City, union consider cost-of-living pay cut

Many Las Vegas city employees would see their annual cost-of-living raise decrease by one percentage point under an agreement between the Las Vegas City Employees Association and city officials that is up for approval Wednesday.

If approved by the City Council and union members, the cost-of-living increase for 2009 would be 2.5 percent, down from 3.5 percent. Not affected would be employee step raises, which add about 5 percent to pay. About half of the city’s employees are eligible for these raises. Those that aren’t and have worked at the city at least six years are eligible for longevity pay, which is equal to a half a percent for each year of service with the city until an employee reaches the top of the job’s salary scale. Longevity increases also would not be affected.

The move would save $1.5 million in the first year and $2.8 million in 2011, which is when the existing labor contract is set to expire.

Over the last 15 years, the cost-of-living increase has averaged 3.3 percent, said deputy city manager Betsy Fretwell. Using that figure, she said the change could save the city $23 million over the next five years.

She described the change as a “significant contribution” toward meeting an anticipated $150 million budget shortfall through 2014.

Union president Tommy Ricketts did not respond to requests for comment Friday. Employees in the other three unions that represent city employees have separate contracts and would not be covered by this agreement.

Additionally, it sets the cost-of-living increase for 2011, 2012 and 2013 at 3 percent a year, with the caveat that the City Council can reduce that by up to one percentage point to balance the budget. It also extends the contract expiration date by three years to 2014 and sets criteria that would trigger layoffs if the city’s finances continue to deteriorate.

“We’ve basically been looking for a 1 percent reduction in the growth rate (of personnel costs) and we attained that in this agreement,” Fretwell said.

“It helps us get there. This is one of many pieces of the puzzle that we’re working on.”

The amount the city spends on wages has grown at about 4.7 percent annually. Individual employee increases vary. Some only receive a cost-of-living raise. In any given year, about half of city employees are eligible for step raises, which when combined with the cost-of-living bump could mean an increase of around 8 percent. An employee with no more steps left but with 10 years of service, for example, would get the cost of living plus 5 percent. Longevity pay ends when an employee reaches the top of his or her salary scale, and only the cost-of-living raise would apply.

The souring economy has led to a decline in collections from the consolidated sales tax, which is the biggest source of operating revenue for the city. City projections show another important revenue source — property taxes — decreasing as well.

To meet the deficit, the city is holding positions vacant, trimming non-labor costs and delaying capital projects in order to form a special reserve fund. The council will also consider fee increases as well as a buyout program at Wednesday’s meeting.

The union brought the current proposal forward and negotiated with the city in order to preserve jobs and keep services, according to city documents.

Fretwell said the lower cost-of-living raise combined with the longer contract gives workers stability and city leaders “the flexibility to get the annual increase in alignment with what the city can afford.”

“I think that it’s a reasonable approach,” she said. “It’s a much reduced growth rate. We also have this trigger in the layoffs section. If things continue to get worse, we’re going to have to take additional measures.”

In the months since the budget picture started worsening, some City Council members have talked about the need for changing the city’s wage and benefit practices, such as the annual raises and paid-for insurance premium and retirement contributions.

Councilman Steve Wolfson has said that for new city hires, “perhaps their expectations can be different than the expectations of our current employees.”

And former Councilman Larry Brown, who left the council for the Clark County Commission last month, said in farewell remarks that “the days of automatic raises, automatic this and automatic that, I think they’ll come to an end.”

Contact reporter Alan Choate at achoate@reviewjournal.com or 702-229-6435.