Dear city of Spokane employees:
You have an opportunity right now to show taxpayers that you’re willing to do your part to help the city navigate the poor economy and improve its budget outlook.
We in the private sector know you work hard. We know you have a responsibility to provide for your own families. We’d like to believe, however, that deep down you understand you have it pretty good, relative to what’s going on around you.
Thousands of jobs have been lost here in the past 12 months, and more cuts are likely before the economy recovers. Many of those lucky enough to keep their jobs have taken pay cuts—actual cuts, not trimmed-back increases. State workers and educators will get no pay raise in the next biennium, and many will get pink slips. This treacherous recession has been painful for nearly everyone, yet you have been largely spared that pain. It’s clear now that the city no longer will be able to insulate you fully from the real world’s economic difficulty.
City administrators are forecasting a $7 million deficit for the general fund in 2010. Things could end up getting worse, if revenue comes in lower than expected, or if expenses, such as for energy, come in higher than expected. No one seems to know where the bottom of this economic trough will be.
You’ve been briefed recently on the options available to make up the expected shortfall. One is a 4 percent across-the-board cut, which likely would result in significant job losses. No one wants that. City residents are still feeling the service impacts from the 2004 layoffs. They want you in your job. Still, if labor costs aren’t reduced in other ways, job cuts will be necessary.
Another option is to tap the city’s rainy-day fund. That’s probably a justified move to cover a piece of the deficit. It’s definitely raining. Be aware, however, that pulling, say $1.5 million out of reserves to pay for on-going expenses only kicks the problem down the road. Permanent corrections to the structural deficit are what’s really needed, not Band-Aids. Without changes, the 2010 budget would show a revenue increase of about 3.6 percent, but a 6.4 percent increase in spending. That’s not going to work in the long run.
As you know, there are a host of other options being discussed—everything from reduced work hours to furloughs, as well as technical, money-saving finance changes. There’s even a notion about hiking licensing fees for businesses markedly.
While budget creativity is fine—and although some revenue enhancements might be prudent—taxpayers here won’t be happy with a solution that doesn’t include a willingness by city employees to concede some of their arguably generous pay and benefits. Remember that over 60 percent of the general fund budget goes to labor costs, and prior cuts to the rest of the budget already have reached bone and sinew.
From scenarios we’ve seen, for each percentage point of increased pay you give up, the city saves about $750,000, so forgoing a planned 5 percent pay raise next year would save the city about $3.75 million. That would be a telling gesture—and wouldn’t even be a true cut in pay, just a lack of a raise.
Benefit reductions would help as well. You might not be aware of this, but many workers in the private sector pay $500 or more a month for employer-sponsored health care, if they’re lucky enough to have access to a plan at all. The tiny portion you are obligated to pay—if you pay any at all in your bargaining unit—is truly unusual in today’s market. Perhaps by paying a greater share of your premium, you could save some jobs at City Hall, maybe even your own.
Yes, such advice is harsh to take, but these are harsh times—times that require all of us to make sacrifices. It’s time you consider doing your part. We believe it will pay big dividends the next time the city turns to voters for help on the revenue side of the ledger. Be warned, though, that if you turn your backs to the need now, while others are hurting, it’s not likely that taxpayers will help, say with a levy-lid lift, next time they’re asked.
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