Council members voted 4-3 Monday night to not immediately put binding arbitration on a ballot measure without more public support. While Woodward favored the measure, his change of opinion could mean that a new vote next week could result in residents having the choice to eliminate binding arbitration.

The council also voted 5-2 Monday night - with Council members Dion Bracco and Craig Gartman voting against - to wait until December to see if there are enough residents who are interested in voting to repeal binding arbitration in 2010.

Arbitration allows police and fire unions, whose members cannot strike under state law, to call in a third-party arbiter to resolve stalled contract negotiations. The Gilroy Chamber of Commerce believes scrapping binding arbitration would free council members' hands and cut future personnel costs. However, police and firefighters have defended it as their only recourse and irrelevant to solving the city's expected $4.7 million deficit, which could lead to layoffs next week.

Waiting until winter would give the chamber and other concerned residents time to gather more than 1,800 signatures, which would force a ballot measure and avoid triggering any sit-downs with the unions. Without the signatures, a majority of the council has to approve the ballot measure. Yet that would, in turn, trigger meetings with the unions that are subject to binding arbitration, according to Gilroy's labor lawyer, Charles Sakai.

Sakai told the council Monday night that the state Supreme Court would review an appeal of an appellate court decision that recently struck down binding arbitration. The law in question - Senate Bill 440 - guarantees an arbiter's decision unless a governing body, such as the Gilroy City Council, unanimously overrides it.

The state Supreme Court has already struck down a law that made it harder for local governments to fight an arbiter's decision. If the high court agrees to rule on SB 440, the appeals court decision will disappear and the current pro-arbitration law will apply until the state Supreme Court makes a decision, said Woodward, who is also a lawyer.

If the court upholds the appellate court's decision striking down arbitration, Gilroy's police and fire unions could still invoke it. This is because Gilroy is one of California's 22 charter cities, which have wider latitude to run their affairs. Instead, residents would have to vote to repeal the charter amendment - voted in by two-thirds of residents in 1988.

Yet, if the Supreme Court overturned the lower court's decision and upheld binding arbitration, a repeal would do nothing. Without a charter amendment, Gilroy would revert to state law, which in that case would allow arbitration.

In other words, binding arbitration will cease in Gilroy only if Gilroy residents repeal the amendment on binding arbitration and the state Supreme Court chooses to not hear the case or upholds the decision against binding arbitration.

"I don't want to go through the expense of getting rid of binding arbitration just to then have it kicked back in under state law," Woodward said.

This was the crux of the issue Monday when Woodward voted against the measure, he said.

The state Supreme Court has not yet chosen to hear the case, as it is too soon after the appellate court's April 24 decision to even appeal. There is a 30 day period after the court issues an opinion before it becomes final. At that point, the party that was ruled against has 10 days to petition the court - which accepts fewer than 5 percent of the thousands of cases it considers each year - for review.

This is what the Sonoma County Law Enforcement Association, represented by David Mastagni, wants to do.

"I'm going to take this to the (state) Supreme Court, and if we don't win, then we will seek enough legal definition to see if the legislative bill can be crafted accordingly. And if that doesn't work, my intention is to pursue a voter initiated amendment to the state constitution," Mastagni said. "Public employers should make law enforcement a priority and then divide and balance their budgets ... The Gilroy City Council will lose any effort to repeal binding arbitration because the public knows that high quality law enforcement is essential. I wish I was down there to fight this."

Despite the "bad advice" Woodward said the council received from Sakai Monday night, Bracco said he planned to vote the same.

"I'm not paying attention to what the (state) Supreme Court's doing on this issue. I'm looking here at Gilroy," Bracco said.

Balancing the budget and restoring employee morale after layoffs are more important than talking about binding arbitration, he said.

The police union has never used binding arbitration but Fire Local 2805 successfully employed the tactic in 2000 and 2005, when an arbiter rewarded the union with raises more than twice what the council proposed.

"I see this as a losing battle when you have these young firefighters going door to door telling people they've got to support them, the people are going to support them, just like they did back (in 1988)," Bracco said.

Gartman agreed.

"My opinion isn't going to change," he said. "If voters want to remove it, they can remove it."

Placing a measure on one of the two 2010 ballots would cost the city between $46,000 and $72,000. But Chamber of Commerce President and CEO Susan Valenta said that expense paled compared to the peoples' right to vote and the $260,000-plus the city spent on arbitration costs with the fire union in 2006.

During the arbitration process, city and union representatives meet with an arbiter - historically a Palo Alto-based lawyer - who looks at each unresolved contract issue and picks one of two sides' final offers. Mutual agreements are allowed thereafter, but the final decision is binding.