Miami’s controversial decision to save millions during the recession by unilaterally slashing employees’ wages and benefits could come back to bite the city and pull it once again into a financial crisis.
On Tuesday, the Florida Supreme Court is set to hear oral arguments in a long-fought lawsuit by Miami’s police union challenging the city’s declaration of “financial urgency” in the fall of 2010. The city used the declaration under state law to reopen its collective bargaining agreements and impose steep concessions on employees while facing a $100 million budget deficit.
At the time, Miami’s unions promised to fight the cuts. Now, almost five years later, the city’s police union is poised to present its case. The outcome could have steep consequences for the city, as well as other local governments throughout Florida.
“The stakes are very high,” said City Manager Daniel Alfonso, who is confident that the city will win. “We’re talking about a financial urgency declaration in 2010 that saved the city over $100 million over the last four years. If we lose the case, that could significantly impact the city’s financial situation.”
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The police union is asking the court to void the city’s cuts to officers’ pay and force the city to give back what they say was improperly taken from employees. The union is also fighting to undo changes to a pension system that once afforded the best-paid, longest-serving public safety workers pensions in excess of $150,000 a year.
That system was created through negotiations between the city and its unions. But after the promises city officials made became too expensive to pay out, city commissioners imposed a cap on retirement benefits at $100,000. The decision — made at a time when federal authorities were months into investigating whether illegal money transfers helped balance Miami’s books in previous years — incensed employees.
“They took their financial difficulties, many of which were their own making, and decided to settle it on the backs of their employees,” said police union attorney Ronald J. Cohen. “We don’t think they can cancel the contract in the middle and take all their savings off the backs of their employees.”
Other agencies, however, did the same as Miami. The Manatee School Board declared financial urgency in 2008. Hollywood declared financial urgency while facing a multimillion budget deficit in 2011 and cut police and firefighters’ compensation by 12 percent. On the southwest coast of Florida, the East Naples Fire Control and Rescue District also cited the state law in reopening its contract with the area’s fire union.
Miami declared financial urgency three years in a row, even simultaneously lowering taxes in 2011, although its police union is only challenging the cuts imposed in 2010.
Chip Morrison, general counsel of the Florida League of Cities, which filed a friend-of-the-court brief in the case, says cities need the ability to reopen union contracts in dire times, considering that employee wages and benefits often make up more than half of a local government’s daily expenses.
“When there is a bona fide emergency, I think all bets are off and no expenditure should be sacrosanct,” he said.
Alfonso said the city would prevail, having defeated the union before the Public Employee Relations Commission and the First District Court of Appeal in Tallahassee. But union leaders are equally confident, and the courts aren’t set on the issue. The Fourth District Court of Appeal sided with Hollywood’s fire union in a conflicting opinion.
Miami’s firefighter union president, Freddy Delgado, said his union has also appealed its financial urgency case to the Florida Supreme Court, and he believes public employees need to stop elected officials from being able to circumvent bargaining.
“If they say it’s legal,” he said, “then any second they’ll just declare financial urgency on us.”
Alfonso said Miami’s negotiating team inserted a clause into the current police union contract capping the city’s liability in the financial urgency lawsuit from growing. But he said there’s still five years’ worth of costs being debated.
“We feel we have a strong case,” Alfonso said. “But you never know.”