State District Judge Martha Tanner presided over the first hearing in the City of San Antonio's lawsuit challenging the 10-year evergreen clause long embedded in its collective bargaining agreements with the San Antonio Police Officers Association and the San Antonio Firefighters Association.
The City filed the lawsuit in November 2014, but a hearing was not scheduled until the the police union broke off talks with the City in late September, ending 19 months of on-again, off-again contract negotiations. The firefighters union never agreed to bargain with the City, even though the last five-year contract for the police and fire unions expired on Sept. 30, 2014.
The City's lawsuit challenges the constitutionality of the evergreen clause, which keeps in place current contract terms, maintains longevity and Step increases until 2024 or until a new collective bargaining agreement is reached. City officials say the unusual longevity of the clause is a disincentive for union officials to bargain in good faith. Union officials counter that previous several generations of City leaders have agreed to the 10-year clause, which they see as protection against having to accept a bad contract.
Tuesday's hearing centered on the City's lawsuit against the firefighters union. A second hearing for the City and police union is scheduled for Nov. 17.
Former City Attorney Michael Bernard presented the City's arguments and asked Judge Tanner for a summary judgment ruling. Tanner rendered no decision Tuesday, but indicated she would review the pleadings and documents over the next week and then rule on the motion. If she denies the City's motion, a trial date is expected to be set for some time in 2016. If she rules in favor of the City, attorneys for the police union are expected to appeal.
Meanwhile, the City continues to cover rising health care costs for union members, who are not receiving wage increases after union officials rejected the City's last wage and benefits offer in September. Under the current contract, union members and dependents do not pay monthly premiums and contribute only small co-pays, while the City's civilian workers pay premiums for themselves and their dependents and pay higher co-pays for physician consults, prescriptions and hospital stays.
Bernard said it's an unreasonable burden on the City and taxpayers to absorb spiraling health care costs while union members have no incentive to help control those costs and do not contribute to their own health care. Health care programs paid for exclusively by employers are a thing of the past in most instances, and City officials say they have no accurate way to budget health care costs that are rising far faster than inflation or growth in the City's general budget.
"Unknown costs being paid out of scheduled general (budget) funds creates an unscheduled debt," Bernard told Judge Tanner.
Bernard also said the current contract has no language subjecting evergreen clause funding to annual appropriations scheduled by the City, therefore the City is bound to honor that obligation. The only recourse would be a summary judgment.
The unions have argued that the City has sufficient revenues to cover employee health costs.
"We do have the assets, but there's no way to tell we will in 2018 or 2019," Bernard said. "It's not a question of solvency, but of debt."
Bernard also said the City has multi-year contracts with language providing direction to the City Council on how to appropriate funds year after year. That is not the case with the union contracts, he said.
Citing one of many similar cases from around Texas, Bernard said nobody can tie up "a municipality's hands perpetually" on a contract, and that it is essentially a violation of public policy.
Attorney Ricky Poole, representing the firefighters union Local 624, said the City is asking Judge Tanner to rule as unconstitutional contract language that the City agreed to when officials signed the last five-year contract with the firefighters in 2009. The existing evergreen clause, he added, has been part of the firefighters' contract since 1986.
Poole noted that no appellate court in Texas has ever upheld any collective bargaining agreement as a debt creator or unconstitutional for the governmental entity involved.
Poole frequently cited testimony given in a deposition by Assistant City Manager and former Budget Director Maria Villagomez. Poole said that employee health care costs accounted for only 1% of the city's consolidated budget. Bernard later disputed that, saying the general fund budget that handles daily city operations, is the more pertinent scope of focus and, therefore, health costs make up a larger percentage than that.
Poole also claimed the City has argued that a sinking fund and tax would be needed in theory to pay for what it now sees as a debt -- the funds being paid out during the evergreen clause period.
According to Poole, San Antonio is on the verge of not having its firefighters signed up on a collective bargaining agreement for the first time in 40 years, and that could set a troubling legal precedent statewide and perhaps beyond.
"That would go against legislative policy, intent in legislation, which says public employees have a right to collectively bargain," Poole said. He added that such a right in Texas is vital because public employees cannot go on strike.
Poole and Bernard also exchanged legal arguments about how the City has handled the expiration of both union contracts through the annual fiscal year budget process. The City deferred funding some street maintenance in fiscal year 2015 to support continued costs for police officers and firefighters. Bernard said the City has had to "cut" back on other services to cover the added health care costs.
Poole said the City instead found a way, in budgeting, to take care of firefighters after the contracts had lapsed. He added if the City wants recourse - theoretically - it could decrease firefighting staffing levels but instead is increasing it to keep up with city growth.
The police union is due to have a similar hearing on Nov. 17. In that case, both sides have filed summary judgment motions.
"We don't believe the contract is unconstitutional," Poole told reporters after the hearing. "The City has never treated this contract as a debt. Despite the City Attorney stating it's not a debt, the City is here today to argue it's a debt."
"The state Supreme Court has ruled that any financial obligation created by a contract is a debt, and you handle a debt in one of several ways," Bernard said. "You pay for it up front, in which case you don't have a constitutional problem, or you create what's called a sinking fund, a tax that's dedicated to pay that debt, or the contract is void."
*Top image: Judge Martha Tanner listens to former City Attorney Michael Bernard's presentation on behalf of the City. Photo by Edmond Ortiz.
Read all the stories on the City and police union negotiations in the Rivard report archive.