The Westport Representative Town Meeting voted Tuesday night to reject the proposed terms of the town's contracts with its municipal employee and firefighter unions.

After more than a year of negotiations between the town and the two unions, the contracts came before the RTM to gain legally binding status after tentative agreements were previously reached.

With the RTM turning down both contracts, the town will consequently need to resolve the new contracts through an independently administered arbitration process. Floyd Dugas, the town's labor counsel, said arbitration proceedings will likely begin in about a month and could take up to six months to complete. In the meantime, the town's existing contracts with its municipal town employees and its firefighters will remain in effect.

Possibly foreshadowing the tone of the RTM's deliberations for the town budget for the 2011-12 fiscal year, several members of the legislative body cited the cost of financing annual salary increases as a major concern for continuing the contracts under their current terms.

"I think we have to support our fire departments, but the question is... can we really afford all these increases," said Lois Schine, District 8.

The two contracts, which retroactively run from Fiscal Year 2009-10 to Fiscal Year 2012-13, proposed salary freezes in FY 2009-10 for members of both unions. In the current fiscal year, 2010-11, the approximately 50 members of the Westport Municipal Employees Union would have received a salary increase of about 1.25 percent, followed by annual salary jumps of about three percent in the final two years of the contract. The approximately 70 members of the firefighters union would have seen their annual compensation rise by 3.25 percent in FY 2010-11, followed by increases of 2.75 percent in the last two years of the contract.

Pension payments contracts also emerged as a concern as several RTM members recommended that the contracts adopt defined-contribution systems. In this retirement plan -- with 401(k) plans being a common type -- municipal employees and firefighters would allocate a certain amount of their salaries to be invested in a range of asset classes. Their retirement funds would then come from these allocations, but would also include the gains or losses on these investments. Some town funds might also be paid into these defined-contribution plans.

Defined-benefit plans, by contrast, essentially offer predetermined payouts for employees based on personalized factors such as years of service. Both the municipal town employees and firefighters' contracts currently allocate pension payments through defined-benefit systems.

"General Motors has a defined-benefit plan, and need I say more," said Jeff Wieser, District 4. "We just need to get to a defined-contribution plan."

Most municipal employee and firefighter contracts in Connecticut still offer defined-benefit plans, Dugas said. He added that the municipal employees' pension plans are "comparable" with their peers in other towns in Connecticut. He rated Westport firefighters' pensions as "more generous than what you would see in other communities."

Some RTM members also argued that the contracts needed to be renegotiated to bring compensation and benefits in line with the private sector.

"If you look at the increases in the three years of the [firefighters] contract still going forward, compounded it works out to a 10 percent increase," said deputy moderator and state Rep.-elect Jonathan Steinberg. "How many of us in the private sector can count on a 10 percent increase over the next three years?"

Nathaniel Gibbons, a former firefighter and current fire inspector for the town, countered that the dangerous and physically demanding nature of firefighters' work merited more stable financial commitment than what would be offered in a defined-contribution plan.

"There are many ways that you can support your employees after they leave this town, without just handing them a 401(k)," he said. "When you retire as a fireman, your body is shot."

RTM Finance Committee Chair Mike Rea agreed with Gibbons.

"How're you going to get people who put their lives on the line to take a job that doesn't pay the benefits that will keep them in your employment?" he asked.

But with several members citing the interests of taxpayers as their paramount concern, the RTM rejected ratification of both contracts by clear margins. Eleven votes in favor, 22 votes against, and one abstention were cast for the municipal employees' contract; nine votes in favor and 25 votes against were tallied for the firefighters' contract.

Reacting to these votes, Ken Gilbertie and Gary Marks, the respective heads of the municipal employee and firefighter unions, told the Westport News that they were "very disappointed" that the RTM had rejected both contracts.

Pre-existing agreements between the town and the two unions preclude arbitrators from amending the municipal employees and firefighters' existing defined-benefit plans until 2014 and 2016 respectively. But all other terms in both contracts -- including compensation -- could now be on the table during the arbitration process.