By Tim Reid
LOS ANGELES (Reuters) - Voters in bankrupt San Bernardino, California, overwhelmingly rejected an attempt on Tuesday to scrap a rule that sets police and firefighter wages based on salaries in wealthier cities.
The ballot measure to force police and firefighters to negotiate their base wage through collective bargaining, which is the process in nearly every other California city, was defeated 55 percent to 45 percent.
The measure was fiercely opposed by police and fire unions, who heavily outspent the campaign to scrap the budget rule. The main proponent to end what detractors called "autopilot" raises for the city's safety workers was San Bernardino's mayor, Carey Davis.
The result means the city, 65 miles east of Los Angeles and which has been in bankruptcy since July 2012, must still set base pay for police and firefighters based on the average salary of such workers in 10 other similarly sized but wealthier California cities.
San Bernardino is expected to produce a bankruptcy exit plan next year. Davis, the mayor, told the San Bernardino Sun that the defeat meant cuts will have to be found elsewhere in the city's budget as it negotiates with creditors.
The city is one of a handful of municipal bankruptcies being closely watched by the $3.7 trillion U.S. municipal bond market. Bondholders, public employees and other state and local governments are keen on understanding how financially distressed cities handle their debts to Wall Street, compared with other creditors like large pension funds, during Chapter 9 protection.
Of San Bernardino's 210,000 residents, a third live below the poverty line, according to U.S. Census data, making it the poorest city of its size in California. The 10 cities safety wages are based upon all have higher median household incomes than San Bernardino.
When San Bernardino entered Chapter 9 protection it was essentially broke, with a $45 million budget deficit and barely able to make payroll.
Under the provision in the city's charter that sets base safety pay on salaries in other cities, police in San Bernardino received a $1 million pay increase last year and are set for another $1.3 million raise this year.
Of California's 482 cities, none sets pay for public safety workers in the way mandated by San Bernardino's charter.
But police and firefighter unions argued that a pay cut would force safety workers to seek jobs elsewhere. They also argued that they had accepted significant pay and job cuts in recent years as the city's financial crisis intensified.
(Reporting by Tim Reid; Editing by Bernard Orr)