District Mayor Anthony A. Williams may propose tapping tobacco settlement funds to help pay for about $8.7 million in bonuses to thousands of unionized employees, or he may spread the cost across more than a dozen D.C. agencies, aides to the mayor said yesterday.
Williams told union leaders last month that he would give up to 6,500 union workers $1,700 bonuses by Dec. 15 as a reward for forgoing raises during the city's recent financial crisis. Since then, he has been under increasing pressure to find the money to pay for the bonuses.
He initially planned to use an $18 million severance fund, but key Republican members of Congress objected, saying they endorsed the fund's creation with the understanding that all the money would go toward reducing the District's work force by 1,000 employees.
The Washington Times reported yesterday that Williams would propose using tobacco settlement funds for the bonuses. But yesterday, top aides to Williams stressed that he had not made a final decision on a new funding plan--even though he hopes to submit a plan to the D.C. Council as early as next week.
Williams aides said the mayor also is considering using unspent funds from the fiscal 1999 budget and spreading the impact of the bonuses across as many as 15 D.C. agencies, from the Taxi Commission--where two union employees are eligible for $3,400 in bonuses--to the Department of Human Services--where 1,080 employees are eligible for more than $1.8 million in bonuses.
Overall, the cost of the bonuses will be somewhat less than previously estimated, said Norman Dong, the District's interim city administrator. A recent count indicated that about 5,100 employees are eligible for $8.7 million in bonuses, rather than the $11 million it would have cost to give bonuses to the maximum 6,500 employees.
"The mayor's office has put forward several options . . . and now we're working with the D.C. Council, the financial control board and the chief financial officer to determine the most viable option," Dong said.
The mayor was out of town yesterday and could not be reached for comment. Union leaders did not return calls, but George Johnson, the unions' chief negotiator and president of Council 20 of the American Federation of State, County and Municipal Employees, has said the mayor must find the money for the bonuses by Dec. 15 or face serious repercussions.
One of the options the mayor is considering, Dong said, is using the tobacco settlement fund, which stems from a nationwide legal effort to make six major tobacco manufacturers reimburse states for health care costs incurred because of smoking-related illnesses. The District is scheduled to receive $1.2 billion in tobacco funds over 25 years; the settlement agreement is worth about $206 billion nationwide during its first 25 years.
D.C. Council member Phil Mendelson (D-At Large) said yesterday that he opposes the tobacco settlement option but would embrace a proposal under which D.C. agencies would cover bonuses paid to their employees.
"I don't agree with" the tobacco settlement idea, Mendelson said. "What makes sense is to fund it out of the agencies."
Mendelson also said the District has a $150 million reserve fund for one-time expenditures, and he suggested that the mayor also explore that option. But, he said, the District is required to advise Congress of its intention to spend reserve money 30 days before doing so.
D.C. Council member Kevin P. Chavous (D-Ward 7) also questioned using tobacco settlement funds for the bonuses. He said Williams should have set up a funding plan before agreeing to the bonuses. "This isn't the way to do business," Chavous said. "All of this should have been worked out ahead of time. We will be looking at the mayor's [future] plans to make sure he has adequate funding sources."
The lump-sum bonuses represent an attempt by the Democratic mayor to build goodwill with organized labor, which has viewed him somewhat suspiciously because he fired hundreds of city employees when he was the city's chief financial officer. More difficult negotiations are ahead over Williams's plan to force D.C. agencies to compete with companies for city contracts, a practice known as "managed competition" that likely will reduce the city's work force.
The mayor hopes that in return for the bonuses, the unions will agree not only to his plans for managed competition but also to link future pay raises to performance.
Among the employees scheduled to receive bonuses are trash collectors, street cleaners, secretaries, housing inspectors and clerical and professional workers in eight unions.