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Miami could owe millions after losing high court case over cuts to police pay and pensions

Mar 05, 2017

March 2, 2017

By David Smiley
dsmiley@miamiherald.com


In a ruling that could have dramatic financial consequences, Florida’s high court sided Thursday with Miami police officers fighting to undo unilateral cuts to their salaries and pensions made years ago during a financial crisis.

The Florida Supreme Court, in a 4 to 1 decision, quashed a lower court ruling that upheld Miami’s 2010 declaration of financial urgency, a rarely-utilized state law that allowed administrators to force open union contracts and impose sweeping concessions on public employees. The controversial move capped pensions at $100,000, cut salaries by as much as 12 percent, and saved the city — at the time under a securities fraud investigation and teetering on bankruptcy — more than $100 million in labor expenses.

But it also sparked multiple legal challenges, including one by the city’s Fraternal Order of Police arguing that Miami officials failed to exhaust other viable options and skipped a key procedural step before unconstitutionally shredding contracts. The union lost cases before the Public Employees Relations Commission and First District Court of Appeal over the last seven years, but won Thursday at the highest level — raising questions about whether the city could be on the hook for millions in back-pay.

“The Florida Supreme Court has spoken,” said Lt. Javier Ortiz, president of Miami’s police union. “The City of Miami wronged our police officers of over $100 million dollars in pay and benefits. It’s time for the City to make good on their past commitments” to employees.

The case has implications around the state.

During the recession, when the salaries and pensions of public employees became an anchor on strained finances, a number of local governments used Florida’s financial urgency statute to force open employee contracts and free up new money by cutting pay and pensions without bargaining. Similar situations played out at the Manatee School District, in Naples, and in Hollywood, where firefighters won a case against the city in 2014 before the Fourth District Court of Appeal. The Hollywood decision conflicted with rulings in the Miami case and ledthe Supreme Court to take up the issue.

Miami’s firefighters also challenged the city, which declared financial urgency three years in a row, even simultaneously lowering taxes in 2011. Their case, while active, was put on hold in order to await Thursday’s decision.

“You can declare fiscal urgency, and it’s understandable to address a crisis. But that doesn’t give you the ability to go in and completely tear up contracts,” said Mark Richard, a labor attorney whose Miami firm represents dozens of public bargaining units across the state, including Miami’s firefighters. “The Supreme Court stepped in, threw a yellow flag and said ‘This is a foul.’ ”

The court’s ruling doesn’t specifically say that Miami officials violated the Constitution or state law in the way it applied the statute in 2010 after shady financial practices and a national recession left the city in dire straits. Then-city manager Carlos Migoya, facing a budget hole of more than $100 million, said alternatives suggested by its unions, like hiking taxes and deploying dozens of red light cameras, were too little too late, and poor solutions for a city facing double-digit unemployment levels.

But the justices did rule that city officials were required to prove that no other “reasonable means” existed to make up its budget shortfall and preserve its union contracts. And the court said the city was legally obligated to go through Florida’s “impasse” dispute-resolution procedure for public contracts before forcing open its union agreements.

Whether the city complied with the former is arguable. That it didn’t do the latter is indisputable.
 

“This is total vindication,” said Ronald J. Cohen, an attorney who represented the Fraternal Order of Police against the city.


For the city, which thanks in part to financial urgency is now flush with reserves and in its best financial shape in decades, the implications of Thursday’s ruling could be significant. Administrators estimate that cuts to police contracts alone saved more than $100 million, an amount that leaves out the value of the changes to the firefighters’ contract, although both unions have since signed new agreements.

When City Manager Daniel Alfonso learned of the court’s opinion during the middle of a labor negotiation session with the city’s firefighters Thursday morning, he let union president Freddy Delgado know that “we may have less money to negotiate with.”

But by mid-afternoon, Miami City Attorney Victoria Mendez was stating publicly that the city was “pleased that the Supreme Court has clarified the process.” Alfonso said the city the city expects the case will go back to the lower courts, possibly to the state’s Public Employee Relations Commission, for further deliberation.

“We think eventually we’ll prevail,” he said.

Mayor Tomas Regalado, whose first year in office was consumed by digging out of a fiscal crisis, said Thursday that it’s likely the ruling won’t resolve anything, and the case will continue on until he’s out of office. But he said a future in which the city pays out millions in back-wages is highly unlikely.

If anything, the two sides could hash out a settlement following Thursday’s decision. Ortiz, the union president, said Miami’s police want to “work with the city in resolving this once and for all.”

“This is going to be a looooong process,” Regalado said. “The next mayor will have to deal with it, but I still think we were legitimate in calling for fiscal urgency.”

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