Municipal Labor Relations Can Be A Bumpy Road

(from Maine Townsman, November 2005)
By Mike Laberge, Freelance Writer

Jay Town Manager Ruth Marden knows to expect bumps in the road when she negotiates labor contracts. But lately, those bumps seem more like potholes.

Health care costs, energy prices and state-imposed spending limits have pressured Maine municipalities to hold the line. With salaries and benefits taking the lion’s share of the town's budget, Marden is facing contract talks with the town’s unionized employees with a new sense of dread.

“We’re living under different rules now than we did before,” said Marden, who has been Jay’s manager for four years. “…When you come to the table, you can feel the tension.”

Jay is far from unique. The stable relationships most municipalities have kept with their unions are likely to be severely tested as Maine’s cities and towns face growing pressures to control costs.

In many communities, health insurance premiums are rising at double-digit rates. Fuel prices are in some cases 50 cents a gallon higher than one year ago. At the same time, communities face spending limits under LD 1, the complicated tax relief measure passed in early 2005.

With costs rising and state law curbing their abilities to raise new property tax revenue, municipalities increasingly are asking employees to share some of the pain. In this fiscal climate, municipal leaders and labor relations experts say that contract talks are likely to become more difficult.

Last year, the black cloud hanging over the Palesky tax cap initiative made municipal leaders cautious. Negotiators hesitated to approve long-term deals out of fear that passage of the cap might box them into a corner.

In Lewiston, contract negotiations broke off for three months in mid-2004 while officials awaited the outcome of the Palesky vote, which would have forced the city to slash its budget. Only after voters rejected the California-style initiative did talks resume.

“The climate just wasn’t there to do any collective bargaining,” recalled Denis Jean, human resources director in Lewiston since 1973. The two sides resumed talks the next month and resolved things amicably.

Stable Relationships

Despite the looming financial strains, municipal leaders say they hope to preserve the current cooperative climate. Robert Farrar, assistant city manager in Bangor, said the city continues to enjoy good working relationships with its 10 unions.

In recent years, contract talks have gone relatively smooth because each side has approached the bargaining table in good faith.

“The unions have been fair and reasonable, and the council has provided us with fair and reasonable amounts to work with,” Farrar said, adding that councilors want to foster good relationships with the city’s unions to maintain good morale.

He concedes, however, that passage of LD 1 is likely to make future negotiations more difficult. Last year, the spending limit forced Bangor to eliminate eight to 10 positions, which was done largely through attrition. This year, the city won’t have that luxury, forcing councilors to make tough decisions at budget time.

In such a climate, municipal negotiators will have to discuss wages and benefits with their union counterparts. Still, Farrar remains optimistic that contract talks will be settled amicably in the months ahead.

“The fact that we’ve had some consistency helps the process,” Farrar said. “We’ve worked hard to maintain our relationships with our unions.”

Marc Ayotte, executive director of the Maine Labor Relations Board, said such relatively stable relationships are the norm in Maine municipalities. Leaders understand the benefit of keeping employees reasonably satisfied. Long contract disputes do little for morale.

Most labor disputes that reach the labor relations board are settled relatively fast, often without a hearing. Litigation is rare.

“People involved in the process work really hard to reach agreement,” said Ayotte, who has led the agency for 15 years. “If you have a bunch of dissatisfied employees, it will reflect on management, ultimately.”

In most middle- to large-sized communities, dealing with unions is reality. In the public sector, according to Ayotte, as many as 90 percent of eligible employees are represented by a collective bargaining unit.

“The overwhelming majority of eligible employees are represented,” Ayotte said. “I think it has to do with concern about the political nature of the employer.”

Still, municipal contracts are settled far more quickly than those affecting teachers and other educators, he said. “I think it’s because on the municipal side you’re really talking about bread-and-butter issues, and on the school side, you have issues that are much more philosophical.”

Feeling the Pinch

Even bread-and-butter issues can cause headaches. The pressure is perhaps greatest on leaders of smaller communities competing with regional hubs for qualified employees. In Rumford, Town Manager Stephen Eldridge said he wants to give his police officers, highway workers and other employees competitive wages and benefits to discourage them from leaving for greener pastures in Lewiston and Auburn, both within commuting distance.

But the reality is Eldridge and the town’s selectmen are facing pressure from many citizens to control costs and hold down the tax rate.

This past year, LD 1 capped the growth in new property tax revenue in Rumford at just shy of 3 percent. With health insurance costs rising at 9 percent, that left little room for other things.

Eldridge, who went to Rumford from Greene last year, expects this coming year to be a bit better. Based on economic growth, Rumford can raise 3.4 percent in additional property tax revenue. At the same time, the town is unlikely to see the same spike in health insurance premiums, giving Eldridge and his department heads some breathing room.

“It’s a struggle,” he said, adding that the town strives to provide a stable level of services. “People don’t want to see their taxes go up.”

Having a single, major employer in a community can add to the pressure at negotiation time. In Rumford, that employer is Mead Paper. In Jay, it is International Paper.

Marden, the Jay town manager, said she inevitably hears two gripes at negotiation time: “Jay has the money, because we know how much the mill pays in taxes,” and, “We don’t make nearly as much as we would if we worked at the mill.”

“That bell is rung all the way through negotiations,” she said.

Marden said she is fortunate that some of her selectmen work at IP. When confronted with such rhetoric, they counter that town employees enjoy better benefits than IP workers, in most cases without having to endure shift work.

“I have a very good relationship with (employees) until it’s time to negotiate,” Marden said. “When it comes to negotiations, it’s very different. I put a lot of that on the fact that I’m in a mill town.”

