Vallejo, Calif., Declares Bankruptcy,
Scapegoats Union Contracts
August 18, 2008
 A May bankruptcy filing by Vallejo, Calif., a city of 125,000 northeast of San Francisco, has spread anguish among 244 members of Local 2376 who work for the city and their colleagues in fire and police unions. If the bankruptcy court sets aside the unions’ contracts, a perilous precedent would be set for over 15,000 municipal workers in IBEW’s government branch and thousands more in utility and inside construction locals.
Hit hard by declining tax revenues as a result of the mortgage foreclosure crisis, cities in California, the world’s eighth-largest economy, are facing some hard fiscal decisions. But Vallejo’s municipal unions say that the bankruptcy is a quick and dirty way to get a judge to scapegoat the unions for the city’s financial difficulties. Those problems, they say, are exacerbated by mismanagement under $450,000 per year City Manager Joseph Tanner and Vallejo’s city council.
Local 2376 members Richard Glenn (left), Jim Gianulias, Mark Dory and Adam Shafer replace 20” water main in downtown Vallejo, Calif.
“Morale is real low,” says Vallejo Local 2376 Shop Steward Jorge Pamogas, a 14-year equipment mechanic. Workers are worried that their pay could be cut or temporary employees will be hired at lower rates. The bankruptcy filing has driven Vallejo’s real estate values even lower, says Pamogas. “I’m afraid that I’ll have to sell my house and end up homeless. There has to be something better than this in America.”
“Vallejo is a story that could be coming to your town,” says IBEW Government Employees Director Chico McGill, applauding Local 2376 and other city unions for first offering the city financial relief and then—after their plan was turned down—mounting an effective legal challenge and public relations campaign to protect their collective bargaining agreements.
Tanner told the unions last year that Vallejo was considering bankruptcy. Over 5 percent of the homes in the city are in foreclosure or owned by banks. A powerful anti-tax movement in the state makes it harder to balance budgets. But Tanner reduced most of the problems to one—claiming that the city’s contracts with unions were too expensive and needed to be set aside.
 Recognizing the city’s problems, the unions commissioned an independent audit proving that the bankruptcy was unnecessary. After much discussion with their members, unions collectively offered to take $10 million in cuts to their salaries and benefits. The city rejected the offer.
“The city of Vallejo has repeatedly been unwilling to meet the unions halfway to resolve this situation,” says Frank Caballero, president of Local 2376, which represents nearly all municipal workers outside of the police and fire departments. Vallejo’s threat to the unions is a new chapter in an older story.
Jim Gianulias, Vallejo, Calif. Local 2376, makes repairs to water tank piping in a vault.
“We’ve had more than a few cases of municipalities immediately cutting jobs and essential services at the first sign of financial trouble, saying that it would save money, only to bring in subcontractors who cost even more,” says McGill.
Local 2376 joined the firefighters and police in an all-out campaign, targeting Tanner’s self-serving tenure and his $450,000 salary and educating residents in Vallejo about the mismanagement that is sinking the city’s finances.
“A city bankruptcy isn’t like a war, it’s like an earthquake,” says Dean Gloster, an attorney who represented the unions in bankruptcy court.
In bankruptcy hearings, Vallejo’s assistant city manager conceded that if the city had accepted the unions’ concessionary offer, a $1.1 million surplus would remain. The city’s budget presentation to the court also left out $2 million in attorney’s fees the city would incur if it stays in bankruptcy, instead of accepting the cuts offered by its workers.
Vallejo unionists know that winning taxpayer support will be as important as the bankruptcy judge’s final determination if they are to protect the wages and benefits that they have fought for over the years. It won’t be easy.
“Many residents say, ‘I don’t have retiree health care insurance benefits, why should I pay taxes to cover you,’” says Vallejo Local 180 Business Agent Mike Smith, who serves as a city councilman in nearby Dixon. Stressing the need to control health care insurance costs and expand access at a national level, Smith says, “If Vallejo succeeds in breaking union contracts, more elected leaders can be expected to declare bankruptcy and let the judge be the bad guy,” he says.
A newspaper ad prepared by the union coalition exposes the city manager’s secret 42 percent pay raise, just five months after he started, that pushed his total compensation package over the yearly pay of the U.S. president.
“While Tanner was lining his pockets with Vallejo taxpayers’ money, he and the City Council were declaring a budget emergency and cutting programs for children, seniors and safer streets,” reads the ad.
|
