Rob Douglas: ‘Fairness’ and city staff pay
June 28, 2012
June 20, 2012: Pay raises for employees approved by Steamboat City Council
Even before the Great Recession proved that Steamboat Springs is not immune from the economic realities of life beyond Rabbit Ears Pass, there were a few open-eyed, responsible city leaders issuing clarion calls about spending commitments that soon would burden the city.
Back in 2008, when revenue streams from the city's sales and business use taxes were at all-time highs, then-Steamboat Springs City Council President Loui Antonucci repeatedly warned that the fiscal viability of the city's general and capital projects funds was threatened because of short-sighted votes with long-term ramifications by a series of councils.
In short, past councils committed future councils to unsustainable spending levels even if revenue continued to flow like the Yampa River of 2011, much less the Yampa of today.
Next Tuesday, the future Antonucci warned about becomes the present as the City Council revisits a recommendation by the city's management team to authorize "market" pay raises for city employees. In combination with already authorized "compression" raises, the market raises would consume $10.5 million in city funds above and beyond current employee costs during the next five years. Consequently, the pay raises would drive deficit spending from the city's Reserve Fund to $7 million throughout the next five years. Further, if the city does not realize projected 3 percent annual increases in tax revenue, the city's financial reserves could be reduced to dangerously low levels in just a few years.
The management team argues that the raises are required as a matter of fairness determined by salary comparisons with city workers in similar Colorado communities. The management team also argues that employee morale is low because city workers have not received a raise in four years following furloughs that reduced salaries and hours worked by 10 percent.
Conversely, it can be argued that city worker compensation is fair when compared with local private-sector workers. City workers receive benefits that rarely — if ever — are offered by local private employers. Benefits should be included in calculations of what city workers make versus local private employees. Furthermore, increases in costs paid by the city to provide employees with free health insurance are de facto raises, and city workers have received bonuses to partially offset furlough-induced salary reductions.
In an effort to flesh out the totality of city employee compensation, the Steamboat Today requested and received a range of information about staff compensation — including the following city management-chosen examples of compensation as budgeted for fiscal year 2012:
■ Staff assistant: Salary $26,945; health insurance $10,681; other benefits $4,047. Total compensation: $41,673.
■ Bus driver: Salary $32,910; health insurance $10,681; other benefits $6,395. Total compensation: $49,986.
■ Police officer: Salary $49,800; overtime $3,000; health insurance $10,681; other benefits $9,903. Total compensation: $73,384.
■ Firefighter/paramedic: Salary $46,701; overtime $10,851; health insurance $10,681; other benefits $12,231. Total compensation: $80,464.
As part of total benefits, the city contributes the equivalent of 6 percent of a regular employee's salary toward their retirement plan. Firefighters receive 11 percent, and police officers receive 12.2 percent. All employees receive medical and dental coverage at no cost and can add their family to the plan for $200 per month.
Based on the above data, and depending on your perspective, arguments can be made that city workers are either paid too little, too much or just about right.
But here's the rub. If the council dives into the fairness argument next Tuesday, it will have been led down the wrong path by the management team.
The council should not address the issue of additional city worker raises next week. To do so would be to ignore the elephant in the room that Antonucci warned about back in 2008. That elephant grew faster during the recession. Now, the beast has grown to the point where the city will be forced to cover expenses by starting to drain the reserve fund next year. And that deficit spending could reduce reserves dangerously in a few short years unless structural changes are made to the operation of the city or taxes increase significantly.
For too many years, as different members shuffled in and out, the City Council — just like our state and federal governments — ignored an obvious fact: The spending binges would have to end.
That is why this council should address the long-term fiscal health of the city before entertaining employee raises. This council must not kick the can down the road — relying on reserves to cover expenses — all the while knowing they'll be term-limited out of office when the red ink finally drowns the city.
Since 1998, Steamboat resident Rob Douglas has been a commentator on local, state and national politics in Washington, D.C., Maryland and Colorado. To reach Douglas, email rdouglas@SteamboatToday.com.