ALAMEDA -- City workers will be asked to pay more for their pension and medical benefits during upcoming contract talks, a move that comes as city leaders look for ways to offset the growing liability of funding benefits for retired employees.

Along with asking workers to pay more toward their pension and medical premiums, the city wants to link pay raises to any future increase in the city's General Fund, City Manager John Russo said.

The goal is also to have the contract talks with the city's four public safety unions, which could begin in the next few days, wrapped up as early as this month.

But Russo told the City Council on Tuesday that the pace of the negotiations will hinge on what each side puts on the table.

The contracts, which include those for rank-and-file police and firefighters, expire in June.

"It's really important for folks to know that police and fire want to be good partners with the city," police Chief Mike Noonan said. "We want to work with the city."

The city's current funding gap for retiree medical costs is about $86 million. But that amount is expected to reach $150 million in the next 15 years unless steps are taken to close the shortfall, Assistant City Manager Lisa Goldman said.

The city's pension liability now stands at about $107 million, according to a task force that briefed the council on Tuesday.


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While the ongoing pension and medical benefit costs are huge, City Treasurer Kevin Kennedy said finding ways to pay for the city's deferred maintenance bill -- now about $9.5 million annually -- must be a priority.

"If we let the infrastructure of our business crumble, then the rest of this stuff becomes irrelevant," Kennedy said. "In my mind, that's the number-one liability we need to address."

Among the possible solutions proposed by the task force is to have employees shoulder more of their pension and health care costs, including creating a "second tier" of benefits for new hires. But an idea that most of the 15-member task force rejected was to sell off city assets to help meet pension costs.

"Salary is going to be your biggest lever in changing this pension situation," Kennedy told the council. "That's the biggest item that feeds into this whole thing."

Along with Noonan and Kennedy, others who served on the task force included fire Chief Mike D'Orazi, Mike Abreu, president of the Alameda Police Officers Association, and Domenick Weaver, the leader of Local 689 of the International Association of Firefighters. The task force met eight times between October 2011 and June.

The briefing on Tuesday came just months after Sacramento lawmakers passed Assembly Bill 340, which is projected to save taxpayers billions of dollars by reforming the state's public pension system.

Along with raising the retirement ages for new employees depending on their job, the bill by Assemblymember Warren Furutani, D-Lakewood, caps the annual pension payout and requires higher payments from workers who are not already contributing half of their retirement costs.

Alameda public safety employees have already shown a willingness to help the city meet the rising costs, Goldman said.

They began picking up 2 percent of the employer contribution toward their pension in January, or a year before the new legislation will take effect, she said.

They have also taken steps to offset the medical costs, including limits on benefits for employees hired after June 2011.

"We are ahead of the curve of many cities," Goldman said. "A lot of the cities right now don't have their employees pay any of the employer share -- the city picks up the full freight."

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

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