Those pricey city union contracts...What ADN said at the time

Posted by Matt Zencey, editorial page editor

Posted: October 7, 2009 - 6:03 pm

Comments (0) |

Sunday, ADN's editorial criticized then-Mayor Begich for withholding information about the city's deteriorating finances as the Assembly debated approving generous five-year contracts for city unions.

Some readers said our criticisms came about 10 months too late.

On the contrary. We wrote three editorials, two in December and one in January, questioning the process and the terms of the contracts.

Our December 2 editorial is here.

Our December 6 editorial is here.

Our January 16 editorial said this:

Nasty surprise
Shortfall raises questions about Begich's end-of-year decisions

The city, having just approved four generous and expensive labor contracts in December, now discovers a $17 million budget gap looming for the current year.

Where did it come from? And why didn't the public learn about it a month ago, before the city signed onto pricey long-term labor contracts?

City officials say they just figured out the size of the shortfall this week and it's still a moving target.

But back in the fall they knew that the city's investment funds weren't producing as much revenue as anticipated. Shortfalls in this year's and next year's investment earnings make up almost all the budget gap.

Still, Mayor Begich pushed ahead in December with labor contracts that include across-the-board raises this year of at least 2.5 percent to 3 percent for members of major city unions -- police, fire, the IBEW and the Anchorage Municipal Employees Association. The contracts combined add about $7.5 million to the 2009 budget, according the city auditor.

Yes, the union reps promised they'd work with the city if the revenues crumbled. But still it seems strange that former Mayor Mark Begich didn't see the giant shortfall coming. And it's poor planning to immediately turn around and have to ask for concessions.
That's exactly what will happen now, says acting Mayor Matt Claman. "We're going to ask for concessions, absolutely."

City administrators past and present justify having negotiated the raises by saying:

* They were following the mandate of an Assembly resolution that called for raises to be based on cost of living over five years, not just one year's ups and downs.

* If the city hadn't agreed to decent raises for police and firefighters, those contracts would be subject to binding arbitration -- meaning an outside arbitrator would decide what's fair, and the city would have to go along. The city would have lost its case in binding arbitration, the argument goes.

But the fact is, the city could have waited until January to approve the police and fire contracts. Unlike the others, they had not yet expired.
Reached in Washington, now-U.S. Sen. Begich defends the contract decisions and said he thinks the $17 million estimate is a worst case scenario.

Begich says the city's investment earnings dropped precipitously right in the last quarter after three good quarters. But that drop started well before the union contracts went to the Assembly for approval -- and financial markets kept getting worse.

As Begich ended his term to become our U.S. senator, he told the Anchorage Chamber of Commerce that Anchorage is doing exceptionally well despite the international economic crisis.

But the size of the shortfall means we're not, and shows poor planning during Begich's last couple of months in office.

BOTTOM LINE: The city's just-announced budget shortfall makes those new union contracts look awfully generous.

login or register to post comments