A tax-limitation measure and a dour economy have knocked $35.7 million and 129.5 jobs out of Vancouver’s budget since 2001. Yet for the past five years, the city has increased both employee pay and benefits, an analysis of data by The Columbian has found.
Wage data show that nearly every one of the city’s 1,100 employees has seen their salary increase — some by a very small margin, others by up to 23.8 percent.
At this point, it’s clear that’s something’s got to give. Vancouver is grappling with a structural deficit that’s as simple as this: Expenses are going up faster than income, Mayor Tim Leavitt said.
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Services have already been slashed at all levels — from a medical rescue unit to customer service hours.
“This is an opportune time for government to look at restructuring and for a complete reconsideration of the delivery of services,” Leavitt said. “Taking a comprehensive look at what services the city is providing, if they’re appropriate and how we deliver them.”
As the council spends the upcoming months figuring out how to run the city — while cutting up to $12 million from both the 2011 and 2012 budgets — policymakers are going to have take a serious look at the entire system, including pay, he said.
But complicated rules govern the way the police and fire employees’ contracts are settled. The city also wants to pay well enough to draw top-notch workers, Leavitt said.
Union leaders say that the city also needs to look at taxes as a way to patch its deficit.
The city is a service-oriented business, so it makes sense that salaries and benefits make up 56 percent of the city’s $131 million general fund, Leavitt said.
However, he said it also makes compensation an obvious part of cost control.
“We need new revenues, or employee benefit cuts and compensation package cuts, or we lay people off,” he said. “At the end of the day it boils very simply down to that.”
Who gets top raises?
Not all public employees are created equal.
According to city data, there’s a difference between which workers are getting what raises: City management and public safety employees saw their wages increase at a much higher rate than those in civilian unions and nonunion members.
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And it’s those same workers who also earn the most.
Benefit costs have also skyrocketed across all employee categories, by more than $11,000 per full-time employee per year over the past decade, despite the fact that workers now shoulder some of their insurance premium costs.
Workers — union and nonunion alike — have been in discussions with the city to come up with solutions, Human Resources Director Elizabeth Gotelli said.
Except for the police unions, which took 5.1 percent raises last year, employees agreed to no cost-of-living increases in 2009. None are slated for 2010.
Union members now pay for 10 percent of their health care premiums, while nonunion employees cover 15 percent — a change for public-sector jobs, where generous benefit packages have long been a draw.
“They recognize the seriousness of the city’s financial situation,” Gotelli said, noting administrators have met with unions to discuss the budget crisis. “They talked with us as a partner in this problem. That was a huge first step.”
But it hasn’t been enough.
New negotiations
The first big changes may come from the police and fire unions.
The city is in the midst of contract negotiations with its four public safety unions, which represent about 35 percent of the city’s work force.
Over the past five years, those units have seen their pay go up anywhere from 12.1 percent (Police Guild) to 23.8 percent (Fire Suppression) — a much faster rate compared with other Vancouver employees. It’s also quite a bit faster than Clark County public employees overall (not including teachers), whose wages grew 10.2 percent between 2005 and 2008, according to Scott Bailey, regional economist with the Washington Employment Security Department.
The big difference in public safety pay may have to do with the way the city and the unions negotiate.
Public safety is so essential that officers and firefighters can’t strike, meaning if the city and one of those unions can’t agree, the contract goes before a state arbitrator, Gotelli said.
The arbitrator then looks at what public safety employees in comparable regional cities make and assigns pay and benefits based on those figures — neither the city nor the unions have a say on the compensation the arbitrator settles upon, she said.
Usually, it doesn’t go that far. The last time negotiations went to arbitration was in 1997, Gotelli said. Typically, as in this year, a state-appointed mediator “controls the process and has power to move parties towards a settlement or declare an impasse” to turn it over to arbitration, she said.
“Mediation plays a major role in the final outcome of union negotiations,” Gotelli wrote in an e-mail.
Public safety unions say the current system is the best way to make sure Vancouver attracts and keeps the best workers.
