Discussion of possible tax hikes in Henderson have raised questions about the city’s employee pay structure, which has trended higher than neighboring communities.
Nevada Policy Research Institute plans to release a report today that shows base salaries for many of Henderson’s top employees exceed those in Clark County, Las Vegas and North Las Vegas.
Victor Joecks, researcher and executive vice president for the Nevada Policy Research Institute, a conservative think tank, said the city’s pay system is broken.
“When the city is saying, ‘Yeah, we’ve got high salaries but there is nothing we can do about it except go to taxpayers who’ve had their income cut and ask for more money,’ the system is broken,” Joecks said. “Even though Henderson has done a good job of navigating a broken system, at some point someone’s got to stand up and say, ‘By the way, this doesn’t make any sense.’ ”
The city is holding a series of public meetings on how to bridge a budget gap and resolve a $17 million annual infrastructure shortfall. A February Special Budget Ad Hoc Committee report’s recommendations included service cuts, increased fees for some city services, reduced hours at some recreation centers and a possible property tax increase.
Henderson Assistant City Manager Fred Horvath said the high base pay “was a conscious strategy” under former City Manager Phil Speight to attract “the best and brightest people.”
“We’ve done this for 15 to 20 years,” said Horvath, adding that paying more for good people has allowed the city to do more with fewer employees. Henderson has 6.8 employees per 1,000 residents, compared to Las Vegas with 8.4 employees per 1,000 residents.
The higher salaries were given even though Henderson is smaller in budget, population and area than its neighbors Las Vegas and Clark County, according to the research institute.
According to the fiscal 2015 tentative budget filed Tuesday, 82.4 percent of the city’s general fund budget was for employees’ pay and benefits. The $185.9 million employee cost is an increase from the $179 million projected last year.
TOP PAY FOR TOP EMPLOYEES
Henderson’s two highest base-salary employees for 2013 were two of its newest.
City Manager Jacob Snow’s base salary of $225,000 is more than Las Vegas City Manager Betsy Fretwell ($187,411) and Clark County CEO Donald Burnette ($201,219).
Snow’s total compensation package — including city payments into the state’s retirement plan, a professional allowance and bonuses — drove his compensation last year to $293,559. When you include benefits and other pay, however, Burnette ($326,324) and Fretwell ($306,879) take more out of their respective government budgets.
But that level of pay is not unique to Snow, a former general manager for the Regional Transportation Commission of Southern Nevada who became city manager in April 2012. Former city managers Mark Calhoun and Mary Kay Peck had the same base salary during their employment.
The second-highest paid employee is city attorney Josh Reid, who was hired in December 2011. He had a base pay of $200,109 and a total compensation package of $260,130 in 2013.
The research institute’s report shows similar stories for other top Henderson officials: higher base pay than their counterparts that is then surpassed in total compensation packages.
Something that will be addressed in a cash and comp study in July is why so many Henderson employees have six-figure salaries. According to a review of the data, Henderson had 292 employees with a base salary of $100,000 last year. Discounting the number of non-jail police staff — Las Vegas has a contract with the Metropolitan Police Department — Henderson still has 36 more employees receiving a $100,000 salary than Las Vegas.
Las Vegas, however, still pays longevity pay, something Henderson eliminated in the 1980s.
COMPENSATION AND CLASSIFICATION STUDY
Henderson has been conducting a “comp and class study” since 2012, comparing city’s pay rates and benefits to other government entities locally and out of state. The study will show that some employee salaries are higher than the market demands. But the city does not have plans to roll back current salaries.
Henderson solicited information from Clark County, Las Vegas, the Regional Transportation Commission of Southern Nevada, and the Southern Nevada Water Authority, as well as the cities of Colorado Springs, Colo.; Irving and Plano, Texas; and Scottsdale, Ariz. The city also looked at a dozen private sector salary surveys through the consulting firm Towers Watson Co.
City employee pay and benefits have been questioned at many of the city-sponsored Bridging the Budget Gap meetings held this month. Questions arose over the apparent increase in salaries and benefits during the downturn.
Overall benefits and pay have continued to rise due to six collective bargaining agreements covering 62 percent of the city’s workers and the state-operated public employee retirement plan.
“Embedded in those collective bargaining agreements, particularly in public safety, are 5 percent steps until you reach the top of the grade,” Horvath said. “We have 62 percent of our employees that are at the top of the range, which means they have not seen an increase since 2009.”
Horvath added that the city’s non-represented employees have gotten merit increases, even though cost-of-living increases were eliminated. The city eliminated automatic 5 percent step increases in base pay in 2012, but lump-sum payment or base salary adjustments may still occur based on performance.
POLICE AND FIRE DRIVE INCREASES
Union contracts, especially in public safety, have continued to drive up salaries and benefits while the city has reduced its non-public safety staff by 16 percent, including not filling vacant positions. According to the city, the number of full-time employees last week was 1,851, down from 2,091 in 2009. Much of the reduction was done through targeted buyouts of more than 400 employees, not through layoffs or job elimination. Horvath said 268 of those positions remain vacant.
Salaries and benefits paid out of the general fund in fiscal 2009 was $170.8 million, nearly $15.1 million less than what it is in the 2015 budget. This has been driven by the increase in fire and police salaries and benefits from $94.1 million in 2009 to a projected $110.1 million next year.
Joecks said the state laws have protected one class of employees while another class of employees has to bear the brunt of the burden.
The city is careful to emphasize that it has received concessions from all unions, including the elimination of cost-of-living adjustments in 2010. Agreements with unions also will save the city nearly $50 million through June.
City officials said they have not discussed the possibility of layoffs, a step other government entities have taken during the economic downturn.
Joecks said Henderson is “misguided” in putting so much effort into holding community meetings when the vast majority of the expense in salaries and benefits is outside city control.
“They should run a similar campaign to put pressure on lawmakers to fix the collective bargaining laws that are causing these problems,” he said. “Even if (Henderson) makes it through this time, in six years when the economy dips down again, they’re going to be facing the exact same problem. Right now they’re treating the system, and it’s time to treat the disease.”
Contact reporter Arnold M. Knightly at email@example.com or 702-477-3882. Follow on Twitter @KnightlyGrind.