The city rejected a proposal from the police union Thursday during contract negotiations, then proposed an 8 percent pay reduction across the board.

The city’s labor negotiators met with the Fraternal Order of Police Lodge 33 for the second time since the union’s membership shot down a tentative agreement for a 3 percent pay cut and 2 percent pension contribution hike.

The union rejected the agreement, which would have applied to Cape Coral police officers, sergeants and lieutenants, on June 29 in a 185-1 vote.

It was expected to total about $800,000 in annual savings for the city.

On Thursday, the union brought forward a new proposal that would have frozen pay and set up a schedule where the employee pension contribution amounts would change every six months, over the next year and a half.

“The feedback we got from our membership is that they would prefer salary reductions going toward pensions,” Kurt Grau, the union’s president, said.

The current 7 percent contribution would have increased to 10 percent up until March 31, 2012, under the plan. On April 1, 2012, that would have decreased to 9 percent up until Oct. 1, 2012, when it would have dropped to 8 percent.

The contribution level would have returned to 7 percent on April 1, 2013.

“The city’s looking for fiscal year money. The city’s not looking for forever money,” Gene Gibbons, the union’s attorney, said. “The parties should only be concerned about the fiscal budget.”

John Hament, the city’s labor attorney, argued that it would lock the city in.

“It’s creating a future position,” he said of the pension contribution portion of the proposal. “You’re removing the ability to have a new status quo.”

Hament called the idea creative, but only a temporary budget fix.

“Then it wipes us out, it puts us back to square one,” he said.

Hament added that the proposal would only make up about half of the annual savings that the rejected tentative agreements were anticipated to reap.

The city rejected the union’s proposal and put a counterproposal on the table for an 8 percent pay cut for Cape officers, sergeants and lieutenants.

“We’re countering with what we feel is important to the city and what we feel is justified,” Hament said.

The city is no longer proposing a pension contribution increase.

“The reason for that is we don’t have the legal power to control that, to mandate that,” he said. “We’re putting our eggs in the wage basket.”

Hament explained that the pay cut increase is tied to several factors – a reduction in the millage rate and increased costs for pensions and health insurance – but also to the savings losses tied to the former agreements.

“We’ve been in deficit spending all last year to the tune of millions of dollars,” he said.

Even with the concessions made by the eight unions – including the prior tentative ones from police and fire – there still was an anticipated shortfall.

“We’re still looking at shortfalls this year,” Hament said.

On Aug. 5, the Cape Coral Professional Firefighters Union Local 2424 also rejected the tentative agreements that it had reached with the city involving the same 3 percent pay cut and a 2 percent pension contribution increase.

Rank and file voted 166-0 to reject, while the battalion chiefs voted 11-0.

On Tuesday, the city met for the first time with fire since the vote. The bargaining unit verbally proposed a 6.3 percent pay increase, among other things. The city counterproposed with the same 8 percent pay cut across the board.

Grau argued Tuesday that an 8 percent pay cut would result in cops leaving – perhaps walking away from their homes – to find better paying jobs.

“We’re probably going to lose 15 cops over this who are going to walk,” he said. “We’re not going to keep cops here.”

According to Grau, there are 19 cities in Florida with a population of over 100,000. The proposed pay reduction would place Cape Coral as No. 18 for police starting salary and No. 93 statewide, below Hialeah and Homestead.

He said it would be a struggle to hire quality replacement officers.

He cited more costs to the city to replace officers lost to a high turnover rate, no cost savings to the city from the additional employee contributions to the pension plan and a further hinderance to the local economy’s growth.

Bennett Walker, the union’s vice president, said they thought that they had come up with a creative way to save the city money with their new proposal, and a jumping off point to entertain discussion and further negotiations.

“I think we’re very surprised and disappointed,” he said of the city’s rejection and proposed 8 percent pay cut. “We were hoping we would have negotiations. We want to get this done. We’re trying to negotiate it.”

Walker said they will have to bring the city’s counterproposal back.

“In the end, this is a decision of the membership, not the board,” he said, adding that he felt it would be difficult for the membership to be receptive to an 8 percent cut when it was not receptive to the initial 5 percent cut.

Walker called the counterproposal “punitive” for the rejecting vote.

The city and police union are expected to meet again on Sept. 6.