“If you want to attract qualified applicants, you’re going to have to pay the same or similar benefits and wages” as other cities, Police Guild President Ryan Martin said.
It’s easy to demonize unions for taking pay increases, Firefighters’ Union Local 452 President Mark Johnston said.
But firefighters should make a good living — and for that matter, so should everyone in both the public and private sectors, he said.
“We make a decent living and I think we deserve every penny we make,” he said, noting his was the first firefighters union in the state to agree to forgo cost-of-living raises last year.
Johnston also said that the union is willing to work with the city this year, but taking big hits in salary or benefits won’t solve the long-term problem.
“I understand why the city wants to control costs,” he said. “It’s not going to solve the structural deficit for the city. It will just bring everybody to a lower common denominator.”
Part of the pay disparity is also due to overtime costs, which made up 12.6 percent of firefighters’ average pay of $92,908 last year, and 6.5 percent of the police guild’s 2009 average salary of $86,714. The city’s civilian unions incur much less overtime, data show.
“Overtime artificially inflates our numbers,” Johnston said. “Our group has long maintained they need to hire more of us.”
Averages also can be misleading: Firefighters earn less than firefighter-paramedics, Johnston said. At the Vancouver Police Department, patrol officers’ paychecks are smaller than those of the senior sergeants’ in the guild ranks, Martin said.
“I’m a top-step patrol officer and I don’t make anywhere near (the police guild’s average pay of) $86,000 a year,” Martin said.
Unequal raises
The city’s other unions and nonunion workers haven’t seen the same double-digit pay hikes as public safety and management in the past five years.
For example, the city’s deputy and assistant fire marshals — who enforce fire safety codes and conduct inspections — were the only ones to see their take-home earnings go down since 2005, by 1.4 percent.
Vancouver’s policy is to pay 95 percent of what people in the same jobs in similar cities make, Gotelli said.
“We made a conscious decision to do that early on when the economy started to go south,” she said.
Rick Wilson, business manager for the 169-member Office and Professional Employees International Union Local 11, pointed out that his union has given up its cost-of-living raises for the past two years and has only seen an average wage increase of 6.9 percent since 2005.
“(OPEIU members) sacrificed when they need to sacrifice,” Wilson said. “The data is showing this group has stepped up to the plate.”
But Wilson said his group can also only sacrifice so much.
The problems of recession and soaring health care are “really outside of the workers,” he said.
“You certainly don’t want to impoverish the city worker,” he said.
Representatives for the 153-member American Federation of State, County and Municipal Employees — which saw an 8.4 percent increase in average pay since 2005 — refused to comment for this story.
Revenue troubles
The true problem, Vancouver’s union leaders said, lies within the city’s tax structure, not in the way that they are paid.
Vancouver leaks sales tax revenue to Oregon like a sieve — to the tune of $10 million to $12 million a year, Chief Financial Officer Lloyd Tyler said.
“If we didn’t have revenue leakage, we wouldn’t have the shortfall,” Wilson said. “The city already runs a lean machine.”
State data suggest Wilson is right: Vancouver has 12.9 employees per 1,000 residents. The rest of the state averages 24.5 jobs per 1,000.
“It’s probably a reflection of lower sales tax per capita and, I expect, lower property taxes because Vancouver is more residential than commercial,” said Bailey, the regional economist.
Property tax-limiting measure Initiative 797, passed by voters in 2001, also keeps local and state government from raising the tax rate more than 1 percent per year. City leaders say the measure has been a huge factor in today’s budget crisis.
About $39 million of the city’s $131 million general fund comes from property tax. Sales tax represents $23 million, lower than what has historically been the case due to the recession, Tyler said.
Mayor Leavitt acknowledged the deep problems Vancouver has with its taxing.
But he also said he doesn’t see tax hikes coming anytime soon.
“Short of raising new revenues, which I don’t believe is going to be something the council will be considering in the short term, we’ve got to address the costs,” he said.
Instead, Leavitt said, “we have to live within our means. I think that city employees must be part of the solution.”
