, Muskogee, OK

November 3, 2012

Accord on tax for city employees in dispute

Union argues terms of 2004 deal still valid

By D.E. Smoot
Phoenix Staff Writer

— Lawyers weighed in on the validity of a document that dictated how revenue from a dedicated sales tax would be distributed as compensation for the city’s non-uniform employees.

Administrators contend the agreement expired in 2011 after city councilors voted to let a collective bargaining agreement with non-uniform employees expire. The vote came on the heels of the repeal of a state law mandating recognition of non-uniform employee unions by cities of a certain size.

Members of the recently revived American Federation of State, County and Local Employees Local 2465 argue the memorandum of understanding is as valid today as it was when it was negotiated in 2004. In addition to wage and benefit contributions, the agreement provided for annual lump-sum distributions of funds exceeding $105,000 required to be held in reserve.

In accordance with the budget prepared this year by City Manager Greg Buckley, city councilors approved a 25-cent across-the-board pay raise for non-uniform employees. The wage increase — granted in lieu of the lump-sum distribution — turned out to be substantially less than non-uniform employees would have received under the terms of the agreement now at the center of contract negotiations.

James R. Moore, a labor and employment lawyer in Oklahoma City, rendered an opinion stating the terms of the memorandum of understanding survived the expiration of the employees’ collective bargaining agreement.

City Attorney Roy Tucker, in an opinion written in response to Moore’s,  said he could find no legal authority to support Moore’s argument.

Tucker stated the memorandum of understanding “was inextricably tied” to AFSCME’s collective bargaining agreement and “contained no independent consideration to support its existence as an independent contract.”

The document was crafted in 2004 after voters approved a dedicated sales tax to boost city workers’ wages. The agreement — unions representing the city’s firefighters and police officers signed off on similar agreements — had set out “an orderly procedure” for distributing the tax revenue to employees.

The permanent, three-quarter-of-a-cent sales tax was approved to fund an immediate $1.63-an-hour raise for the city’s firefighters, police and non-uniform employees, benefits and equipment needs.

Eighty percent of the revenue is distributed equally into accounts for each of the three employee groups. Ten percent helps fund the employee benefit plan, and the rest is set aside for certain capital and equipment needs.

Moore said, like the dedicated sales tax, the memorandum of understanding provides no termination date and does not tie its validity to the recognition of AFSCME as the employees’ bargaining agent.

“First of all, the agreement between AFSCME and the council had nothing to do with state law or legal recognition of the union,” Moore said. “The second thing is the sales tax ordinance overrides all of this: The people decided to distribute the money in certain way, and city has no authority to change that.”

Tucker, while acknowledging revenue from the dedicated sales tax “must be used for the purpose and percentages” approved by voters, disputed Moore’s arguments. He cited at least three reasons to support his opinion.

First, Tucker argues the document was a “bargained for” item during annual negotiations and attached to each new collective bargaining agreement or the salary schedule. Because the most recent agreement was allowed to expire, the terms of the memorandum of understanding also lapsed.

Tucker’s second argument is based upon laws that govern contracts, which require four things: parties capable of contracting, a meeting of the minds, a lawful object and consideration — anything of value given in exchange for something else of value or a promise to perform. Tucker argues consideration is lacking because the parties have yet to negotiate a new collective bargaining agreement.

Tucker finally cites a 1993 court case and state constitutional provisions prohibiting present obligations against future general fund revenue. He says the prohibition bolsters his argument against the continued validity of the memorandum of understanding.

Moore said Tucker’s third argument is flawed because it applies only to general revenue. The dedicated sales tax for employee wages and benefits is obligated already for those purposes, and the continuation of the memorandum of understanding has no bearing on that prior obligation.

“Every contract has a beginning date and an end date and is only good for a year at a time,” Moore said, noting his involvement in the case cited by Tucker in his opinion. “The memorandum of understanding, like the ordinance, does not have an end date and is not a part of the collective bargaining agreement.”

Moore said the issue, which is at the center of present contract negotiations, needs to be resolved because money voters intended to be paid to employees is being withheld. Moore said the decision to raise pay in lieu of the lump-sum distribution “unearmarks the tax” revenue dedicated for wages and benefits.

Buckley disputes Moore’s assessment, saying the city continues to use the revenue from the tax to enhance employee compensation. He acknowledged those funds can be used for no other purpose.

“Moving forward there will be a continued blend (from the dedicated sales tax and general fund revenue) to enhance employee compensation and benefits,” Buckley said, noting his desire to make employment with the city one of choice, not a last resort.

Buckley said it is possible funds that normally would have been distributed as a lump sum this year could be used to boost wages once an employee reclassification and wage study is completed.

Reach D.E. Smoot at (918) 684-2901 or