Emanuel forges cost-cutting agreement with labor leaders who once opposed him

Four years after a strident confrontation with organized labor he later regretted, Mayor Rahm Emanuel forged an agreement with union leaders Thursday to cut skyrocketing health care costs by $20 million and identify $88 million in new revenues and reforms.

Emanuel stressed that he has made no commitment to steer clear of layoffs and privatization in his 2016 budget in exchange for the savings pinpointed and agreed to by Chicago Federation of Labor President Jorge Ramirez and members of the Labor Management Cooperation Committee.

Nor did the mayor firmly commit to the $65.9 million in “non-tax revenue” outlined by the CFL’s consultant. They include: $7.5 million from increased “police false-alarm fines”; $1.1 million from “revised fire false-alarm procedures and fines”; $4.2 million in higher sanitation violations and collections, and $11.4 million in increased building and licensing fees.

But Emanuel said labor’s decision to embrace his challenge to deliver better service at a lower price will make more than just a dent in solving the $30 billion pension crisis that has reduced Chicago’s bond rating to junk status.

“My budget will show fewer employees working for the city than when I started and fewer employees than even 2015. So, there’s no that kind of [no layoff] pledge. But it does help us meet the obligation that we’re going to save a minimum through reforms of $170 million — and this is part of that,” the mayor said in an interview with the Chicago Sun-Times.

Emanuel then delivered a not-so-subtle message to his old friend, Republican Gov. Bruce Rauner, who is embroiled in a budget stalemate with Democratic legislative leaders over Rauner’s unyielding demand for pro-business, anti-union reforms.

“Asking organized labor to be part of the solution is a better way of getting to a result than saying that organized labor is the problem . . . It stands in contrast to what’s not happening in Springfield,” the mayor said.

“We’ll pass a budget and a number of reforms and savings came from labor. That’s a model. And I appreciate that all members of the building trades . . . agreed to be partners. They love this city. They have ideas. It doesn’t mean you have to unilaterally disarm before you sit down. We will disagree about things. We will agree about things. Where we agree, let’s work together.”

Ramirez could not be reached for comment.

The blueprint for reducing health care costs by $20 million is outlined in a resolution approved this week by the Labor Management Cooperation Committee.

It talks about “new approaches to diabetes management” that take advantage of advances in technology” and about a “second-opinion program” that would require employees to secure “expert opinions from the best doctors in their respective specialties” before surgery.

The resolution also talks about “physician-based disease management and tele-medicine.”

Emanuel is the son of a doctor and the brother of another who jokes about having his own personal HMO.

From what he knows about medicine, the $20 million savings estimate is conservative.

“There’s a lot of changes in medicine. There’s tele-medicine. There’s better doctors managing the illness, rather than by fee-for-service . . . There are certain hospitals that, if you looked at them in the network, that hospital is much cheaper on heart. That one is much cheaper on kidney surgery, where the other ones are way out on the border. So, they can be part of the network, but still go to the one that’s most affordable,” the mayor said.

“I personally — this is somebody who spent a lot of time on health care from a public policy standpoint and knows a lot — think this number is with minimal participation. It has a lot more upside. I think we’re being conservative on our estimation.”

Emanuel has openly bemoaned the tone of his early confrontation with labor shortly after taking office.

The mayor demanded work-rule changes to replace morale-killing furlough days. Labor leaders who did not support his candidacy stood their ground, forcing layoffs.

The strident tone of that early standoff gave way to collaboration — on wellness, McCormick Place reforms and on managed competition between city employees and private contractors that has saved the city millions in recycling costs.

The union representing garbage-collection workers also agreed to cut the pay of new hires and cross-train them so they can be moved around based on the city’s changing needs. Most recently, they helped the city cut the fleet of trucks assigned to garbage collection.

In early June, Emanuel summoned virtually every union represented in the city work force, with the exception of the Fraternal Order of Police, to an unprecedented meeting at Plumber’s Hall.

The conversation focused on the pension crisis and the junk bond rating that has saddled taxpayers with millions in penalties and higher borrowing costs.

Emanuel said then that the goal of that meeting was to “create an environment” where labor leaders “felt comfortable” tossing out ideas “that have risks associated with them” for their own members and for the city.

Four years ago, the CFL served up a smorgasbord of ways to cut the city budget by $242 million, by eliminating redundant layers of middle management, improving efficiency and having city employees do work currently doled out to politically connected contractors. Many of the ideas were adopted.

Now, they’ve delivered another $108 million in savings and reforms, some of which City Hall was already thinking about.

Emanuel can only hope that Rauner is watching and listening.

“I don’t think there’s anything subtle about what I’ve said here,” the mayor said.

Emanuel also talked about his own evolution from a mayoral candidate whose campaign was almost universally opposed by organized labor to their partner in savings.

“There’s no doubt that it’s been a journey for me. I don’t think Jorge, the Laborer’s Union, the Carpenters and Electrical Workers, the Operating Engineers would tell you it hasn’t been a journey for them. That’s part of having a mature relationship,” the mayor said.