A labor agreement the Santa Barbara City Council approved for city employees this week could save cash in the short term, but an official said it may cost Santa Barbara up to $1.8 million by 2012.

Because of measures like some workers taking a 5 percent furlough of workdays and suspending their vacation cash-out options, labor costs for 2010 would come in at nearly $22,000 less than current costs. Kristine Schmidt, employee relations manager, on Tuesday presented the council with the plan, and said the long-term costs associated with the agreements would be realized in 2011 if the city chooses not to extend furloughs and the vacation cash-outs. Otherwise, the results would be seen 2012. The item passed 6-0; Councilman Dale Francicso was absent.

The agreements deal with several groups of employees, 107 of whom are in the city’s treatment and patrol division, and work in the water and waste water division and also with airport and Harbor Patrol and park ranger functions. TAP employees will receive a 2.5 percent pay increase in April of this year, and 1.5 percent next April, and instead of a 5 percent furlough, those employees will forfeit cashing in their vacation days.

Hourly employees, of whom there are 320, will see their wages increase as well, but are not affected by a furlough because of the lack of a regular schedule.

Among supervisors, 84 will receive 1 percent pay raises in September and 1.5 percent raises in April 2010, dates that were pushed back to be more cost-efftective.

“What you’ll see in this year is that we gave lower than budgeted salary increases and on a delayed schedule from those anticipated increases when the budget was developed,” Schmidt said.

Supervisors will also be eligible to take Cesar Chavez Day off. The state holiday is March 31, in honor of Chavez’s birthday, or the appropriate Monday or Friday nearest that date.

Among managers, 53 will have their salaries delayed by nine months, when they’ll receive a 2.5 percent increase in April 2009 and 1.5 percent April 2010. Managers will also be subject to an unpaid furlough of 5 percent, which amounts to 104 hours. Vacation cash-out options will also be suspended for this group in 2010 and 2011, if necessary.

These tactics would put the city under budget by about $606,000 this fiscal year, Schmidt said.

Lanny Ebenstein, who spoke for the Santa Barbara County Taxpayers Association, said the agreement would create a 3.6-day workweek for city employees who have been employed for 11 years or more. He said that because of the number of days off allowed city employees for sickness and bereavement, holidays are unrivaled in the private sector, which he said amount to 83 day per year.

“The salary increases you are considering today would about match time lost on furloughs so that the net real cash lost to city workers would be little to nothing,” said Ebenstein, encouraging the staff to go back to the drawing board. Mayor Marty Blum questioned how Ebenstein arrived at 83 days of lost work, and asked Ebenstein to follow up with supporting information.

Terry Tyler, a retired CPA who worked as an outside auditor for the city and Santa Barbara County in the 1980s, also spoke during public comment.

“Approving these labor agreements and salary increases at the same time you are asking your department heads to dramatically cut their budget is not only illogical, but irresponsible,” he said.

Noting that economic circumstances have changed dramatically since the negations began, Tyler said the city should ask employees if they would take salary cuts, instead of potential layoffs and furloughs.

Tyler also said he felt compelled to remind the council “that most of you took campaign contributions from the Service Employees International Workers Union, and now you’re sitting in judgment on that contract? I would suggest that you might want to abstain from voting on this issue because it’s a conflict of interest.”

Councilman Das Williams said this type of agreement between cities and employees is being adopted in many municipalities and he said he felt it was a responsible strategy.

“Because we have contracts with employees, we can’t just do this by fiat, we do this by negotiation,” he said.

Councilman Roger Horton, chairman of the council’s Finance Committee, said the city can control its expenditures but has less control over income. He said he’s noticed that transient occupancy tax revenue from hotel visitors has been less than expected and he encouraged the city to be even more conservative with its finances.

“When we put together planning for subsequent fiscal years, we need to be extremely cautious on the income side of this equation,” he said.

Councilman Grant House said he approved of the agreement and added that it represents a fair amount of belt-tightening.

“The employees that we’re talking about are those who are providing vital and essential services,” he said.

In spite of dire economic times, Councilwoman Iya Falcone said the “good-faith” negotiations on both sides should be honored.

“The negotiations were started quite a long time ago,” she said. “To yank the rug out from underneath a good-faith bargaining process I think is fundamentally unfair.”

— Noozhawk staff writer Lara Cooper can be reached at lcooper@noozhawk.com.