In financial crisis, Las Vegas doles out bonuses, cites future savings
City officials say there is significant long-term cost savings afforded by providing unionized workers with one-time payouts, instead of ongoing cost-of-living increases.
The Las Vegas City Council unanimously agreed Wednesday to pay nearly 2,000 city employees more than $6 million in bonuses as the city faces perhaps the worst financial crisis in its history.
But city officials say there is significant long-term cost savings afforded by providing unionized workers with one-time payouts, instead of ongoing cost-of-living increases, that will contribute to closing a projected budget deficit in the future. And an estimated $1.7 million will be covered by federal funding.
Still, the city employees avoided the type of concessions made on Tuesday by most Clark County workers, who agreed to cut their hours by 5 percent over the next year to save the county roughly $33 million as it, too, deals with a financial crisis brought on by statewide closures in response to the coronavirus pandemic.
City employees also were able to sidestep 6 percent concessions being contemplated as late as last month in order to prevent layoffs.
‘Strange and difficult time’
Instead 1,960 employees represented in contracts for two unions, the Las Vegas City Employees’ Association and the International Association of Fire Fighters, will receive lump-sum payouts as part of labor deals through June 30, 2021.
The bonuses are based on annual salary, including base and longevity pay, according to copies of the contracts. Unlike cost-of-living increases, they will not compound over time or affect pensions.
City officials on Wednesday lauded both labor groups for cooperation during what Councilman Brian Knudsen called “such a strange and difficult time financially for the city.”
More than 1,250 employees represented by the LVCEA, the city’s largest labor group, will receive a 3.23 percent bonus. More than 700 IAFF workers will get a 5.5 percent bonus, split over two fiscal years: the current year and the one that starts July 1, because the union had been operating without a contract since June 2019.
“We got one year,” LVCEA President DeAndre Caruthers told the council. “Let’s right this ship, and let’s keep pushing forward and keep doing what we do best and that’s serve the city.”
The construction of the LVCEA labor deal is markedly different from how union leaders described it in a letter sent out to members last month, when they said the bonus would constitute hazard pay. Caruthers said then that he believed the city intended to bankroll the payment to members, whether or not they had been working, with federal coronavirus relief funding through the CARES Act. He could not be reached by phone late Wednesday.
At the time, city officials would not comment on the tentative agreement because it had not been ratified by city lawmakers. On Wednesday, the city said it would not designate the bonus as hazard pay nor use CARES Act funding to pay for that bonus. City documents show it will be paid through “various funds.”
However, the lump-sum payout to the firefighters union for the current fiscal year, roughly $1.7 million, will be paid through federal coronavirus relief funding as hazard pay, according to the city, which said it is allowed by U.S. Treasury guidelines.
While the federal government has advised that workforce bonuses are ineligible expenses, hazard pay is eligible on a case-by-case basis, described as “additional pay for performing hazardous duty or work involving physical hardship” related to the coronavirus.
The estimated other $1.7 million in bonuses to the firefighters’ union for the coming fiscal year, like the roughly $2.9 million in bonuses to the LVCEA, will be paid by the city. But despite doling out about $4.6 million, the city said it is expected to save more than $5.5 million during fiscal year 2022 by not providing a traditional cost-of-living payment.
The city has said it intends to use the vast majority of its $119 million direct allocation in CARES Act funding on public safety payroll between March and June. That plan, in addition to savings from an ongoing hiring freeze and “other budget decrements,” allowed the city to afford the bonuses not paid through CARES Act funding, it said.
“Were it not for CARES Act funding, we would be in a very different situation than we are at this moment,” City Manager Scott Adams told the council.
Contact Shea Johnson at email@example.com or 702-383-0272. Follow @Shea_LVRJ on Twitter.