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HomeMy WebLinkAboutAgenda Bill 3.B 05/16/2011, F ^ y A I DATE: May 16, 2011 TO: Honorable Mayorand`Members of the'CityCouncil FROM: John C. Brown, City Manager SUBJECT: Resolution Maintaining the City'of Petaluma f Living Wage Rate at $12:46 Per Hour With Employer Contribution Toward Medical Benefits and $13.99 Per Hour Without Employer' Contribution Toward Medical' Benefits RECOMMENDATION It is recommended the City Council adopt the attached resolution Manitaining the City of Petaluma Living Wage Rate at $ T,246 Per,Hour With an Employer Contribution Toward Medical Benefits and $13.99 Per Hour Without an Employer. Contribution Toward Medical Benefits, for the 2011 -12 Fiscal Year. BACKGROUND The City of Petaluma approved and adopted a, Living Wage Ordinance effective December 20, 2006. The Ordinance establi "shed pan, initial hourly wage of '$11.70'per hour with an employer contribution of at least $1.'.50, per�hour per toward medical benefits, and $13.20 per hour without contribution toward benefits. Petaluma Municipal Code Chapter 8.36; (the Living Wage Ordinance), at Section 836.060.1) provides that the initial rate, "be increase...d annually on July 1, in accordance with any increase due to a cost of living adjustment for City employees, equal to the, average cost of living adjustment (excluding equitypayirncreases) for all City non safety; non- management employees as of the date of the most recent adjustment of the parof non- safety, non - management employees., but no more than ahe. most recent December to Dec`ember Consumer Price Index for San Francisco - Oakland -San Jose (CPI -U), published by the,.Bureau of Labor Statistics ". The Ordinance -also provides that the City :Council may review the impact of the cost of living adjustment (COLA) on an annual basis, assess any potential adverse impact and may modify or pena d optio y ` ma an n of �a COLA otherwise allowed by this subsection. Pursuant to the Living Wage s O us d:adjustment would be effective on Jul 1. The Crt y of Petal umd, s current Living 'Wage is $12.46 per hour with an employer contribution toward medical benefits of $1.50, and $1199 per hour without the employer contribution toward ,,medical benefits. Agenda <RevJew: - City Attorney Finance Director_ City Manager . . last year, :based. on_ the December to December increase in the Consumer ,Price Index for the San "I `Francisco= Oakland =San Jose`(CPI -U) area between 2008 and 2009, the City Council adopted E r Resolution 2010 -057 which increased the Living Wage rate by';2:6.percent effective July 1, 2010. Staff recommended that. Council forego the increase in recognition of the furlough program which imposed,the equivalent of a -3.1, percent.salary reduction full -time City employees. The r r: instead to increase the . Living Wage'by the applirners� at this leveT.of compensation, and chose ' Council voted againsttmpactmg'hourly wage'ea cable ;CPI. DIS "CUSSION: The December 2009 to December 2010 change n the,CPI -U. for the San Francisco- Oakland -San Jose area isa 1.5 percent,increase:.If-the Council approves COLA, the Living Wage will increase to $12'.65'per hot& with idn employer contribution toward. medical benefits and $14.20 p er hour without that contribution. his n. ` increase is recoinmend for the potential adverse impact it will have on City finances. The City continues to struggle to bring rising „expenses in line with projected revenues. Earlier this year the Council'reviewed a Five -Year financial forecasthr the current and next four fiscal years.' The forecast ;shows continued deficit between _revenues .and expenses if corrections are not °made. Council recentlydirected staff to reduce expenditures by $4,000,000 in 2011 -12 to bring revenues and experditures. nto line through the forecast period, and to begin to restore reserves. The'Couincil reviewed a,menu of options including „forgoing salary step advancements continuing to defer COLA' due AFSCME- represented employees, and forgoing annual pay -outs for Administrative Leave accruals; .actions intended to curtail expenses through 'cost avoidance. Although increasing the living wage has a, small impact of the. City's, overall finances, ii is an , expense the Council can choose Ito avoid unlike health premiums and retirement benefit rates that are set routside;the Council';s jurisdiction: Avoiding added costs reduce the effort that must -be made to balanc ', e;reveriues and,ex` enses � efforts this y ear that may include additional• "employee p I salary,and/or'benefit reductions , and/or lay -offs. T h e refore with e ecommended that, the r I wing Wage be maintained' at its current level of $12.46 p mployer conifibuti"on of at least $1.5'0 per hour per,empl"oyee toward medical r , benefits and.