The city of Las Vegas is prepared to pay a consulting firm $360,000 to quantify what council members, administrators and taxpayers already know: public employee salaries and benefits are breaking government budgets.
These are the stark numbers the City Council is expected to hear this week before approving the contract: About three-quarters of all city spending is already swallowed by personnel; the city’s labor costs are expected to increase 6.7 percent annually through 2013, while revenues are projected to grow by only 5 percent per year over the same period; and after cutting $20 million from the city’s budget this year, the council can expect annual budget deficits twice as large in each of the next two years.
How did things get so bad? During the valley’s breakneck growth of the 1990s and the first half of this decade, tax revenue poured into public treasuries faster than politicians could spend it. So they handed it over by the truckload to their pals in the public employee unions.
Everyone from firefighters to janitors routinely get annual “step” raises of 4 or 5 percent, plus cost-of-living adjustments of 3 or 4 percent, regardless of performance. In addition to receiving salaries and pay raises that far exceed those awarded in the private sector, public employees pay no Social Security withholding, boosting their take-home pay (and quality of life) by another 6 percent. They pay nothing toward their health insurance premiums, and many pay nothing from their own wages toward their defined-benefit pensions.
To understand how lucrative that benefit is, imagine your employer contributing an amount equivalent to 20 percent of your base salary to your 401(k) account each year without requiring you to set aside a single dime — and then guaranteeing a high rate of return regardless of whether the stock market tanks.
A Las Vegas Chamber of Commerce study released earlier this summer found that state and local government workers in Nevada are paid, on average, 28 percent more than private-sector workers, without considering the costs of public employees’ expensive benefits packages.
Over the years, the City Council and other government overseers have simply shrugged their shoulders while approving new contracts with employee unions, declaring their hands were tied by the secretive collective bargaining process. The taxpayer has been left without a dog in the fight.
But the City Council knows that this type of generosity — allowing expenses to continue to grow faster than revenues — can’t be sustained any longer, even if the local economy quickly recovers from its current slump. So when the city firefighters contract comes up for renewal in 2009 and the rest of the city’s workers follow in 2011, council members want administrators armed with detailed figures that show significantly higher salaries can’t be justified for most city positions. Such information could be the determining factor if contract negotiations fail and go to arbitration.
If the study is authorized by the council, as expected, it will be the city’s first in about 14 years. It would compare the salaries and benefits of city employees to those of other government work forces. An initial review of several positions found some Las Vegas salaries were comparable to their counterparts in cities such as Phoenix and Salt Lake City, as well as other Clark County municipalities. A few were paid 10 to 20 percent more.
If this approach is taken with all city of Las Vegas jobs, it will be a complete waste of time and money. Government salaries have risen significantly faster than those of private industry all across the country. They’ve mushroomed not because of natural market pressures, but because of bogus salary surveys that warn of mass resignations if more pay raises aren’t awarded.
No, this salary survey should finish what the Las Vegas Chamber of Commerce started by comparing city worker salaries and benefits to their private-sector counterparts here in Clark County. Let the city’s lavishly compensated secretaries, landscape maintenance workers, communications professionals, security guards, computer technicians and middle managers see how much better off they are than their privately employed colleagues — and then try to justify even higher pay at the struggling public’s expense.