In The News › Pressed for cash

Nov 16, 2009

Source: New Orleans CityBusiness

Filed under: Government Finance, Orleans Parish

Pressed for cash

City worker pay cuts on table in balancing budget

Monday, November 16, 2009
By Richard A. Webster
New Orleans CityBusiness

One month after City Council members approved a 96 percent pay increase for themselves and a 6.5 percent increase for the mayor, plus an annual increase of 2.5 percent, they are considering a budget proposal by Mayor Ray Nagin that would cut the salaries of City Hall employees by at least 4.6 percent.

The wage decrease is comprised of 12 unpaid furlough days plus a $20 biweekly cost increase to their health benefits. For someone making $21,000 that could amount to a cut of $1,486, more than 7 percent of their salary.

The city is facing a projected $68 million budget shortfall and the 12 furlough days are expected to save about $4.7 million.

Of the seven council members, four responded for comment — Arnie Fielkow, Jackie Clarkson, Cynthia Willard-Lewis and Cynthia Hedge-Morrell. The council was in budget hearings all last week, which presented scheduling difficulties.

Willard-Lewis and Clarkson, both of whom voted against the council’s pay raise, came out the strongest against the mayor’s proposed salary cut. Decreasing the city’s share of employees’ health benefits as proposed could result in pay cuts in excess of 10 percent, Willard-Lewis said.

“Many of our city employees make less than $30,000 a year, and a 10 percent cut for them represents more of an impact than a city employee that is making six figures,” Willard-Lewis said. “Therefore, I am opposed to an across-the-board 10 percent cut, but would support a sliding scale of cuts based on the amount of the individual salaries.”

Clarkson is working with several other council members and the administration to introduce a graduated furlough system in which the salaries of the lowest paid would not be cut. As the salaries increase, so would the number of furlough days, with those making above six figures experiencing the toughest cuts.

“I don’t believe ever in balancing any budget on the backs of the workers and especially the lowest-paid workers,” Clarkson said. “When you do something across the board, arbitrarily you always hurt those who are paying the dearest price to be part of your organization.”

In 2008 the city increased City Hall employee wages from a minimum of $7.50 per hour to $9.10. Hedge-Morrell, who also voted against the council raise, said it would be “a shame now to have to reduce the pay for these hard-working public servants. We are still looking for alternative ways to balance the budget. There will be a lot of tough decisions to close such a large deficit. There are no easy choices.”

Fielkow, who voted for the council pay raise, was more circumspect when discussing the pay cut, saying he can’t single out one issue to focus on right now because it’s on a list of at least 25 that all have to be considered.

But he said he is empathetic toward the plight of City Hall workers, many of whom are still recovering from Katrina.

“No one wakes up and says, ‘We should do furloughing of city employees.’ We would much prefer not to be in that situation. But the reality is, and New Orleans is not alone on this, cities across America are experiencing tremendous budget deficits and we’re trying to come up with the best way to cover that shortfall,” Fielkow said. “It doesn’t mean we are not sympathetic to the financial realities of our community right now.”

A modest pay cut is one way to avoid mass layoffs or more extreme furloughing, strategies other cities have used to save money, Fielkow said.

“We rejected all of those concepts as a city and the mayor’s proposal reflects a modified approach to come up with some savings.”

As for criticism that the last thing the council should be considering is cutting the salaries of low-wage workers just a month after voting to increase their own salaries by nearly 100 percent, Fielkow said it’s unfair to equate the two.

The council put forward a proposal that would reduce its budget by $1 million, easily covering the $350,000 expense created by their pay raise, he said. And the city should benefit from the pay raise because it is designed to attract a larger and more talented field of candidates interested in serving the public, Fielkow said.

“In that respect I think it’s a small investment,” he said. “It’s an easy political issue but in the overall $460 million general fund budget it’s a small number and for those that want to critique whether the timing is right I would say we reduced our own budget by threefold the potential increase.”

But such arguments are not likely to ease the financial hardship or disappointment of a city employee making $21,000 who is asked to swallow a 7 percent pay cut, Willard-Lewis said.
“After Katrina, with the exception of the civil servants involved in public safety, over 3,000 employees were terminated and few have benefited from the employment generated from the recovery,” Willard-Lewis said.

The fact that a pay cut is even being considered is the result of systemic problems throughout the city, said Janet Howard, president and CEO of the Bureau of Governmental Research, a nonprofit research organization dedicated to public policy.

“It will require a comprehensive overhaul of a lot of things down at City Hall. Whether you have employees in the right places, whether you need to cut some employees, are you getting your resources to the right places? You have problems with the tax base and the number of abatements. We have problems with the pension system. It’s so comprehensive, no matter what they do this year they’re not going to solve this problem.”•

Nov 16, 2009

Source: New Orleans CityBusiness

Filed under: Government Finance, Orleans Parish

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