City officials in Thunder Bay say an arbitration ruling shows why changes are needed in how contracts for emergency services are decided.

A report prepared for city council shows the impact of a decision that increases retirement payouts to firefighters.

An arbitrator has ruled that, in calculating banked sick day payouts for retiring firefighters, the City of Thunder Bay must include a series of salary bump-ups that recognize for years of service.

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Thunder Bay city manager Tim Commisso. (CBC)

City manager Tim Commisso said it will cost the city $170,000 this year and an estimated $30,000 to $35,000 each year after.

He noted the arbitration rulings are inflating city budgets.

"We can't see emergency services — notwithstanding the fact that they are essential services — getting double the increases of other employee groups," Commisso said.

"That's been the trend over the last 10 years and, quite frankly, I don't see that stopping. We just can't keep up with this approach that sees everything being done on the basis of one gets it, the other will typically get it, and it will spread across the province."

A growing number of municipalities want the province to step in and reign in arbitrators’ awards, he added.

'No consistency'

Mayor Keith Hobbs called some arbitration decisions "bizarre."

"Emergency service workers — I was one — they work very hard and they have dangerous professions," he said. "But some of the arbitration decisions are just wild these days."

Hobbs remarked the city doesn't often succeed when disputes go to arbitration.

"It seems like there's no consistency," he said.

"They're not taking into account economic conditions in a city. Thunder Bay is recovering … we saw two per cent growth last year, which is OK, but some of the decisions that arbitrators are making, there's no rhyme or reason for them."

The recent ruling stems from a previous arbitration ruling in 2011 that settled a years-long contract dispute between the city and the firefighters association.

That ruling — which the city lost — instituted the salary bump-ups for years of service, called recognition pay. Under recognition pay, firefighters earn an additional 3% after 8 years of service, 6% after 17 years and 9% after 23 years.

The city and firefighters association disagreed on whether this recognition pay should also apply to the retirement payout for unused sick days, so another round of arbitration was held to solve that.

Commisso said the ruling came down in late May of this year.