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Cornelius News

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’


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.


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.