The Anchorage Assembly rejected a new city contract with the Plumbers and Pipefitters Local 367 union after an arbitrator brought into deadlocked negotiations approved a 5 percent raise this year.
Though a majority of Assembly members voted in favor of the contract terms, the 6-4 vote, with one member absent, fell short of the eight-vote supermajority required to ratify it.
The Assembly vote means the union can exercise its right to strike.
The union hadn't budged on its demand for a 5 percent pay increase this year, on top of annual 1.5 percent cost-of-living raises in each of the next three years. Negotiators for the city contended Anchorage could not afford the raise, which would translate into a $850,000 spike in labor costs.
The deadlock led to arbitration. The arbitrator, Michael Peterson, said he agreed that the union members were far underpaid, citing comparable wages for public and private utility workers.
Most of the city's union plumbers work in the water and sewer department, the Anchorage Water & Wastewater Utility, though a few are employed directly for the city.
Comparable wages for both public and private utility workers, including Enstar, Chugach and Municipal Light and Power, were almost all "substantially higher" than the wages paid to the AWWU workers in the Plumbers and Pipefitters Union, Peterson, an Anchorage-based mediator wrote in his arbitration decision.
A meter reader at AWWU receives 6 percent less pay than one at Chugach, 14 percent less than a meter reader for ML&P and 37 percent less than someone with the same job at Enstar, according to Peterson's decision.
"Overall, the great majority of the job categories at AWWU are paid in the range of 20-30 percent less at AWWU than comparable job positions at all other comparable utilities," Peterson wrote.
City negotiators said the costs had not been budgeted. And Anchorage's budget is tight. The millions of dollars more being spent to expand the police department and the use of savings to fund government, coupled with sharp cuts to the state revenue sharing program, were presented to the arbitrator.
Peterson, the arbitrator, acknowledged state and local budget problems. But he said the union proved that it was not being compensated fairly.
The union argued that most of its members are paid through utility rates through AWWU rather than taxes, which are subject to the Anchorage tax cap. Taxes are set by the Anchorage Assembly and the utility rates by the Regulatory Commission of Alaska.
City spokesman Myer Hutchinson disputed the suggestion that the difference between utility and general government budgets would have a difference.
"More funds to one union or another union has impacts down the line," Hutchinson said.
The contract goes against guidelines passed by the Assembly in a 2010 resolution that said union wages should increase based on the rate of inflation. Hutchinson said the Berkowitz administration has been following that guidance in its contract negotiations.
A union representative didn't return a message seeking comment Tuesday.
A similar wage disagreement came up in 2011 negotiations between the city and the Plumbers and Pipefitters Union. An arbitrator issued an opinion that sided with the union, but the Anchorage Assembly refused to authorize the contract.
The case ended up in Alaska Supreme Court, where the court ruled that the arbitration document couldn't override the policy choices of elected representatives.