Four of the five labor groups in San Luis Obispo have agreed to forfeit pay increases and any additional city contributions to their health insurance for one year.
The move is expected to save the city about $490,000 annually compared with initial budget estimates.
The agreements, expected to be approved by the City Council tonight, include the San Luis Obispo City Employees’ Association, the International Association of Firefighters, Local 3523, unrepresented managers and confidential employees — accounting for about 81 percent of city staff.
The San Luis Obispo Police Officers’ Association has not agreed to the terms.
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“We couldn’t reach an agreement with the Police Officers’ Association,” City Manager Katie Lichtig said. “We presented the same terms and conditions to the POA as we did with all the other groups.”
Negotiations with the police union are ongoing.
The contracts setting the pay and benefits for those five employee groups will expire Dec. 31. During negotiations, city staff asked the groups to consider one-year agreements forgoing cost-of-living increases or increases to the city’s contribution to employee health insurance.
A five-year fiscal forecast presented to the City Council in late October identified an expected $2.2 million shortfall in the city’s roughly $54 million annual general fund in the budget for fiscal year 2011-12.
That shortfall will grow to $3 million in 2012-13 and continue to average about $2.6 million over the next five years, according to city projections.
“These agreements will allow us to have a better sense of how the pieces fit together as we work to create financial sustainability in the long-term before we enter negotiations again,” Lichtig said.
Erik Baskin, president of the San Luis Obispo City Firefighters Association, said the group was “glad that we could once again be the leaders amongst labor and partner with the city to ensure that firefighters stay on the engines.”
“We wanted to do our part to help the city get through these tough economic times,” Baskin said.