July 12, 2009 in City

Wages & means

City struggles to balance budget crunch, rising wages of public workers
By The Spokesman-Review
 

Chief concession

Under the City Charter, Mayor Mary Verner is entitled to be the city’s highest- paid employee, not including the city administrator. But since taking office, Verner has held her salary at $100,000. As of May, about 80 city workers earned more than she. The highest paid is Police Chief Anne Kirkpatrick, at $165,808 a year.

In an interview last month, Verner said she doesn’t stress her pay concession to employees: “I just don’t think it’s fair for me to highlight that. That’s my personal decision. I do think it’s incumbent to establish leadership from the top and to show that it’s important to the executives that we work our way through this.”

Jobs with great pay and excellent benefits can be hard to come by in a recession – but not necessarily at City Hall. The city of Spokane hasn’t stopped filling openings, and those lucky enough to land jobs will get solid pay with raises on the horizon, two taxpayer-funded retirement plans and premium health insurance.

It’s a package that city officials, including the mayor and City Council members, have started to view as unsustainable.

A Spokesman-Review analysis of city pay shows that since the mid-1970s – soon after state law gave public safety unions greater power in contract negotiations – many city workers, especially police and firefighters, have made significant pay gains compared with the average worker in Spokane County.

While wage growth among Spokane County residents has increased an average of 281 percent since the mid-1970s, most firefighter and commissioned police officer salaries have jumped between 400 and 500 percent.

The growing disparity between average wages and city pay, critics say, makes it increasingly difficult to balance budgets without cutting services. Even before the economic crisis became apparent last year, city leaders forecast a deficit, in part because administrators approved a series of employee contracts with raises in salaries and benefits expected to outpace revenue growth.

“I just really struggle with how we can be giving out these kind of continual wage increases and benefit increases when the people who are out there paying for them are taking 5, 10, 15 percent pay cuts or furlough days or are losing their jobs altogether,” said Nancy McLaughlin. McLaughlin is one of two City Council members who voted in September against a three-year contract with 5 percent annual pay raises for the city’s largest union, Local 270 of the Washington State Council of County and City Employees.

The leaders of the city’s four largest unions did not return calls seeking comment last week.

A former city union president, however, said raises for police and firefighters over the past three decades represent how vastly underpaid public safety workers were until a state law went into effect that forced departments to pay salaries comparable to those in similar-size cities.

“The wages, frankly, were so low, we had guys quitting to drive milk trucks,” said Ken Strong, who led the city’s fire union for 17 years, including through the 1970s. “There didn’t seem to be any future in it.”

Police and fire wages in Spokane resemble pay in Tacoma, Vancouver, Wash., and Bellevue, Wash., according to salary data compiled by the Association of Washington Cities.

But with the troubled economy making expected shortfalls deeper, Spokane Mayor Mary Verner and the City Council are pushing unions to make concessions to cover half of the city’s forecast $7 million deficit in 2010. They also say they want changes in pay or benefits to be permanent.

The collective message from elected leaders: Make contract concessions or face layoffs.

At a council meeting earlier this year, city administrators said some union leaders have expressed willingness to give up benefits or pay, but only if all unions participate.

In an interview last month, Verner acknowledged that mistrust among the unions is one of the most significant challenges in working for concessions.

“That has been the culture of the organization for so long that I think it’s difficult for people to sing another tune at this point,” Verner said. “Even in my recent history with the city, I’ve watched the same pattern. It’s difficult for one bargaining unit to believe that the other bargaining unit is going to participate in good faith, and no one wants to go first, thinking that going first is going to disadvantage them.”

Unlike pay and benefits for police and firefighters, state law doesn’t require city officials to tie wages of other workers to salaries paid by other cities. In general, non-public-safety raises have not been as significant as those received by police and firefighters. Garbage collectors’ pay, for instance, has grown between 260 and 300 percent in the same period in which average wages within Spokane County increased by 281 percent.

More than paychecks

Salaries are only a portion of employee costs. Of the city’s more than 2,000 workers, only commissioned police officers, city prosecutors and fire battalion chiefs pay more than $15 a month to cover their personal health insurance; city workers also pay significantly less than private-sector employees to cover dependents, according to state statistics.

Most city workers have two retirement plans – both of which are partially paid for by the city. That’s on top of Social Security, to which the city contributes for most non-public safety workers.

Pensions for public safety officers are handled by the state and are supplemented by the city and workers. Other city employees pay 7.75 percent of their pay into the Spokane Employees’ Retirement System. The city matches that amount, which was increased last year to help ensure the plan’s solvency. New workers earn 2 percent of their salary as retirement pay for each year of their service, up to 70 percent.

Employees also get 457 plans: defined contribution plans that resemble 401(k)s. Starting in the late 1990s, the city began matching some of the money employees invested in the funds. Currently, the city matches up to $161 each paycheck for firefighters, 4 percent of wages for police and up to $120 a month for members of the city’s largest union.

