Are government pay raises ‘tone deaf’ right now?
June 9. By Dave Yochum. Raises for government employees appear to be the order of the day as local governments review and approve budgets for the upcoming fiscal year. Annual budgets are being approved in June and officially commence July 1—in the midst of a historic pandemic.
“The County is anticipating a sharp decline in the economy during the 4th quarter of fiscal year 2020 as a result of retail stores, restaurants, and other businesses closing as a result of the Stay at Home Proclamation,” Mecklenburg County Manager Dena Dioro said in her budget presentation for FY 2021.
The temporary closing of local businesses, the reduction in hotel occupancies or the temporary halt of sitting down for a meal at a local restaurant or bar “has had an impact on the dollars that would have circulated through the community,” she said.
Nevertheless Diorio recommended a 3 percent across the board pay raise for all employees, costing taxpayers $9.2 million.
The budget was approved; some $19 million will be appropriated from reserves to offset the anticipated decline in revenue in FY 2021.
Meanwhile, the North Carolina economy continues to suffer from the COVID-19 pandemic. The unemployment rates grew in all of North Carolina’s 100 counties in April. The state’s 12.5 percent jobless rate in April increased 8.2 percentage points from March.
The NC Division of Employment Security reported unemployment 14,929 claims on Monday. Since the pandemic began, there have been more than 1.02 million applicants for state and federal UI benefits.
‘Tone deaf’
PHILLIPS
In Huntersville, Town Commissioner Stacy Phillips said it is “tone deaf to be giving out raises right now” when so many people are out of work.
“We can revisit the budget any time and make an amendment,” she said. “Our obligation is to our community because the people are what make our community great.”
The Huntersville board agreed on a 2 percent raise for town employees, down from the 3 percent recommended by the town manager.
In Cornelius, the proposed $24 million budget contains funds to cover an average 3 percent merit raise for all employees.
MILTICH
Commissioner Mike Miltich suggested that the raises be delayed based on the “difficult circumstances we face” as the effects of the coronavirus continue to unfold.
What is the COVID future?
“I’m just concerned that we don’t know how the finances are going to play out. To me, raises are optional and I wanted to be sure projections were being met before committing the funds,” he said.
Fellow Commissioner Tricia Sisson lent support during a budget discussion back in May. She could not be reached for comment, but it appears Miltich doesn’t have the votes to postpone or reduce raises.
The town could use fund balance reserves to make up for short-falls in revenue, as well as cost-cutting elsewhere. The tax rate for next year likely will be the same as this years rate: 0.222 cents per $100 assessed value.
The budget document says: “The Town will closely monitor economic conditions, and when warranted, adjust budgets mid-year to meet revenue estimates and minimize unplanned uses of fund balance. The Town will also monitor the impact of federal and state budget decisions on the Town’s financial outlook.”
The second public hearing on the Cornelius budget will be Monday evening, June 15, with a final board vote at a special meeting June 18.
Precisely where we are economically speaking is anyone’s guess. While economists predicted the national unemployment rate might hit 20 percent in May, it actually fell from 14.7 percent to 13.3 percent.
Cash infusion
Nationally speaking, part of the economy reopened and the Paycheck Protection Program steered $660 billion in loans to businesses with incentives for rehiring employees.
But apparently the Bureau of Labor Statistics said it erred around data classifications in March, April and May. Without the error, the unemployment rate would be higher: 16.3 percent for May, down from 19.7 percent for April.
On the federal level, it looks like President Trump is expressing confidence in the economy. The White House is recommending a 1 percent increase for civilian federal employees. In each of the last two years Trump initially pushed for salary freezes.
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Fact: The Town is not using fund balance to support raises or any other item in the budget. As for merit raises, a little more money in the hands of our police, fire fighters, and staff means a little more spending and a little more spending is good for local business.
It’s Economics 101. The Feds are pumping trillions into the economy for economic stimulus, so is it now incumbent for Cornelius to do less for our folks?
At my office no raises and no bonuses this year. That coupled with unemployment for nearly 3 months makes it difficult for me to agree with raises for government employees other than police and fire. I just think with the difficulties faced by the taxpayer at this time, it is somewhat insulting for government employees to vote themselves a raise. Just my opinion. (I have always thought it unethical for government employees to be able to vote for their own raises.). Just to let you know where I stand. Stay safe and Good bless.
Well how is it different than an employee getting a raise when they work for a bank, corporation,etc? The employee does not vote for any type of raise whether it is merit based or a cost of living adjustment. That would be the town board of commissioners.
Fact: Commissioner Duke is economically illiterate.
Ouch! I’ve got an MBA in Financial Management and more economics courses than most, so there! I get your concerns about raises, but not your rudeness.
Mr Grant’s proposed budget for this coming year, a year that is filled with financial uncertainty caused by COVID-19, includes a 3% merit pay pool. I suggested to the Manager, and my fellow Commissioners, to defer any discretionary spending, such as raises, until such time that the Town is assured the finances are as projected. That should be known by February. We are fortunate to have such exemplary staff working for Cornelius, and I’m very much in favor of a merit pay increase. I am just concerned about the Town’s finances in these unprecedented times. Comments on the budget can be emailed to [email protected]. Public Hearing is June 15th, and vote will be June 18th Special Meeting.
Given the uncertainty that has been thrust upon all at “ This Time”…..I believe that the 3% compensation increase line item is inconsistent with the circumstance in the proposed budget…”This Time”. I encourage our commissioners to think carefully on this before their final Vote for “ Our Town”
Like all I hope as the picture clears that “ Things will get better”. For All? $ wise and otherwise.
Regards
Town Manager Grant and his team have worked very hard to present a budget proposal that is conservative and includes expense reduction levers as needed. An independent study documented the need for compensation improvement for our Town staff. Although there is much work to be done… I am confident that the LKN area and Cornelius will rebound quickly from the effects of the Governor’s prolonged SAH order. The town is well managed and we have a solid balance sheet. We will not be using our fund balance but rather adding to it this year. The merit raise proposal is not across the board… recognition will be given to the staff and sworn officers that are getting us through these difficult times.
No need to take short term , symbolic punitive action that could have longer term negative consequences .
From the FY 21 budget document: “The Town will closely monitor economic conditions, and when warranted, adjust budgets mid-year to meet revenue estimates and minimize unplanned uses of fund balance. The Town will also monitor the impact of federal and state budget decisions on the Town’s financial outlook.”
Federal workers are paid twice the private employees, receive three times the benefits, Dental, Optical. The retire in their 50’s, work 9:00 to 3:30, receive step-increases yearly, average salary over $90,000. Federal workers owe $billions to IRS because they will not pay payroll taxes. Federal workers received $450 million in bonuses last year – hundreds of them for over $40,000. Federal workers are lazy and immoral stealing from a real retirement Trust – Social Security – to pay for millionaire Congressmen. Average Congressman has $ 3 l/2 million net worth but continues to rob the Pension trust of middle-class (average disposable income $33,000) to wallow in filth with his Federal brethrens who contribute virtually nothing.. Average Social Security recipient receives $1,000 month and received filthy l.7% cola which is applicable only to people with “earned benefits”. Means test glutton Congress and term limits, Federal employees should also be means tested and pay for their own Cadillac benefits and retire at 65. I don’t want to be supporting this disgusting bunch for 30 to 40 years.