"Because of the city budget challenges next year, we're now negotiating with all of the employee associations to help us balance the budget," he said.
The city has eight employee associations.
The employees already negotiated once last year and agreed to some concessions, Wilson said. But because there's an anticipated increase in pension costs, the city needs the employees to agree to more concessions.
The salary increases were negotiated about five years ago at a time when no one expected the recession, Councilman Don Hansen said. The city's general budget for this year is $180 million. Huntington Beach is projecting a $3.5-million deficit in the 2011-12 budget, Wilson said.
"Our ability to afford these continued increases is just not going to happen," Hansen said. "Deferring them is not going to make sense anymore since we won't be able to financially integrate them into the budget without either significant cuts or layoffs."
The City Council met in a closed session Tuesday to learn of the latest results of the negotiations with the employee groups.
There was nothing reported out of the closed session. Both the fire and municipal employee groups' presidents did not return calls by Wednesday.
Hansen said the short-term solution is to eliminate the increases because deferring them would just not work anymore. If the increases are not eliminated, the city would have to lay off employees in the long run to close the budget gap, he said.
The employees are not obligated to reopen their contracts and negotiate their salaries. But Hansen said without the employees coming to the table, the city will have to find another solution to balance the budget.
"Ultimately, it's going to have consequences on the city's ability to deliver services," he said.
Wilson said negotiations are still ongoing, but the city is looking to either eliminate the salary increases or put them toward employees' pension accounts.