Baltimore Circuit Judge Kathleen O'Ferrall Friedman ordered the city yesterday to pay its 2,000 firefighters and fire officers roughly $3.8 million in pay increases won in arbitration last year.
The pay increases, which Mayor Kurt L. Schmoke sought to withhold because of budgetary constraints, are scheduled to go into effect July 1, the beginning of the city's 1992 fiscal year.
The ruling came in a lawsuit filed by two unions representing city fire employees whose lawyers argued that Mr. Schmoke overstepped his powers in ordering a pay freeze for fire employees in spite of last year's arbitration ruling.
Judge Friedman's decision, if not overturned on appeal, will force city budget officials to rewrite the $1.79 billion budget, which by a quirk of fate was being passed by the Baltimore City Council and signed into law by the mayor a few blocks away at City Hall at the same time that attorneys for the two sides argued in the courtroom over the pay increase.
City lawyers said they would appeal the judge's order to the Maryland Court of Appeals.
A spokesman for the mayor said budget officials are preparing options for balancing the budget should the pay increase stick, and said one option would be to lay off city workers.
City Council President Mary Pat Clarke said layoffs should not be required, however, because the budget includes a $5.2 million surplus, which would be more than enough money to make up for the firefighter pay raise.
The $5.2 surplus was created by making changes in the law governing the pension portfolio for the Fire and Police Employees Retirement System. A bill creating those changes was passed by the council yesterday and is expected to be signed by the mayor today.
"The money that we've just generated through the fire and police [pension] was being set aside by the city in the event we lost in court," Mrs. Clarke said.
But although the money exists in the budget, only the mayor, and not the council, has the power to funnel the budget surplus into the pay raise.
In ordering the city to fund the pay increase, Judge Friedman said that Baltimore is bound by a 1985 state law requiring it and its two fire unions to submit to binding arbitration whenever the ,, two sides become deadlocked in contract negotiations.
The city's 2,000 fire employees won an arbitration package last year that called for a two-step pay increase beginning last July 1.
Although the city implemented the first step of the pay increase, the mayor sought to void the second step, which was to have brought city firefighters a 6 percent increase on July 1. He announced March 1 a freeze of the wages of all city employees as a way of closing an anticipated $54.1 million gap in the fiscal 1992 budget.
The city won a lawsuit similar to yesterday's in 1977. In that case, a judge ruled that the Board of Estimates was within its rights in voiding a pay increase to a city union.
Two years later, Baltimore voters approved an amendment requiring the city to submit contract disputes with firefighters to arbitration. Although that law was overturned in court in 1984, the General Assembly passed the current law a year later.
Lawyers for the city had argued that the 1985 law forcing the city to accept the provisions of the three-member arbitration panel violated the state constitution because it allowed the state to exercise controls over city governmental functions that it had previously entrusted to the city. But Judge Friedman sided yesterday with lawyers for the firefighters, who argued that the General Assembly reserves the right to withdraw powers previously granted to local jurisdictions, and did so when it passed the law forcing the city to submit to binding arbitration in disputes with the fire unions.
"More than anything else, this will lift the morale of the department," said Jeffrey A. DeLisle, president of one of the two fire unions. "We waited a long time for that arbitration agreement. Taking that away was a real blow to morale in the department."