Human Resources Director Dave Chandler said it’s relatively common for local governments in Washington to offer both kinds of retirement plans.

Spokane Valley offers its employees a match for its defined contribution plan in lieu of paying into Social Security, said Mike Jackson, deputy city manager. Spokane County, however, doesn’t offer a match for its employees in their 457 plans.

Nationwide, a Department of Labor study released earlier this year shows that only 19 percent of local government employees receive a pension and a deferred-contribution plan with a match.

Catching up

City wages for police and firefighters went through a significant transformation in the 1970s, after state rules governing union bargaining took effect. Supporters of the change argued that police and fire unions had been ignored because they are legally prohibited from striking.

The Spokane Police Guild and elected officials butted heads in 1978 after a state arbitrator forced the city to increase police wages by 13 percent. The arbitrator based the pay on Tacoma’s police salaries, though he subtracted an amount to offset Tacoma’s higher cost of living.

At a hastily called press conference in his City Hall office soon after the pay increase was announced, then-Mayor Ron Bair said the higher wages would force layoffs and asked residents to “join us in the outrage.”

In response, the guild took out ads in The Spokesman-Review and Spokane Chronicle noting that on a per-capita basis the city spent considerably less on policing than other Washington cities. It also said the pay increase would place “top patrolmen’s wages just over $5 less per hour than those of such journeyman wages paid plumbers, steamfitters, welders and sheet metal workers in Spokane in 1978.”

Strong, the former fire union president, said better wages increased competition for jobs, leading to a better pool of candidates.

“We used to have collective begging,” Strong said, noting that before state law was changed the fire union appealed to voters for pay increases through ballot initiatives. “No question about it, (collective bargaining rules) made the city sit down and negotiate with us.”

Terry Novak, who became Spokane’s city manager just before the arbitrator’s decision in 1978, said he believes bargaining law should be modified to provide more balance for local governments.

If city wages are rising faster than those of most taxpayers, there could be backlash, Novak said.

“It’s tinder waiting for the fire,” said Novak, a professor in Eastern Washington University’s public administration graduate program.

Despite what Novak sees as a disadvantage in bargaining, he said the city faces a bigger problem in balancing its budget from approved citizen initiatives over the past 15 years that have limited state and local governments’ abilities to raise taxes and fees.

Novak disagrees with union sentiment that the city was underpaying its public safety officers when he arrived. The city never had a problem attracting candidates, he said.

“I remember being shocked at the number of people who showed up when we gave the entrance exam,” Novak said. “We had several hundred people.”

Glenn Kibbey, chief examiner to Spokane’s Civil Service Commission, said the city has few problems attracting qualified candidates for most city jobs. The down economy appears to be increasing the city’s applicant pool.

Almost 600 took the civil service test earlier this year in hopes of joining the fire department. That’s up about 200 from two years ago.

Some of the 10 candidates who tested last week for Spokane’s open environmental analyst job said they were out of work.

Erika Schwender, for instance, had been laid off by a mining company. She said a job in local government appealed to her because it’s focused on public service.

“When you work in the private sector, you’re usually focused on your client or the organization you’re working for, and there’s not much public outreach,” Schwender said.

Closing the gap

Verner said she doesn’t regret signing off last year on the contract for Local 270. She noted that the union and her administration came to an agreement before stock markets crashed in the fall.

“I’m comfortable that we did the right thing under those circumstances. It’s very easy now in 2009 to say, ‘Well, in hindsight you would do something differently.’ But for all we knew we could have continued the trend that we were on, which was an excellent financial forecast.”

The administration agreed to similar compensation increases earlier this year – after the recession had taken hold – for the city’s fire battalion chiefs.

Now, however, city leaders are taking a harder line.

Chandler, the city’s human resources director, said each union has been given a target it must meet for cuts. Whatever is not met in concessions will come from layoffs, he said.

Gordon Smith, a staff representative for the Washington State Council of County and City Employees, said if employers can prove there are shortfalls and are willing to share the burden among the work force – including management – unions will consider concessions.

He noted that Coeur d’Alene’s city unions recently voted to forgo a pay increase scheduled for later this year to save jobs and city services. The union representing Spokane County building and planning workers agreed to cut hours.

“What I’m finding at least here so far is that people are understanding that we don’t want our members having to job-hunt in this economy,” said Smith, who represents Spokane County and other unions. “Unlike some of the stereotypes of unions, they’re stepping up to the plate.”

Verner said the city’s goal is to create a 2010 budget that doesn’t hurt important services.

“Our citizens are going to expect the same service regardless of what our budget is,” Verner said. “You just expect somebody to show up and pick up your garbage, you expect to call 911 and get a (response). You want your potholes fixed. You don’t care that we have to cut our budget by $7 million.”

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