In a few short months, San Luis Obispo voters will determine the fate of binding arbitration by deciding whether to repeal it or keep it as is.

To help voters make the right decision, the San Luis Obispo Chamber of Commerce has decided to refute the misconception that binding arbitration allows for a level playing field in negotiations between city management and employee unions.

“Binding arbitration gives important decision-making power to an outsider who is unaccountable to voters, but whose decision will ultimately affect all city residents,” said Dave Garth, president/CEO of the Chamber. “This issue is not about the value of public employees. It’s about fiscal responsibility and accountability. Binding arbitration has put the City of San Luis Obispo, and ultimately its citizens and taxpayers, in a fiscally dangerous situation. We now know the negative impact of binding arbitration and how it puts the city’s future at risk.”

Binding arbitration puts decisions on wages, benefits and working conditions into the hands of an outside arbitrator when city management and employee unions cannot come to an agreement.

So what’s the catch? It takes the power away from the citizens and their elected representatives and puts it into the hands of someone who isn’t accountable to voters and doesn’t have to worry about how the settlement will be paid for. Arbitrators don't have to fear governing bodies because they very seldom have to face the same one twice, according to reports. So, at the start, the city enters binding arbitration at a disadvantage.

But what does this have to do with San Luis Obispo?

Binding arbitration has hurt the city financially since it was approved by voters in 2000. Almost immediately, just the threat of arbitration led to higher wages and benefits.

Then, in 2008, San Luis Obispo police union members went to arbitration and received a 30-37 percent raise that cost the city $5.4 million that fiscal year, with ongoing costs of about $3 million a year.

“It’s made it impossible for us to manage our labor costs,” said City Council Member Andrew Carter. “Before San Luis Obispo police went to binding arbitration, they were already making more than every other local police department. After binding arbitration, they began making more than the Los Angeles Police Department.  Most area residents, of course, make less that they would in LA.”

This actually is a detriment to public safety because the city is unable to afford more officers to patrol the streets.

Now, the city faces a $2.6 million budget deficit, and its police officers make more annually than the average San Luis Obispo family (average family income in San Luis Obispo is $60,903, according to the city).

San Luis Obispo police officers also make more than Los Angeles police officers, despite San Luis Obispo’s low crime rate and population.

Although the local firefighters unions have not used binding arbitration, the threat of it has given them a clear advantage in the wage and benefits negotiation process. San Luis Obispo firefighters make slightly more at the base level than Los Angeles firefighters at the same level.

“The threat of binding arbitration gives unions a significant advantage in negotiations,” Carter said. “The arbiter will always split the baby and grant more than the city’s last and best offer. So, in order to try to avoid binding arbitration, the City makes offers that are more generous than we normally would, significantly more than inflation. It pushes us to offer things beyond what is reasonable, affordable, and fair.”

California cities repealing, amending binding arbitration

Twenty two cities in California currently have some form of binding arbitration, but only 13 cities, including San Luis Obispo, have used it. Already, some cities are regretting the decision to put binding arbitration on the table.

In June 2010, voters in the City of Vallejo passed Measure A which repealed the binding interest arbitration requirement from the City’s charter.

In November 2010, voters in the City of Stockton passed Measure H which repealed the binding interest arbitration requirement for firefighters. Also in November voters in the City of San Jose passed Measure V, which amended the city’s binding interest arbitration provision to require arbitration decisions to be based primarily on the city’s ability to pay and prohibit any decision from creating an unfunded liability.

“Binding arbitration is unfair to local taxpayers. They have no control over the arbiter's final decision.  The arbiter does not have to consider the City's ability to pay, unless the award would make the City go bankrupt,” Carter said. “It’s not his concern what has to be cut to pay for the award.”

Now, voters in San Luis Obispo will have the opportunity to repeal binding arbitration. City staff has been directed to create language for a ballot measure that, if approved by City Council, will be distributed to voters on Aug. 30.

The future viability of the city depends on whether or not concerned citizens rise to the challenge. Want to help in this effort? Click here to sign up to help with the effort.