The World-Herald asked Omaha's mayoral candidates for their views on several key issues facing the city.
Today: Union contracts
Tuesday: Streamlining government
Thursday: Job creation
How would you describe the state of the City of Omaha's union contracts?
What's happened with contracts in the last 25 years is (we have) spent less on wages during the contract period and in return we've basically lowered the retirement age and enhanced the pensions. And that has to be reversed. I would trade higher wages for a defined contribution plan. I think there are too few employees in the fire and police pension plan to make it work. They (the plans) definitely need to be changed. I would move toward negotiating hybrid plans where you move toward negotiating defined contribution plans for new hires, give current employees the option. And the current contracts don't reflect comparisons to private employers, and that is a major factor.
I think our union contracts, actually, are some of the most expensive union contracts in the country the way they're designed. I'm not the mayor. I'm not on the City Council. And yet I have read the labor contracts from other cities. I know what they look like. I know what's reasonable. If you took out police and fire labor contracts to any other Midwestern city — and even if you took them to New York, Los Angeles, San Francisco — they would laugh. Nobody has the pension formulas we do. No one has the staffing mandates. We can't find labor contracts where the union tells the employer they can't lay anybody off except through attrition.
With the fire contract, we successfully achieved significant reform in health care and pension. Immediately saving $680,000 a year in health care and $822 million of pension savings over the 2014 contract. We stopped spiking and we raised the age of retirement. As of January 1, 2013, the unfunded pension liability dropped by $30 million. However, we have a lot more to do.
I've always felt that we need to step back into a more middle ground between what's fair for the union and what's fair for the public. We have done that. I'm the first mayor in 30 years to get major concessions from the unions, and that bordered on the double-digit reduction in the pensions and also the wage freezes we did the first two years and the end of spiking. Sadly, the City Council put some things back in that they shouldn't have.
I think that our employee contracts are bloated. When I was on the City Council I commissioned a study and a group out of California called Matrix came in and reviewed our police and fire contracts. They told us we could save millions of dollars without compromising public safety. You have an expert who's indicating to us that we could save millions of dollars without compromising public safety. I think it's incumbent on the leaders to exercise that option and reduce the cost of public safety. Our pension system is broken. In 20 years, we may not have a retirement system for our public safety employees. Or in the alternative, taxpayers are going to have to bail the system out. Neither of those alternatives is acceptable, which is why the next mayor has got to fix our contracts and pension systems immediately.
Should the mayor take the lead in negotiating city labor contracts?
It should be the mayor's role. I was a judge on the Commission of Industrial Relations. I've negotiated a lot of labor contracts in my career. I can tell you that if going to the CIR in the past was a paper tiger, it isn't any more. It's an avenue that's there. But I think the other thing is you have to involve the City Council in the pension issue and not make it a political issue. It's a math problem.
The mayor should absolutely be in control. But it's very important the mayor not take any money, or have any campaigning help from the labor unions. I understand why the city council took negotiating power away. The mayor was doing things behind closed doors, then he'd dump a labor contract on them at the last second and try to push them to approve something. I understand why they took it from him. What I don't understand is why Jean Stothert didn't take our credible information we gave her and look at the difference between our contracts and other labor contracts.
Yes. The vote in August of 2011 by the City Council was a vote of no confidence (in) Mayor Suttle. My further thought would be the City Council, instead of going to court with the CIR (Commission of Industrial Relations), we put the burden on ourselves. It was a vote of no confidence because the mayor presented us with a contract we could not approve. I think it should be under the responsibility of the chief executive of the city. But I will say, if I'm elected mayor, I'll keep our independent negotiator at the table — not a city employee.
I think the union negotiations should come back to the mayor. I will get back on plan. Right now, since the council took away the authority, we have been stymied in addressing the other critical subject matters. Health care reform, to get down to one health care plan, and the disability. We need to get disability off the pensions. The reason we get along is simply this: Trust. We trust each other enough to talk.
The mayor is the chief executive officer of the city. It's incumbent upon the mayor to negotiate reasonable contracts with the city employees. If he can't do that, he should be removed from office. The contracts should not be negotiated by a seven-person legislative board. Their job is to make laws and to approve contracts, not to negotiate them. In the future, the mayor should take back the negotiation authority and be judged in accordance with his ability to negotiate reasonable contracts.
If the mayor is leading the city's negotiations, what would your approach be in the next round of union talks?
The only realistic way to make a defined benefit work is by increasing the retirement age for all employees. You have to look at defined contribution plans for new hires. The whole pension negotiation process — we can negotiate those things. But I don't think you can negotiate them as part of a collective bargaining agreement. Pensions are so severely underfunded that you have to start the process on day one. I'd reconvene the Bates Commission, divide the plans to see what the real underfunding is and what drives the underfunding. Is it the age or is it the disability payments, for example. And then you sit down with the unions and you try to figure out a plan to make it more viable.
We're going to research what it should cost to run public safety in a city our size. If we have the facts and they're indisputable and they demonstrate we're paying a premium on public safety, I am going to give the unions an opportunity to work with me on reorganizing so we can get the cost down. As long as they work with me, I will not have to get drastic and do a massive reorganization. If they don't work with me, then I'm going to be forced to implement new measures to lower costs while making sure the public is just as safe. You look at privatization, ambulance services. You look at reorganizing the whole way we manage equipment. Do you have to have a fire truck chase every ambulance? You look at maybe outsourcing.
My goal is to achieve further health care savings by moving all public employee unions to one health care plan. (Currently, the city's police and firefighters have their own plans.) We could get further savings if we only had to administer one health-care plan for all city employees, including for unions. We also need further pension savings, which would include employees putting more money into the pensions, taking less benefits and the actives (current employees) working more years.
Right now if you get a disability it's paid for out of the pension plan. We need to pay for it out of an insurance plan. And we need to be working with each person that is having a disability to spend a two-year window to get them rebooted into the workforce, whether it's city or private or whatever. They need to be back working. Right now the disability plan lets you stay on disability the rest of your life and you pull all the money out of the pension. It's the wrong concept. I'm very pleased that we have the plan in place — it was painful — to bring solvency to the pensions. We need to now go back and do the same thing with the civilian side because it's starting to get out of whack too. We need to catch it while the dollars are low. We can't sit around for eight years and do nothing. But it needs to come back to the mayor, and we need long-term contracts, not one year or two years.
The mayor needs to tell the employees what is reasonable and affordable to the taxpayers with regard to their salaries, benefits and pensions. The employees need to respond, in conjunction with the mayor, with a plan that reaches affordability in the near future. If the employees are not willing to reason, the mayor should ask the state Legislature to make changes in the law, which would allow the mayor with more authority to set reasonable expenditures with regard to the employee contracts. (I support) either a lower pension multiplier, and/or the employees have to work past 45 years of age, and/or they have to work for more than 25 years before they reach full retirement, and/or the employees have got to contribute more before they reach their full retirement.