A plan that reduces city of Las Vegas employees' cost-of-living raises by 1 percentage point while extending for five years contract terms under which many employees will see annual raises of 5 percent to 7 percent was unanimously approved Wednesday by the City Council.
Council members also said the city needs to revamp its compensation and benefits structure for new employees so personnel costs can be better controlled.
All this is in response to falling city tax revenues caused by the economic slowdown and the dramatic drop in growth in the city.
Without cutbacks, the city could rack up a $150 million shortfall over the next five years, although numbers presented Wednesday suggested it could be even worse.
"Some will say it's not enough," Deputy City Manager Betsy Fretwell said after presenting the changes to the council. "It meets the financial model that we presented to you in October. If revenue continues to fall off, we may need to do more."
The Las Vegas City Employees Association, which represents about half of the city's 3,100 employees, agreed to accept a lower cost-of-living raise this year: 2.5 percent instead of 3.5 percent. Their contract also was extended three years to 2014, and the council has the power to set the cost-of-living bump at 2 percent annually in the final three years.
The difference in cost over the next five years is $22.5 million, Fretwell said, when compared with keeping terms of the current contract.
The Las Vegas Peace Officer Association, which represents the city's detention center workers, is voting this week on changes to their contract.
Their cost-of-living raise would be 2.5 percent instead of 3.5 percent in each of the next two years. The city's uniform allowance would drop $500 a year, and the city's health insurance contribution would drop $30 a month this year and $50 next year.
The peace officer association's contract was not extended, and they will be back at the collective bargaining table in 2011. The changes should save the city $770,000.
City leaders are still talking with the Police Protective Association, which represents city marshals, and International Association of Firefighters Local 1285. The unions want more financial information.
The firefighters' contract expires in June, and a negotiation notice is expected by February, Fretwell said. "That one is a little messy because of the opening of negotiations in the next month or so."
The changed contracts leave in place existing annual step raises and longevity pay, meaning many employees still will see yearly raises of 5 percent to 7 percent, even if the cost-of-living increase has been trimmed.
A new hire making $50,000 a year who is eligible for step raises would make nearly $75,000 after five years under terms of the current contract. With the 1 percentage point concession, that employee would make about $71,000 in the fifth year. Some city jobs that start out at that pay scale include heavy-equipment operator, Municipal Court marshal and permit technician.
Mayor Oscar Goodman said that because compensation is spelled out in labor agreements, the city can do little if unions aren't willing to reopen their contracts. He used the possibility of layoffs to pressure unions to talk, with the goal of reducing the rate of growth in personnel costs by 1 percent a year.
"A contract is a contract. It's a deal. You can't break them," he said. "We asked them to open up their contract. They gave us this concession."
Councilwoman Lois Tarkanian said unions that agreed to changes are "responsible."
"They also said that if more is needed, that is something they're amenable to discussing. Will it be enough? It may not be enough. But was it a responsible step? Yes."
Goodman, Tarkanian and Councilman Steve Wolfson reiterated the need for the city to revamp its salaries and benefits, at least for new hires.
"You can't change the old way with the people who are already under contract," Goodman said.
But he said upcoming negotiations would be a time to discuss phasing out step raises, lowering the cost-of-living bump and reducing the city's contributions to health insurance and retirement.
"All these things could be part of it. This is an opportunity."
Contact reporter Alan Choate at email@example.com or 702-229-6435.