A regular Source feature, Undercurrents explores issues, ideas and events as they develop beneath the surface in the Virgin Islands community.
Both sides of the bargaining table have ignored it for so long that the public has almost forgotten it’s there, but this “elephant” is not going away. It’s getting bigger and bigger.
At the end of the 2012 fiscal year – Sept. 30, 2012 – the government owed its employees $295.2 million, according to government figures. Interest on the debt is relatively low, but it continues to compound.
At roughly $300 million, the amount is nearly half as large as the entire General Fund Budget for 2013 – but it isn’t in the budget.
“These retroactive payments go back to the late 80s,” said Valdemar Hill, the government’s chief labor negotiator.
They represent salary increases that were negotiated, contracted, but never actually paid because there were never sufficient government revenues to cover them.
Labor representatives continued to push for the implementation and occasionally would win a chunk of the back pay through some sort of special intervention, such as legislation to borrow monies. But government revenues continued to drop and eventually union leaders agreed to temporarily put the retroactive payments aside while negotiating new contracts and new salary increases.
By 2009 when Hill came on board at the Office of Collective Bargaining, government finances had slipped so far that the current administration not only wasn’t paying retroactive increases, it wasn’t offering any ongoing increases.
“Increases have been paid up until 2010,” Hill said. “No increases have been negotiated on my watch.”
That, he said, is only because there is no money.
“Employees deserve decent wages for the work that they provide,” he said, adding, “I look at labor unions as my partner, not an adversary.”
But Hill said, “Unless the Legislature appropriates funds to pay those increases, the government has no obligation to pay.”
Or as Budget Director Debra Gottlieb put it, “Retroactive salaries are owed. (But they are) a moral obligation rather than a legal obligation until there’s an appropriation to pay for it.”
Gottlieb appeared with other government financial officers before the Legislature in February to report that government revenues and the economy in general both continue to decline, the government even faster than predicted.
Among the long list of sobering numbers were territorywide unemployment figures that went from 8.8 percent in the period July 1-Dec. 31, 2011, all the way to 13.3 percent in the same six-month period ending Dec. 31, 2012.
In an interview last week, Gottlieb said more recent numbers show revenues are still heading downward.
Labor unions are well-aware of the trend.
Some unions, like the Virgin Islands Workers Union, have decided to defer salary increases and sign contracts with salary reopening clauses. “We have to wait until the freeze is lifted,” said Charles Nicholas, its president.
Other contracts are not signed.
Hill said the government has employees belonging to 13 different unions, some of which represent more than one group of workers, and that there are 22 total bargaining units.
Of those, only seven have contracts that are current. The rest are extended day to day by agreement of the two sides.
To Gerard Jackson of The United Steelworkers of America the situation is less than fair. He negotiates on behalf of the approximately 2,900 workers in eight different locals in the territory, about half of them government workers.
His government members are owed between $60 million and $80 million in retroactive increases, he said.
Does he envision that money ever being paid?
“Yes, to the benefactors,” he said, only half joking. Already the government has had to pay lump sum portions to the estates of some deceased workers when special appropriations were made.
Jackson said the last salary increase his people received was in 2004 and 2005. The 8 percent temporary pay cut implemented across the board to all government workers in 2011 resulted in “pushing them back to the wages of 1999 and 2000,” he said.
Jackson suggested the government revisit proposals his predecessor, Luis Tito Morales, suggested, such as the government forgiving workers’ outstanding property or income taxes in amounts comparable to the retroactive increases. Another idea is to use government properties to pay off some of the liability.
Vernelle S. deLagarde, president of the St. Thomas-St. John Federation of Teachers, said the 8 percent cut effectively put her members back to 2006 salary levels.
The AFT is operating on a month-to-month extended contract with 21 nonsalary issues yet to be resolved by mediation and with a wage reopener clause that is to be activated in June, when, deLagarde noted, the government may again say it has no money for salaries.
Meanwhile, she said, if the government has no money, it shouldn’t be pushing for the items in a contract that need to be financed – such as a longer work day for some employees.
DeLargarde noted that the AFT does a lot more than negotiate contracts; it sponsors the annual Quiz Bowl and administers a number of professional development programs, including an annual teachers conference and educator courses.
Still, the economic impasse is frustrating.
“Members are leaving,” she said. The district’s AFT membership has slid from about 1,200 to between 900 and 1,000 in recent years, the result of attrition and the government’s efforts to encourage retirement.
DeLargarde said the government should “just be thankful for those who have decided to stay under these conditions.”
As for the future of the AFT, she said, “I see it at least for the rest of this administration as a daily battle.”
That’s rather like the way Gottlieb describes the fight to keep the government afloat. She said the Virgin Islands Economic Stability Act of 2011, which contained the infamous 8 percent cut as well as the retirement incentives, “did accomplish some of what was intended … VIESA has saved money” although she added, “It has been very challenging to manage.”
Gottlieb said, “I do not see anything in the landscape for the next year” that would allow the government to pay any significant sum of the retroactive increases.
What she sees is an economic struggle and, she said, “We’re all in it together.”
