Breaking the Bank? 

Hidden Costs in New Police Pact

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TRICK QUESTION: How much cash will the Portland Police Association's (PPA) three-year contract—which includes a two percent pay raise and other perks traded for random drug testing—actually wind up costing us?

With budget workshops for bureaus beginning next week, it's time to ask. But the answer depends on who's talking. And on how far ahead they're looking.

Officials like Mayor Sam Adams, Portland's police commissioner and top budget executive, prefer to say less than $6 million. It's a politically generous interpretation because it looks only at costs during the three years of the contract—not the ongoing hit to city finances.

But finance officials, pondering Portland's fiscal outlook over the next several years, see a figure almost three times as large: $17 million through June 2016. None of that extra money—the raise plus pay bumps for education, fitness, and working odd hours—was figured in the city's most recent budget forecast. To keep Portland from plunging back in the red, that means more cuts or other savings.

"The money has to be found somewhere," said Bob Del Gizzi, finance manager for the Portland Police Bureau, noting that in the budget year starting in July, the cost is $2.7 million. "It hasn't been determined whether the bureau will have to take it out of its own hide, or if there will be more money" from another source.

What's more, there's another cost quietly lurking in the contract—a provision that allows officers hired since January 1, 2007, to cash out a portion of their unused sick leave when they retire. City coffers won't absorb that cost for at least another 20 to 25 years, but if salaries continue to rise alongside inflation, one official says, the added expense could top $2 to 3 million in years that see a lot of retirements.

"It's a hidden time bomb," said one insider who asked not to be identified. "This is a lot of money. But since it's in the future, they don't care."

Cops hired before 2007 already receive the cashouts, and most invest them in tax-free trust funds that help pay for medical bills when they retire. In the 2009-2010 fiscal year, the bureau paid $405,713—nearly the same as paying six full-time officers at an average salary of $70,000. For the more recently hired officers, the money can't be used to inflate their pension payments.

Firefighters also are eligible for the cashouts. In 2008-2009, the fire bureau spent $981,888, a figure that dropped to $151,608 the next year.

The mayor and the city council have defended the pay increases and other perks, calling them a fair trade for the right to test officers randomly for drugs and alcohol, and also for the police union's assent on tighter civilian oversight.

Steve Herron, the labor lawyer who negotiated the contract with the PPA, also cautioned that there may be some savings that budget forecasters can't yet see. New rules on how officers use compensatory time off will reduce the bureau's overtime budget, he says. Same for encouraging cops to bank their sick time, says Herron, instead of spending it when they're not all that sick.

But if those savings don't appear? Officials say city leaders won't be parsing around the size of contracts. They'll be parsing around the number of officers to lay off—or how much to raid from other bureaus to put that off.

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