Repeating pay-raise mistakes

Everyone wants a pay raise. A highly productive, fortunate few of us might actually get one.

But after nearly six years of economic suffering, everyone can’t get a pay raise. For too many businesses, even those no longer on life support, the money simply isn’t there.

Government has a different reality. Southern Nevada governments are in worse shape than most of the businesses that support them, with expenditures exceeding revenues, reserves providing what little money is available to spare and future budget deficits on the horizon. The money simply isn’t there for everyone in the public sector to get a pay raise.

Yet pay raises are being handed out like candy. You won’t get a pay raise, but you’ll pick up the tab so your government workers can get one.

This wasn’t supposed to happen. A handful of elected officials who are generally supportive of bargaining groups swore during the Great Recession that the fat years would never return. In those days, government workforces across the valley received average annual pay raises of between 8 and 10 percent through iron-clad four-year contracts. No one ever said no because they didn’t have to. The tax money was pouring in too fast to spend.

But it’s not enough to have fixed wage scales that allow government workers to pick up “step” pay raises for gaining additional years of experience. They have to get Cost of Living Adjustments as well. And merit premiums. And longevity bonuses. And on and on.

This summer has been brutal for anyone charged with watching government ledgers or negotiating public employee contracts.

First, the low-profile Las Vegas-Clark County Library District awarded its union employees a three-year contract with 3 percent annual pay raises. That reset the bar for every other bargaining group.

Last month, the Las Vegas Convention and Visitors Authority board responded by giving its unionized workers, represented by the Service Employees International Union, a five-year contract with 3 percent annual raises through 2015, a 2.5 percent raise in 2016 and 2017 and a 2 percent raise in 2018.

A few days later, the Las Vegas City Council signed off on a four-year deal for its firefighters. The pay raises were smaller, to be sure, with 1.5 percent pay raises in the second and third years and a 2 percent bump in the fourth. But the deal also included a $500 per firefighter, per pay period, contribution to their medical benefits. How many people in the private sector, in the ObamaCare era, are getting up to $13,000 for expanded health care?

Two weeks ago, the Clark County Commission awarded a 2 percent pay raise to 750 nonunion employees, while eliminating longevity pay for such future hires.

Days later, the Clark County School Board approved for 10,000 support employees, including bus drivers and janitors, a 2 percent pay raise, plus an additional 1 percent raise to cover an increase in their pension contributions. However, that agreement also freezes “step” pay increases through 2015. Restrained, yes. But still a stretch for a system that cries poverty.

With its LVCVA deal done, the SEIU clearly wants something comparable from Clark County for its roughly 5,000 members there. This month, the SEIU Local 1107 rejected a contract that offered a 2 percent COLA (even though it has no nexus to the Consumer Price Index) and a 2 percent “merit” pay raise, according to a memo obtained by the Review-Journal’s Ben Botkin.

Can you imagine turning down a 4 percent bump? This from a bargaining group that has seen its members’ pay grow by 13.5 percent since July 1, 2008, according to the county. In fact, across all local governments in Clark County, payrolls increased 10 percent from the end of 2007 to the end of 2012, according to the Nevada Department of Employment, Training and Rehabilitation. During the same period, private-sector payrolls were flat.

No local government will be able to hold the line when additional contracts come up for negotiation. They have no leverage. Every other entity is boosting payroll, even if there’s no revenue to cover it.

All this serves to remind the public what it pays for, and what it’ll get if higher taxes are imposed. The sales tax increase being contemplated by the Clark County Commission to bolster police budgets would allow Las Vegas officers to collect pay raises. And you can bet that if voters pass the 2 percent margins tax next year, the teachers union will apply all kinds of pressure to gain big pay raises — and thereby diminish the number of new teachers that can be hired.

Nevada’s pay-raise politics have left the state with one of the smallest, best-paid government workforces in the country, and the Great Recession has made the problem worse.

In 2008, Henderson had 2,091 full-time equivalent employees and $206.6 million in general fund expenditures. For the just-concluded fiscal year 2013, the city had a workforce of 1,867 with $211 million in expenditures. Las Vegas had 3,213 employees in 2008 under a budget of $519.4 million. Last year, it had 3,090 workers under estimated expenditures of $465.5 million. Clark County had 8,505 workers in 2008 under expenditures of $1.432 billion. At the end of 2012, it had 6,821 workers under estimated spending of $1.177 billion.

Controlling payroll growth remains the greatest political, financial and policy challenge for Southern Nevada’s local governments. This is not about hating public employees or diminishing the work many of them do. It is about math and fairness. Local government employees already are paid more money than their private-sector peers, but wages largely remain stagnant in the business world.

It appears our elected leaders already have forgotten whatever lessons the Great Recession taught them — if they ever learned them in the first place.

Glenn Cook (gcook@reviewjournal) is the Las Vegas Review-Journal’s senior editorial writer. Follow him on Twitter: @Glenn_CookNV. Listen to him Mondays at 4 p.m. on “Live and Local with Kevin Wall” on KXNT News Radio, 100.5 FM, 840 AM.

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