Difficult Negotiations

In Westbrook, a Portland suburb also in the shadow of a paper mill, disagreement over wages, health insurance and retirement led to a three-year impasse with the police union that was settled in October.

Police officers in the city of about 16,000 residents had gone without a contract since 2002. Entering negotiations, union leaders had sought higher wages and a change in their retirement benefits that would allow all officers to retire after 20 years.

As it stood, officers fell under two retirement plans. Veterans of the police force qualified for a traditional defined-benefit plan allowing them to retire at 50 percent pay after a set length of service. But officers hired after 1996 fell under a new deferred-compensation plan from the International City/County Management Association (ICMA). Westbrook contributed 10 percent of their pre-tax income to individual retirement accounts.

City leaders, for their part, were unwilling initially to change the retirement plan or offer raises as generous as the police had sought. The city also wanted employees to share some of the costs of rising health insurance premiums.

“The city came into this with the idea that, `This is what we’re willing to offer for wages increases, these are the concessions we need you to make regarding health care, and we’re not open to talking about retirement,’ “ recalled Joseph Desjardins, president of the Westbrook Police Association. “In my opinion, the city was unwilling to compromise. There was little give-and-take.”

Attempts to contact the city officials on the management side of the negotiations, prior to publishing deadlines for the article, were unsuccessful.

Desjardins said turnover hindered already difficult negotiations. A new police chief, administrator, attorney and councilors joined the city after the process had started.

The impasse ended this fall after union and city leaders accepted the recommendations of a fact-finding panel of the Maine Labor Relations Board. Police officers received raises that boosted their pay from the lower end to the high-average range in Cumberland County. In return, all police officers – not only those hired after 1999, as had been the case – will have to contribute to their health insurance premiums.

Finally, a new retirement agreement places all officers on a defined-benefit plan that allows them to retire after 25 years. The city, according to Desjardins, will pay for the plan partly by cashing out its contributions to officers’ deferred-compensation accounts and partly by using some of the surplus from its state retirement system holdings.

The two sides on November 8 signed two three-year contracts – the first for July 2002 to June 2005, and the second covering July 2005 to June 2008.

“I’m happy with it, ultimately. I really am,” Desjardins said. “Unfortunately, it took three-plus years and a fact-finding panel to get there.”

Augusta leaders struggled with a similar impasse with the city’s firefighters two years ago.

Facing a flat tax base, city councilors hoped to avoid raising the base pay of the city’s rank-and-file employees. Instead, they wanted to give employees lump sum payments of three percent to avoid impacting future budgets. The city also wanted employees to pay a greater share of their health insurance costs.

“The combination of the two was extremely unpopular,” recalled Ellen Blair, the city’s human resources director.

Most of the 190 employees in the city’s eight bargaining units ultimately accepted the offer. The city’s firefighters held out, hoping to have the raise added to their base pay.

Negotiations stalled and dragged on for two years. In the meantime, firefighters held a pair of informational pickets in front of city hall and filed a complaint with the Maine Labor Relations Board. The complaint alleged that Augusta had engaged in a prohibited practice because a management official had told unionized public works employees that the city might be willing to revisit their contract, should firefighters ultimately receive a better deal.

City councilors took a hard line, telling managers on the negotiation team that the city could not afford to do any more. Ultimately, the firefighters settled for close to the city’s original offer in early 2005, in return for concessions on non-monetary items.

“The council had established bargaining guidelines at the very beginning of the process, and they never wavered,” recalled David Barrett, director of labor relations at MMA, who helped negotiate the contract.

Communication is Key

Things always could be worse. Denis Jean, the human resources director in Lewiston, can recall how bad labor relations were in the 1970s and early 1980s. Negotiations routinely dragged on, and give-and-take was almost non-existent. Each side arrived at the bargaining table with a list of demands, and neither wanted to yield.

The climate became much more professional during the past two decades. Slowly, managers and union leaders learned to trust each other. Contracts normally are settled on time now.

“Over the years, both sides have matured,” said Jean, who has worked in Lewiston for more than 30 years. “We’re not seeing each other as a threat.”

Overall, Maine’s small size and small town feel generally help labor negotiations. Many municipal managers and the consultants who represent unions have been around for years and have worked together before. They generally know what to expect when starting negotiations. Information flows more easily.

“The representatives of both parties are fairly constant,” Barrett said. “You know the people you’re dealing with.”

Eight years ago, Auburn City Manager Patricia Finnigan began holding regular meetings with department heads and leaders of the city’s firefighters’ union, hoping to improve communication and built trust.

The Auburn Fire Department Quality Council typically involves members of the city’s management team, the fire chief and union leaders. The free-wheeling sessions allow representatives of each side to air complaints and discuss potential problems before they lead to grievances.

“Having a better working relationship through the year makes for a better relationship at contract time,” said Deborah Grimmig, the city’s human resources director. “It has been extremely effective.”

Fire Chief Wayne Werts agrees. He’s a 28-year veteran who became Auburn’s chief four years ago. He understands the importance of good communication, having served as president of the firefighters’ for six years during the 1980s.

“Instead of coming to the table and having everything close to the vest, everything’s put on the table,” Werts said. “It’s an open, trusting forum.”

Negotiations, he recalls, used to be as tense as high-stakes poker games. The quality council has improved the bargaining climate.

“I don’t remember the last time when we went 18 months or two years without a signed contract,” Werts said.

“The quality council doesn’t get rid of disagreements,” he said. “It gets rid of how you disagree.