of workers we have, but these savings will mean that we are able to maintain services that we would not otherwise be able to maintain, and it does mean that we will be able to retain jobs," McGinn said.

Coalition of City Unions head Adrienne Thompson said the unions would vote on whether to ratify the agreement by October; McGinn presents his 2011 budget on September 27.
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