Report blasts city union pay raises

The generous pay raises and benefits handed out to labor unions in recent years could jeopardize the city's ability to deliver services to its residents, a new report warned yesterday.

The report, from the business-backed Boston Municipal Research Bureau, called for changes that would allow Boston to settle contracts more quickly and make key management changes without negotiating them with city unions.

''Collective bargaining is broken," the report said. As labor costs soar, along with healthcare and pension costs, the city will be unable to deliver anything but the most basic services, such as police and fire protection, according to the report.

''You'll have fewer dollars for services like libraries and parks," said bureau president Samuel R. Tyler. ''You have outdated laws and practices that need to be changed."

In a scramble to settle union contracts before last year's Democratic National Convention, the Menino administration agreed to $200 million in raises over four years, but gained little in return, Tyler said.

He proposed that the state law controlling public employee bargaining be changed so that municipalities can unilaterally assign and promote workers, subcontract, offer overtime, and hire part-timers, all steps that are now subject to negotiation.

In addition, Tyler wants legislation to encourage unions to settle contracts faster, by limiting retroactive pay raises to one year and forcing police and fire unions that delay bargaining with the city into binding arbitration sooner.

Leaders of city employee unions reacted swiftly to the report's recommendations, saying they would oppose any effort to undermine their bargaining power.

''Over my dead body," said Boston Police Patrolmen's Association president Thomas J. Nee, whose union settled a contract on the eve of the convention that gave members 14.5 percent in raises over four years. Tyler ''wants to make us all indentured servants," Nee said.

Jim Durkin -- spokesman for the American Federation of State, County, and Municipal Employees -- said his union would also fight any move to change state labor laws. ''AFSCME would strenuously oppose any effort to infringe on our collective bargaining rights and would aggressively fight any effort to weaken collective bargaining laws."

Mayor Thomas M. Menino said he supports the proposed labor law changes but believes that the Legislature is unlikely to approve them, given the political strength of unions on Beacon Hill.

''Is it a possibility? No. It is not realistic," Menino said. ''You're telling me we'll get legislation to reform labor laws? It's not going to happen."

Menino said he is instead pushing bills to increase the city's revenue, such as closing loopholes for telecommunications companies, a change that would put an extra $45 million in the city's coffers each year. He is also pushing for a city tax on restaurant meals.

The report also said that city health insurance costs are soaring, to $211.5 million this fiscal year, an 11.2 percent jump from last year.

Tyler recommended that the city push for legislation to set up a group insurance commission, similar to the one used by the state to contain healthcare costs. While the city's medical costs have increased 73 percent over five years, the state's have risen only 57 percent, Tyler said.

A group insurance commission would have the power to negotiate with insurance companies, design plans, and determine coverage, copayments, and deductibles unilaterally, without union input. ''If you can't control health plan design, you can't control health insurance costs," Tyler said. ''It's an unsustainable situation in terms of double-digit increases in health insurance costs."

But such a change would also meet resistance from the city's unions, which have fought more modest changes, such as the city's elimination of one HMO plan last year. Three unions filed grievances, which are pending.

Pension costs are making up an increasing portion of the city budget, the report said. That's in part because city officials have provided extra benefits that count toward employee pensions.

The Quinn bill, which pays thousands of dollars extra to police officers who earn college degrees, has swelled the city's pension liability, as have recent labor contracts allowing employees to buy back vacation time and count the extra time toward their pension, the report said.

In addition, weak investment performance, an early retirement incentive offered in 2002, and the benefit structure combined to require a payment of $186.3 million this fiscal year, a 27.1 percent increase over last year, Tyler said.

According to the report, the average pension for a teacher who retired in 2003 was $50,337. For a police officer, the average was $53,142 and for a firefighter, $49,164.

''City officials should resist any efforts to modify collective bargaining contracts that would expand benefits that would add to employee compensation and be considered pension eligible," said the report. The city's pension benefit is ''very generous . . . in this economy, and there is no need to enrich it further at taxpayers' expense," the report said.