By the numbers
How approved compression raises would be dispersed (percents rounded):
■ Transit: 24 percent
■ Fire: 21 percent
■ Parks and recreation: 20 percent
■ Police: 14 percent
■ Public works (excluding transit): 12 percent
■ General service: 4 percent
■ Legal: 2 percent
■ City manager office: 2 percent
■ Finance: 1 percent
■ Planning: 1 percent
Steamboat Springs City of Steamboat Springs officials say they are working to solve a morale problem.
Predicting an end to a painful recession, city officials Tuesday night said it was time to award employees with raises for the first time in four years and to resolve major pay discrepancies.
The request stemmed from a salary survey that claimed many city employees are underpaid.
Several members of the Steamboat Springs City Council were skeptical of the city’s proposal to correct the problem by spending more than $1.5 million each year on raises in a time of economic uncertainty.
“It’s a big number that is going to eat us before we know it’s hungry,” Cari Hermacinski said about the price tag for the raises.
Hermacinski said a challenging winter season, a lack of development in the community and an ongoing fiscal crisis in Europe combine to create a shaky economic outlook for Steamboat.
Council member Kenny Reisman said the cost of the proposal “scared him as an elected official.”
The proposed pay-raise package is twofold. The city is seeking to resolve compression, a pay discrepancy that arises when the city’s new hires are earning as much as veteran employees, at a cost of $700,000 per year. It also is seeking to bring all city employees up to market value, which was determined by the salary survey of 10 Colorado cities comparable to Steamboat, at a cost of about $800,000 if approved this year — a number the city estimated would grow by $300,000 each year.
A large group of city employees attended the lengthy discussion in Citizens Hall on Tuesday night, and a slim majority of the council decided it was time to start implementing at least part of the pay-raise plan.
The council voted, 4-3, with President Bart Kounovsky and members Scott Myller and Hermacinski dissenting, to spend $1.05 million throughout the next 18 months to resolve the compression portion of the raise plan.
“It was a great step,” Finance Director Kim Weber said Thursday. “We’re very happy with council acknowledging that this was something that should be dealt with.”
Weber said she will ask the City Council at its July 3 meeting to pay the first $350,000 of the compression raises in the second half of this year with excess sales tax revenue. The $700,000 annual cost of the compression raises also is expected to be paid for by gains in sales tax revenue.
Through April, Weber said, the city collected $800,000 more in sales taxes than it budgeted.
A morale problem
Anne Small, the city’s director of general services, said compression has plagued city workers for years.
“When you are being paid at the same rate after three to four years as someone who just walked in the door, it’s a little demoralizing to feel that you are not valued given what you’ve given over the past number of years,” she said. “It dis-incentivizes people from doing a good job.”
As a result of council’s vote Tuesday, Small said, about 70 percent of the city’s more than 200 full-time employees who are not seasonal will see an annual pay increase ranging from $100 to $12,000. She said city staff still was working to calculate how much of an increase each qualified employee will receive based on the number of years the employee worked for the city without a raise.
But what is clear is the city’s largest departments will see the largest gains.
Transit workers, including bus drivers and mechanics, will receive 24 percent of the raises. Firefighters, parks and recreation employees and police follow with 21, 20 and 14 percent of the compression salary increases, respectively.
The raises will not apply to the city’s management team or director positions.
But as they celebrate the approval of the first part of the plan, city officials are working to secure more raises.
Small and Weber will approach City Council on July 3 to pursue the second part of the pay-increase plan, which would bring all city employees up to market value.
“It’s an important part, and I think we do still want that to get looked at,” Weber said about the market value part of the pay-raise plan.
Making it sustainable
City officials said Thursday that the long-term sustainability of the salary proposal is dependent on an improved economy.
Weber said she’s confident the plan could be supported with current revenues at least until 2017. But then, it will need some help.
“In the short term, we have the finances to support this, and it is a reasonable plan,” she said. “In the long term, to sustain this we need to make structural changes.”
She said that would mean finding additional revenue outside sales taxes or reducing services.
“I’m not asking for operations or personnel (costs) to come out of reserves,” she said. “I think we can fund this for the next five years out of current revenues, not out of reserves, as long as we could pay for capital projects and the Iron Horse debt out of reserves.”
Weber and Small said pay raises were important for sustaining employee morale. They noted that since November, eight city employees have left to obtain higher-paying jobs.
“We’re very concerned about that escalation of attrition for those folks who are looking at a higher salary,” Small said. “It’s a leakage of our skilled employees.”
She predicted the pay-raise plan would lead to less attrition.
If the city’s entire plan is adopted, Small said, 23 employees would see no salary increase, 11 would see an increase of less than $900, 22 would see a raise of between $1,000 and $2,000, 45 would see a raise of between $2,000 and $5,000, 64 would see a raise of between $5,000 and $10,000 and 38 would see an increase greater than $10,000.
To reach Scott Franz, call 970-871-4210 or email scottfranz@SteamboatToday.com