The city of Costa Mesa opened contract negotiations with its largest employee association this week by offering a 5% pay cut, a 5% increase in pension contributions and other sharp reductions in compensation that a workers' representative deemed "offensive."

The plan also proposes another potential 5% pay cut for top-tiered employees — an outcome dependent upon their performance review, for a total of 10% in cuts.

"The city's proposal is a reflection of how the council majority views its dedicated employees — with contempt," Costa Mesa City Employees Assn. President Helen Nenadal said in a prepared statement. "We believe there is a better way, and our proposal will offer accountability for taxpayers, will honor your service and will provide some common-sense approaches to addressing challenges."

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The employees who would be affected by the proposal are not public safety workers.

The two-year proposal, given Tuesday to CMCEA representatives, was called an "extreme proposal" in a comment about the negotiations on the group's newly launched website, CostaMesaWorks.com.

CMCEA, which represents about 200 city workers, posted the 58-page document on the site Wednesday afternoon.

Mayor Jim Righeimer countered that the city employees are, by and large, well compensated. Within the workforce of about 460 full-timers, 310 have total compensation packages — which includes salary, health benefits and pension numbers — amounting to more than $100,000 a year, he said.

"In addition, they have a pension plan that is unheard of in the private sector," Righeimer added. "We always want to make sure that our employees can make a good living, but we have to do what's right for our Costa Mesa residents, who are footing the bill."

He said "there is a reason" the city gets hundreds of applications for job openings, and "It's not because we don't pay enough."

The contract proposal has a provision eliminating the existing requirement of a 30-day layoff notice. Instead, no specified prior notice would be required, other than that it be before a layoff and that the employee be directly contacted.

The city currently gives employees "step increases," or an increase in salary, as they advance in a given job category.

Under the 10-step pay increase system, employees trying to reach or maintain placement on the 10th step must receive an "outstanding" rating on their annual performance review. If not, they would be bumped down a salary level, effectively receiving a pay cut.

Being on the 10th step is "temporary and conditional" and must be sustained each year, according to the contract proposal. Furthermore, the reversion cannot be appealed.

CMCEA officials estimated that as much as 60% of their membership would be affected by this condition, and said the "outstanding" designations are historically rare.

The proposal would also eliminate a benchmark-setting process that compares employee compensation with that of other public agencies, including neighboring cities.

Instead, Costa Mesa will first look to the compensation levels in the private sector for comparison, although the city won't be bound to adjust accordingly.

The city's contract with CMCEA expired in March. Labor negotiations began Tuesday, and about 100 CMCEA members met Wednesday afternoon at City Hall to discuss their options.

Their next meeting is scheduled for Sept. 10. The CMCEA has yet to file an official response to the proposal.

Orange County Employees Assn. spokeswoman Jennifer Muir described Tuesday's two-hour negotiation meeting as a "professional exchange," though one under "incredibly difficult circumstances."

"The city's proposal is just so extreme and offensive," she said. "We listened, and the meeting ended."

Under Costa Mesa's Civic Openness in Negotiations ordinance, known as COIN, the city now uses an independent negotiator, Richard Kreisler, to represent the city, rather than a city executive. An independent auditor also determines fiscal impacts.

Throughout the process, reports will be made public. Council members are also required to disclose communications they may have had about the negotiations with the representatives.

The CMCEA, which is affiliated with the OCEA, represents employees who include office personnel, planners, inspectors and mechanics, as well as some police and fire department personnel.

—Daily Pilot Staff Writer Jill Cowan also contributed to this report.