By Jim Christie
SAN FRANCISCO, Oct 19 (Reuters) - Pay cuts and other
concessions by employees of Atwater, California may help the
city balance its budget and avoid bankruptcy, i ts mayor said on
"We hope to be able to balance our budget," Mayor Joan Faul
told Reuters by telephone. "We can't thank our unions enough."
Atwater, a city of about 28,000 residents in California's
Central Valley, faces a budget gap of more than $3 million and
is a candidate to become the fourth city in California this year
to seek protection from creditors under Chapter 9 after it
declared a fiscal emergency this month.
Three other cities in the most populous U.S. state this year
have filed for Chapter 9 protection from their creditors,
prompting some concern in the $3.7 trillion U.S. municipal bond
market of more filings. They can be used to try to break
contracts, including those with bondholders.
On Monday, Atwater's staff will brief Faul and other city
council members on concessions agreed to by its work force.
They are expected to considerably bolster the city's
finances, said Nancy Vinson, a business agent for the American
Federation of State, County and Municipal Employees (AFSCME).
The union represents Atwater's non-safety workers.
"I'm very hopeful," Vinson said. "They're doing what they
can to fix it and if they follow through with the things they've
identified to me, it looks good."
Vinson said the city will cut 8 positions from its
35-employee non-safety payroll and that its remaining members
will accept a 5 percent wage cut and pay more toward their
pension accounts and health care.
Also, furloughs imposed last year will remain in effect so
that Atwater's AFSCME members will see their overall
compensation cut by between $500 and $650 a month, which will
cut their combined payroll expense by 24 percent from last year
The concessions should cut Atwater's non-safety payroll
expenses by $610,000 this fiscal year, Vinson said, adding that
the city's police officers, which she does not represent, have
agreed to steep compensation cuts in line with those affecting
her union's members.
Faul said police officers will see a 22 percent cut in
overall compensation, adding that details on Atwater's labor
agreements would be unveiled on Monday.
Other financial measures Atwater is pressing include
negotiating a new contract for garbage services and moving
forward with plans for raising 10-year-old rates for garbage
services and 20-year-old rates for water services. The rate
plans would need to be put to voters, Faul said.
Faul declined to comment on how the city council may follow
up on its fiscal emergency declaration. By declaring such
emergencies, California cities can fast-track plans for Chapter
The city council of San Bernardino in July authorized a
bankruptcy filing after declaring a fiscal emergency. The city
of 210,000 residents 65 miles (104 km) east of Los Angeles filed
for bankruptcy on Aug. 1.
By contrast, Stockton, a city of 300,000 about 62 miles (100
km) northwest of Atwater, filed for Chapter 9 protection in June
after 90 days of inconclusive mediation with its creditors.
Mammoth Lakes, a resort town of about 8,000 in California's
Sierra Nevada Mountains, filed for Chapter 9 protection on the
heels of Stockton's filing because it could not afford to pay a
$43 million legal judgment against it. That dispute has since
been settled and Mammoth Lakes is moving to have its bankruptcy
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