Veolia Transportation Executives Asked Phoenix For $2.3 Million To Help Settle Union Contracts

Veolia Transportation executives want the cash-strapped City of Phoenix to shell out more than $2 million to help bail out the transportation company as it tries to negotiate contracts with two remaining unions.

Phoenix said uh-uh, no way.

Well, Assistant City Manager Ed Zuercher put it much nicer in a letter to Veolia Chief Operating Officer Ken Westbrook.

"After a full review, we respectfully decline your request for several reasons, including conflict with federal funding provisions..." Zuercher wrote in that November 23 letter.

Makes sense since Phoenix certainly doesn't want to jeopardize its federal funding. Again.

Veolia spokesperson Val Michael could not be reached for comment.

Behind the request: It seems that company executives want to eliminate workers on the top end of the pay scale with a severance package that includes two weeks of pay for each year  employees have worked at the company.

But they don't want to pick up the entire tab. Instead, they want Phoenix taxpayers to kick in about $2.3 million, which is supposed to cover one of the two weeks in severance package.

Zuercher tells New Times that the city turned down Veolia's request since those expenses were not included in the original contract. 

Has Veolia not been feeling enough (money) love from Phoenix?

Um, the transportation company already muscled nearly $30 million from the city by following some helpful advice from Phoenix Mayor Phil Gordon and threatening to abandon its contract with the city. (Veolia used that money to cover pension and sick leave costs for its employees.)

As part of that gimme -- the city officials also agree not to try to recoup $681,000 that Phoenix said it mistakenly paid Veolia for its employees' unused sick leave.
And, of course, there is $50,000-a-day fine that Phoenix waived for Veolia, sparing the company from having to dole that out that money if workers go on strike.

Phoenix also agreed to waive all fines for several months that Veolia would have otherwise had to pay for problems such as a bus driver arriving too late or too early to a stop, a bus being out of service or a rider filing a complaint.

Interestingly, the letter from the city makes reference to Veolia wanting financial assistance because it apparently hasn't been able to strike a deal with unions to create a two-tier wage system for employees. Essentially, it means that new employees would make less money.

It's no doubt an unattractive offer even for existing employees -- who presumably wouldn't be affected by the lower pay -- because it establishes an incentive for the company to get rid of higher paid workers to make room for the cheaper ones.

Earlier this year, union reps claimed that Veolia underbid the Phoenix city-bus contract -- which was about $13 million less than the next lowest bidder. Veolia execs denied those claims and told the City Council that union folks were simply trying to smear the company.

Perhaps there was some truth to those claims after all?

In his letter, Zuercher notes that part of Veolia's bid was based on an assumption that company was going to establish that two-tier wage system.

Veolia hasn't been able to make that happen. But it was a risk they were willing to take by bidding low, not feeling out the union leaders and just assuming they would agree to a different pay structure.

So ... now that Veolia can't make it work, they want the city to bail them out.