What about ‘gainsharing’ for taxpayers?

The city of Las Vegas is still trying to change its approach to compensation in response to the valley's economic slump. Bargaining groups can't ever again expect annual salary increases of between 8 and 10 percent, with guarantee upon unsustainable guarantee.

Nothing is guaranteed anymore. Not when the public suffers through year after year of double-digit unemployment, stagnant wages and reduced opportunity. And not while the city is still searching for efficiencies and cost savings.

So City Manager Betsy Fretwell has proposed a new "gainsharing" program that would reward the municipality's workers with one-time bonuses. Ms. Fretwell and the City Council want to shift compensation toward a performance-based model that, unlike automatic salary increases, better controls the growth of personnel costs.

In a message to city employees last week, Ms. Fretwell proposed giving each worker $549 as a reward for "the many sacrifices that have been made during the past several years of this economic downturn." The city has eliminated about 600 positions and put in place a less-generous salary structure for future hires. Employee groups, meanwhile, have given up many of the pay raises they previously had negotiated to prevent layoffs.

"As currently envisioned, gainsharing will be a policy whereby if city General Fund revenues exceed expenses, a percentage of that excess would be set aside annually in a pool to compensate employees. In simplest terms, it would be similar to profit sharing in the private sector," Ms. Fretwell wrote in her message.

However, Ms. Fretwell's initial $549 bonus doesn't fit her own criteria. It amounts to a sympathy payment to build goodwill with unions for future contract negotiations. Instead of being paid from a budget surplus, the estimated $1.3 million for these bonuses would come from city reserves.

The city had to take $10 million from its savings account to balance the current year's $465 million budget, primarily to restore pay raises and hours workers had lost. A $28 million budget hole exists for fiscal year 2014, largely because of - you guessed it - growing personnel costs. And the city doesn't have the money to pay for an estimated $45 million in required park, road and building maintenance over the next five years. Revenue is expected to remain flat.

Bonuses for achieving a budget surplus are one thing. But a bonus for agreeing to the "sacrifice" of accepting a smaller pay raise equates to no sacrifice in the first place.

Besides, there is an important third party to remember in any "gainsharing." Shouldn't taxpayers share in whatever gains are realized, too? What about bonuses for them, in the form of tax rebates?

Ms. Fretwell's plan is a good starting point for debate on performance-based pay. Her plan to pay bonuses now is not.