ALAMEDA -- The City Council has approved contracts for police and firefighters that call for them to pay more toward their pension and health care costs, but the city treasurer said the changes will not help offset the city's projected budget shortfall.

Locking in pay and benefits for public safety employees -- whose salaries and benefits take up most of the city's $70 million budget -- means other city departments will now face deep cuts as officials look to save money, Treasurer Kevin Kennedy said. The shortfall is estimated at $2.6 million for the upcoming fiscal year and expected to climb.

"By not cutting two-thirds of the budget, we are insuring that we are going to have to cut the other services the citizens value," Kennedy said. "Those things are going to be decimated."

City Manager John Russo said approving the four-year contracts Tuesday resolves an ongoing grievance filed by the International Association of Firefighters against the city. It stems from a "me too" clause that the union says makes firefighters eligible for certain benefits that were part of the police contract, he said.

Former Interim City Manager Ann Marie Gallant and former fire Chief Dave Kapler denied the grievance when it was filed in 2009. But City Attorney Janet Kern said she does not believe their decision would now hold up in court. The city's liability stands at $3.6 million over the grievance and could reach $7 million in four years if not settled, Kern said. Councilwoman Beverly Johnson said the issue could not be ignored.


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"It is there, and it's real," she said before the council approved the contracts Tuesday.

Councilman Doug deHaan cast the lone "no" vote. The city would likely need to secure a loan or dip into budget reserves to offset the liability if the contracts hadn't been approved, Russo said. Police and firefighters have not had a pay raise in more than six years. Among the key provisions of the contracts are for police and firefighters to gradually pay more toward their pensions -- an overall 67 percent hike -- that will save the city about $3.5 million, Russo said.

The contracts also link pay raises to the performance of the city's General Fund and change the retirement formula from 3 percent at age 50 to 2.7 percent at age 57 for new employees. Newly hired firefighters also will no longer receive a full salary while they attend the academy, limiting it to 40 percent of the starting wage.

Not all the rank-and-file were pleased with the terms of their contract, said Domenick Weaver, president of Alameda firefighters Local 689. But the contract still got almost unanimous support, he said. Fire Chief Mike D'Orazi and police Chief Mike Noonan said their departments will look for additional savings.

"We are continually looking for ways to adjust without cutting, by being more efficient," Noonan said. "This isn't going to change that."

Having public safety contracts in place will allow city officials more flexibility as they wrestle with the budget, including finding ways to pay the city's deferred maintenance bill, now estimated at $9.5 million annually, Mayor Marie Gilmore said.

The approval of the contracts comes in the wake of the council approving a two-year budget cycle, which officials say will offer more stability and provide a framework for long-term financial planning.

Results from a survey released in May showed 84 percent of people supported cuts in the budget for public safety as a way to help maintain other services, Kennedy said Tuesday. The city's money woes have already led to outsourcing the Alameda Animal Shelter, he noted.

"I wonder what's next," Kennedy said. "Are we going to privatize Mastick (Senior Center)? Is it going to be the parks, the library? Are we going to ask people to go out and do bake sales to raise money to keep these things going?"

The contracts are available at http://www.cityofalamedaca.gov/City-Hall/Public-Safety-Contracts-.

Reach Peter Hegarty at 510-748-1654 or follow him on Twitter.com/Peter_Hegarty.

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