Pension Tension

City Manager Calls Stalled Police and Fire Pension Negotiations Potentially ‘Tragic’

By Angie Hargot

Plagued by months of deadlocked city negotiations, and with the Sept. 30 deadline quite out of reach, the Miami City Commission passed last Thursday a 180-day extension of time to hash out pension agreements with the city’s police and fire unions.

At the crux of the impasse: stabilizing the rescue workers’ pensions made precarious by the faltering stock market.

“The last two days I would say we have had intensive meetings,” City Manager Pete Hernandez said at the commissions Sept. 25 meeting. “And while we may not have a solution, we have options that need to continue to be explored.”

Commissioner Tomas Regalado was leery about the detrimental effects sheer time could have on the investments themselves in an already volatile market.

“The stock market is taking a beating,” Regalado said. “We don’t even know what’s going to happen this afternoon and tomorrow … we don’t know what the next 180 days will bring. Not even a magician can predict” that, he said.

Hernandez echoed his concern, adding that the week’s tumultuous market has been a factor in the negotiations.

“The economic condition … weighed very heavily on us as we sat around the table and weighed the issues,” Hernandez said, adding that more time is needed for solutions that “require some legal analysis and additional financial review.… We don’t plan to wait around the 180 days.”

Commissioners asked often outspoken Fraternal Order of Police President Armando Aguilar for his analysis of the negotiations. He was not as charitable about the city’s efforts.

“I’m a little bit concerned with the fact that we ratified this contract in April of 2007, and we’ve only met a handful of times on this issue — two of those times being this week,” Aguilar said. “Now in the eleventh hour, we’re trying to rush this through.”

Although Aguilar was optimistic that the proposals made by the city were viable, he asserted that the issues should have been resolved “a long time ago,” and added that the quickly approaching December holidays could very well inhibit the ability for the parties to get some of the legal items on a judge’s agenda.

“We realize the severity of the situation,” Hernandez said. “If we don’t address the issue of the pension properly, it will have a tragic impact on the city of Miami. I think it’s that serious. Both sides realize it and have been very open to looking at solutions.”

Hernandez added that he expects to give the commission a progress report in the next 60 days.

However, when prodded by Commission Chair Joe Sanchez, who demanded to know if the city had been acting in good faith, Aguilar stated that he thinks the two groups still have work to do “before I can answer that,” explaining that he was unsatisfied with some of the city’s proposals and the way they were proposed.

With the market up and down like a rollercoaster, the city is, in part, feeling the pension crunch that many local municipalities and segments of the private sector have been facing for years: the city’s pensions, like those of many private companies, are based on revenue that can fluctuate.

“We have a reality that we have to deal with,” Hernandez said. “We have a crisis that is nationwide. Our revenue at the local level will not be growing … pension costs could be spiraling out of control as a result of what’s happening in the market. Simple math will tell you we cannot afford it.”

Commissioner Marc Sarnoff addressed a still bleaker outlook.

“Is it time to consider [that] moving forward with new hires, a city such as our own cannot afford to fund benefits programs?” Sarnoff asked. “[Of] the concept of pensions in general — can they be afforded in the future?”

Hernandez conceded that the city could soon face scenarios that entailed “different plans for new employees,” he said. “Every time the market goes down it has an impact in the following years’ contribution [to the pension fund] by the city.”

In the meantime, Hernandez added, one solution presented by the unions a day prior involved an agreement where the unions and the city would share in the burden of payments over a certain “threshold.”

Aguilar added that the FOP has long pushed for the measure.

“One of the ideas behind it is to stabilize the pension costs,” Aguilar said. “Had the city done this years ago — we suggested it — you wouldn’t be in this mess right now.”

He explained that by stabilizing the pension costs, the city could also estimate what the cost would be in any given year.

“We don’t want to kill the goose that laid the golden egg, but at the same time I don’t agree with our employees having to [pay] more and more when we came up with a viable solution …which is always the city’s solution.” He vowed not to allow the problem to be solved by cutting salaries or reducing the benefits of the retired.

However, fearing a further burden on taxpayers, waning city resources and even tighter budget next year, Sarnoff scoffed at the situation.

“I don’t know at what point we shouldn’t just hand you the gavel and have a police department, fire department, and if you have anything left over — sanitation,” he said.

Confident in a market bounce-back similar to after 9/11, Regalado remained optimistic.

“What happens in the stock market is nothing new,” he said. “It will come back.... Had, six months ago, you met every day, maybe you wouldn’t be in this situation. You cannot postpone a crisis.”

However, citing caution, Hernandez defended the slow pace of the negotiations.

“Up until now there were no real solutions presented.… it was like gambling with the city’s future — and I wasn’t about to enter into something that was like going to Vegas,” Hernandez said. “I couldn’t do that to the city. So we’re looking for more solid solutions.”

The motion to extend the deadline for a solution passed unanimously with Commissioner Angel Gonzalez absent.

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