SF and its unions agree to extend contracts 2 years

The dome of the Rotunda at City Hall was awash in the colors of the Rainbow Flag for Pride Week in San Francisco, Calif., on Wednesday, June 22, 2016. The dome of the Rotunda at City Hall was awash in the colors of the Rainbow Flag for Pride Week in San Francisco, Calif., on Wednesday, June 22, 2016. Photo: Carlos Avila Gonzalez / The Chronicle Buy photo Photo: Carlos Avila Gonzalez / The Chronicle Image 1 of / 3 Caption Close SF and its unions agree to extend contracts 2 years 1 / 3 Back to Gallery

Unions representing 26,000 San Francisco municipal employees have reached a tentative agreement with the city to extend existing contracts by two years, averting a bargaining process that was set to begin later this month.

The tentative agreement, which is subject to member approval, calls for a raise of 6 percent over two years. A 3 percent raise would take effect on July 1. Another 3 percent increase would take effect in July 2018.

However, the second increase would be delayed by six months if the city in March 2018 projects a budget deficit of more than $200 million. Current predictions show a budget deficit of $119 million for the 2017-18 fiscal year and $283 million the following year. But the city is required to balance the budget, and city officials said they expected the trigger only to take effect in the event of an economic recession or large federal funding cuts.

The agreement covers all city employees except those in the fire and police departments, whose agreements were not up for negotiation. Covered workers include nurses at Laguna Honda and San Francisco General Hospital, parking enforcement officers, librarians, civil engineers, building inspectors and managers, among many others.

The city negotiated separate agreements with the 33 unions, although the key provisions are similar for all of them. The negotiations were coordinated through the Public Employee Committee, a consortium of public sector unions.

Mayor Ed Lee’s offer to extend the existing contracts, instead of renegotiate them, was a first in recent history, according to union leaders. In the typical bargaining process, negotiations would have begun later this month and lasted through mid-May, and touched on everything from health care benefits to staffing levels.

A spokeswoman for Lee declined to comment on why he sought contract extensions instead.

“We are hopeful that we will reach an agreement with each union that provides a fair cost-of-living increase, while maintaining the city’s flexibility to respond to potential financial challenges arising at the federal, state and local levels,” spokeswoman Ellen Canale said in an email.

While the city is in strong financial shape, sales-tax revenue and hotel-tax revenue are growing at a slower rate than last year. Even more worrisome for city officials is the prospect that President-elect Donald Trump will follow through on his threat to cut federal funding for cities like San Francisco that provide sanctuary to those in the country without proper documentation.

“It really seems to be a time we need to be working together and supportive and not in an adversarial forum for four months. That’s the main motivation for people on the union side, and I think people on the city side as well,” said Bob Muscat, executive director of Local 21 and chairman of the Public Employee Committee.

Emily Green is a San Francisco Chronicle staff writer. Email: egreen@sfchronicle.com Twitter: @emilytgreen