Reno City Manager Andrew Clinger has called on public employee unions to make compromises in order for the city to rein in rapidly rising compensation costs.
Clinger is concerned that Reno is facing a double challenge: revenues are still at least $10 million below the peak before the recession, yet the percentage of the budget going toward employee compensation has risen.
Clinger has cited the looming $210 million unfunded liability for retiree health benefits as the city’s single greatest challenge. That liability will put the city in the red starting in 2016, according to an independent analysis. The city of Reno’s requests are fairly modest at the present time, focusing on ending retiree health benefits for new hires. Still, only one of the nine labor unions the city must deal with has agreed to end that benefit.
“We must have the cooperation of our collective bargaining groups to achieve long-term solutions,” Clinger said. The rising labor costs come at the same time Reno is dealing with a severe debt load, now at $512 million. That’s a vast improvement over the $608 million the city owed in 2009, but still a burden.
Municipal government compensation in the Reno-Sparks area is generally regarded to be about 20 percent above the national average for these positions, despite the fact that this region has a relatively low cost of living. The primary compensation drains, of course, come from salaries and benefits in the public safety area, principally that of firemen. As an example, the average compensation for an assistant fire chief, who maybe oversees 3 to 4 stations, last year was more than $267,000!
Here are some key comparisons that demonstrate the rapidly growing portion of the city’s budget that is provided to employees:
•In the year 2000, employee compensation equaled 79 percent of the budget.
•In 2014, that percentage is now 89 percent.
•In 1997, 35 percent of compensation was in the form of benefits.
•In 2014, that has now reached 55 percent.
•In 1999, total compensation paid by the city was $68,527,226.
•In 2013, total compensation almost doubled to $134,518,425.
•In 2007, the city of Reno had 1,605 full-time employees.
•In 2014, that number dropped to only 1,069.
•Thus, total employee compensation has jumped by a third, while the number of employees has declined 37 percent!
As these comparisons clearly show, employee compensation has gone beyond any rational formula. Many citizens are asking how this situation has evolved. Part of the explanation, of course, is the growing power of public employee bargaining groups, especially fire. Others have criticized elected officials and managers for agreeing to these pay and benefit rises. However, in the end the real failure has been that those of us who are taxpayers have not made ourselves sufficiently aware of this cost escalation and taken steps to demand that it be reined in.
Clearly, the rapid rise in compensation/benefit costs and the percentage of the municipal budget it accounts for is not sustainable. Unless these expenditures are reined in — and not just for future employees — there will be virtually no money available for infrastructure and other projects.
Tyrus W. Cobb spent 26 in years in the Army, including two tours in Viet-Nam, but never received any overtime pay.