$I "per hour without employerrcotitribu,iion'toward medical benefits,, for the period from July 1,201 1 through June 3 O 2012. FINANCIAU MPACTS There is no cost associated with the recommended. action., Increasing the living wage by 1.5 percent, however, "will res "It an'estimated increase cost to'the City in FY 2011-12 of $8,988•.00. The General Fund's share ,of this cost is` $6,782. . This reflects the cost of adjusting' the hourlywage of'City of Petaluma living wage positions and those Recreation Department positions benchmarked to the City's living wage positions. ATTACHMENTS Resolution NO. , 2011 -XXX N.C.S. Of the City of Petaluma, California 1VIAINTAINING C fTY OF PETALUMA LIVING WAGE -RATE AT $12.46 PER HOUR WITH, AN EMPLOYER CONTRIBU'T`ION TOWARD, MEDICAL BENEFITS AND $1399 PER HOUR WITHOUT AN EMPLOYER CONTRIBUTION TOWARD 1VIEDICAL BENEFITS, ,'FOR THE 201'1 -12" FISCAL YEAR WHEREAS, the City Council of the ' of Petaluma established a Living Wage Required for Specified- City- Funded 'Contracts and City .- Employees, by adopting Ordinance No. 2256 NO. s.,. effective December 20, 200.6; ("the Living Wage Ordinance "); and, WHEREAS the Living Wage Qr ynanc'e is codified at Chapter 8:36 of the City of Petaluma Municipal Code; and, WHEREAS, Municipal,' Code Section 8.36,060.1), provides that the Living Wage rate shall be increased „annually on July 1,,, in accordance with any increase due to a cost of living adjustment .for City employees but no more than the most recent December to December Consumer Price Index for S'an -Francisco= Oakland -San Jose '(CPI -U); and, WHEREAS, Section 8.3'6.0'60.D further provides' 'that, the City Council may review the impact of the, cost dNiving adjustment ("COLA"), on an annual basis to'assess any potential adverse impact and may modify or suspend adoption of ,a COLA otherwise allowed by the subsection; .and, WHEREAS,” the initial Living Wage rate in 2006 was $11.70 per hour with an employer contribution of at least3'1.50 per hour. per employee toward medical benefits and $13.20 per hour without,, said contribution; and, a I WHEREAS, the current Living Wage pursuant to Chapter 8.36 is $12.46 per hour if a contribution of at least $1.50 per hour per employee is paid by the employer „toward the cost of medical benefits; and $13 -99 per hour without said contribution toward medical benefits; and, WHEREAS, the December to December Consumer Price Index for San Francisco- Oakland -San Jose (CPI -U) indicates .an overall increase of 1.5 percent in Bay Area consumer prices_ from December 2009 to December "2040 and WHEREAS, after three years of budget reductions the City continues to , struggle to bring expenses in line with revenues, and the City Council has directed staff to reduce expenditures by $4 in 2011 -12 to balance revenues >and expenditures through 2014/15 and to begin to re- establish reserves; and WHEREAS,. the City Council has directed staff to attempt,to implement budget reduction strategies that include actions intended to curtail expenses through cost avoidance, and cost avoidance will reduce the wage concessions that may be ,needed from City Employees, and/or lay -offs that may otherwise be required, to balance 'revenues and expenses; and WHEREAS, increasing -the, Living Wage for 2011 -12 will.add to the currently projected imbalance between revenues and expenses. NOW, THEREFORE, BE IT RESOLVED that .the City Council finds ;that increasing; th °e Living Wage established pursuant to Petaluma Municipal Code Chapter - 8.36 by any amount for 2011 would'have an adverse impact on the City., BE IT FURTHER RESOLVED that pursuant 'to Petaluma Municipal Code Section 8.36.060.1), the City Council declines to adopt a COLA adjustment to the Living Wage and maintains the Living Wage for 2011 at the current level of $12.46 per hour with an employer contribution toward medical benefits of ;at least $1.50 per hour per employee; and $13.99' per hour without said contribution.