HAYWARD -- At a packed meeting where the audience often drowned out council members, the City Council imposed a one-year contract Tuesday cutting Hayward's clerical workers' pay by almost $400 a month and maintenance workers' wages by about $325 a month.

Acknowledging the cuts will be painful, council members said they were needed to shore up the Hayward's long-term finances. The city has $392 million in unfunded pension and benefit costs,¿ plus $500 million in capital needs over the next decade, according to a staff report.

"There are two main things driving this -- the cost of pensions and retiree medical coverage," Councilman Marvin Peixoto said before the vote, as people wearing purple T-shirts shouted out their objections. One man used a bullhorn to speak out.

"It's unfair to pass this down to our children," Peixoto said. "We can no longer kick this down the road."

The city in August declared an impasse with Service Employees International Union Local 1021, and the two sides went to fact-finding. The fact-finder recommended gradual 4 percent pay raises starting in July, in addition to a 2 percent increase if Hayward brings in more revenue and the state retirement system does not require the city to pay more. The fact-finder also proposed a $750 signing bonus.

Hayward rejected many of the fact-finder's conclusions, saying the report ¿did not address long-term liabilities and increased retiree health benefit and pension costs, which are expected to outpace revenues.


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The city had sought 5 percent cuts in total benefit packages, on top of a previous 12 percent reduction. To help spread those costs, managers proposed a five-year contract, but by law, the council could only impose the one-year contract.

"The community can no longer afford the benefit packages as they were," City Manager Fran David said. "We must all pay more."

The city asked the same concessions from its 11 bargaining units, and eight have agreed. But speakers at the council's meeting said they are the city's lowest paid workers, at $55,000 to $65,000 a year, and the cuts hurt them more.

"I barely make ends meet now; an entire paycheck goes to my mortgage," said Erika Johnson, a police records clerk.

Councilman Al Mendall said Hayward needs to reduce its liabilities to preserve employees' benefits and asked workers to consider the less painful five-year proposal.

"I consider myself a pro-union Democrat. But I also have a responsibility to maintain the fiscal solvency of the city," he said.

SEIU Local 1021's Hayward chapter represents almost 300 workers, including librarian assistants, water sanitation and treatment workers, street maintenance crews, crime scene technicians, 911 dispatchers and administrative staff.

"This is $394 a month out of my budget. Where's it going to come from?" asked Jill Maughan, a library assistant.

"Taking this money will make it hard to survive," police records clerk Kathy Costa told the council. Asked about Hayward's unfunded pension and benefit costs, a union representative said the city is in better shape than it portrays and routinely underestimates revenue.

"Every year, they've been saying the sky is falling, the sky is falling, and we have given in year after year to help them," union spokeswoman Anna Bakalis said Wednesday. "Year after year they've come back and say, oh, look, we have extra revenue.

"We cannot afford $200 out of our paychecks; we've already lost $1,200 a month," she said, referring to earlier concessions.

Councilman Francisco Zermeño called imposing the contract the toughest decision he has made on the council, but he said that he had a responsibility to address the city's deficit and increased costs.

"There's a lack of acknowledgment that we have long-term issues," he said.

After the vote, people chanted, "No justice, no peace" as they left.

Contact Rebecca Parr at 510-293-2473. Follow her at Twitter.com/rdparr1.