East Pierce to lay off six firefighters

East Pierce Fire and Rescue and the department’s labor union, Local 3520, failed to reach an agreement last week to mitigate a $1 million deficit in East Pierce’s 2015 budget. In order to address the shortfall, East Pierce’s Fire Commissioners voted 5-2 to lay off four firefighters, as well as two temporary firefighters, one receptionist, and reduce one information technology staff member to part-time status.

East Pierce Fire and Rescue and the department’s labor union, Local 3520, failed to reach an agreement last week to mitigate a $1 million deficit in East Pierce’s 2015 budget.

In order to address the shortfall, East Pierce’s Fire Commissioners voted 5-2 to lay off four firefighters, as well as two temporary firefighters, one receptionist, and reduce one information technology staff member to part-time status.

“Given that we have been unable to come to an agreement with Local 3520, we are forced to utilize personnel layoffs to reduce our deficit spending,” Fire Commission Chairman Dale Mitchell said during a Dec. 16 meeting. “We believe our only viable option to the long-term financial health of the fire district is to lower our annual operating expenditures through a reduction in the number of employees.”

Local 3520 and East Pierce will continue to discuss concessions, but the layoffs are scheduled to take place on Jan. 31 if concessions are not agreed upon.

Labor Concessions

Local 3520 and East Pierce have met seven times during the past few months to discuss multiple concession packages in order to prevent layoffs. The union’s most recent package, according to Local 3520 President Mike Westland, would have saved East Pierce approximately $1.3 million.

With the $1.3 million, Westland said, there would be no need to lay off any East Pierce staff, whether union or nonrepresented, because it would have covered the entire budget shortfall.

Fire Chief Jerry Thorson said Local 3520’s claim of a $1.3 million package is inaccurate.

“We tally it up differently,” he said. “We disagree on the dollar value of the offer they made and the long-term impacts.”

Thorson declined to speculate on his value of the union’s last package, but Mitchell said there would be a remaining deficit of $490,000 if the package was accepted.

One of the reasons the package was not agreed on, both Westland and Thorson said, was because the parties disagreed on cost-of-living concessions. “The deal breaker was they wanted our cost-of-living adjustments for the whole year,” Westland said. “We offered them several ways around that.”

According to a labor and management counter offer document dated  Dec. 2  and provided to the Courier-Herald, Local 3520 offered to forego the cost-of-living increase for six months.

Both management and the union confirmed an unofficial offer was made later to concede the cost-of-living increase for 11 months, and receive them on the last month.

“That way for next year, for contract negotiations, we are where we should have been earlier,” Westland said. “Otherwise, if you give up your 2 percent cost-of-living adjustment, that 2 percent is gone for the rest of your 15-year career.”

Thorson said Local 3520’s cost of living concessions were short-term solutions, which is why East Pierce did not accept the package.

“If we simply defer the cost of living increase for part of the year, we have really just pushed the problem out a few months and then we are right back in the same position, where we have got that 2 percent plus any increase that would come in at the following year,” Thorson said. “It has a compounding effect and we are trying to minimize that part of it.”

According to Thorson, all non-union staff will forego their cost-of-living increases for the next year, including him and Deputy Chief John McDonald.

Fundamental Differences

Mitchell said during the Dec. 16 commissioner meeting that East Pierce and Local 3520 have “fundamentally different perceptions” on budgets.

“A big part of what Mitchell was referring to was the use of the ending net cash and the reserves,” Thorson said. The ending net cash is like a savings account to tide East Pierce over during the first quarter of the year because the department doesn’t receive property tax money until April. This way, East Pierce can afford to pay staff before tax revenues are available.

Thorson said it is important to use the ending net cash and reserve funds very carefully. “The ending fund balance in dwindling, and we believe we need to protect that money so that we can afford to pay people during those first four months,” he said.

Westland and Local 3520, however, believe this is the right time to dip into the ending net cash and reserves to fix problems now, and replenish the money later when tax money is made available.

“You have $5 million, and you need $6 million,” Westland said. “You take $1 million out of reserves, pay your bills for labor, and then you get the tax money and put it back into reserves.”

It is department policy to retain a minimum of 20 percent of the year’s budget for the ending net cash to roll over into following year’s budget. Based on the currently approved 2015 budget of about $23 million, the minimum ending net cash level of 20 percent would be about $4.5 million.

However, East Pierce has estimated a total of $5,525,971 for its ending net cash balance, or 24 percent of its budget.

Although the budgeted ending net cash is 4 percent more than the policy minimum, Thorson said the policy minimum should be raised to 25 percent to cover delinquent taxes and other department needs.

According to Westland, delinquent taxes are estimated to add up to roughly $600,000 in 2015. This would leave some wiggle room of around $400,000 before East Pierce would dip further into their estimated ending net cash by the end of 2015.

Assessed Property Value and reserves

According to Mitchell, when the 2008 recession hit, property values in the East Pierce district fell sharply, which resulted in East Pierce receiving less money from property taxes.

However, he said, even though East Pierce was receiving less money, the department felt it was important to continue with the same level of service it gave before the recession.

To continue the high level service, “the board has sacrificed over the last few years and put (reserve) money in the general fund,” Mitchell said.According to Mitchell, East Pierce had a reserve fund pot of around $7.7 million in 2011.

By 2016, it is estimated the reserves will have shrunk to $5.2 million, more than a 30 percent decrease in five years.

This includes a $1.2 million withdrawal in the 2015 budget from reserves to pay for new self-contained breathing apparatuses for firefighters, which both Thorson and Westland agree is an absolute necessity.

Over the past year, assessed property value in the fire district has increased with the improving economy, according to Westland and Thorson. Both parties have noted that East Pierce will receive an estimated $1.2 million increase in property taxes in 2015 because property values are increasing. Westland said this is a good indication that property values will continue to increase in the next coming years.

“All indications that I have seen is next year will see very similar or better increases in assessed property values,” Westland said. “If that is the case, at the end of next year, the district will be collecting the same amount of money that they would have collected if the levy passed.”

East Pierce’s recent Operations and Maintenance levy failed to garner a supermajority, or 60 percent, of votes to pass in the last primary and general elections, and cost the fire district $3.2 million.

However, Thorson is less optimistic and believes that the district should use conservative growth estimates to budget responsibly. “We’ve yet to receive the official letter from the county that should be coming any day,” Thorson said. “But it looks like it will only be a $35,000 difference than what the preliminary numbers were. It is not going to be the $400,000 increase that some people were thinking.”

 

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