Pierce County pay raises: They’re complicated

Pierce County government workers’ pay rose by nearly one-quarter from 2005 to 2009, far faster than inflation or private wages during the same period.

County workers’ average annual pay grew by more than 23 percent – from $51,038 to $62,866 – during that time, according to a News Tribune analysis of county reports to the state Employment Security Department.

Even as the economy tanked and the county faced a budget crisis, the raises continued. And the raises will come even as the County Council prepares to adopt a budget this week likely to cut services and positions while raising fees.

All county workers got at least a 2.5 percent cost-of-living pay hike this year, and they’re scheduled to get another 2.5 percent raise Jan. 1. Pierce County Executive Pat McCarthy and County Council members are set to get a 3 percent boost. The raises come even as the local Consumer Price Index dropped 0.5 percent between July 1, 2009, and June 30, 2010.

McCarthy defends Pierce County’s recent raises, though she points out that it’s a system she inherited when she took office Jan. 1, 2009.

“Since I walked in the door, there’s always been talk about salaries, about benefits, about COLA” (cost-of-living adjustments), McCarthy said. She and her staff are working to change the overall approach to bargaining contracts and the meting out of raises, but doing that requires thoughtful, systematic planning, she added.

“The public expects us to be smart. They expect us to be strategic in how we do things,” McCarthy said. “I wish it could be faster, but we’re governed by strict state and federal labor laws.”

As the nation’s fortunes shifted, and local governments went from boom times to bad times, salary-rate guarantees built into union contracts obligated Pierce County to pay more than half its work force at least 2.5 percent more a year, even if inflation was lower.

Many of the pacts, which run through Dec. 31, 2011, were negotiated in the fall of 2008 and early in 2009, as Congress worked to bail out Wall Street, Washington Mutual failed, and county revenues plunged.

A sense of fairness – and a reluctance to give unrepresented employees a reason to organize – caused leaders to give nonunion workers the same kinds of raises, Deputy County Executive Kevin Phelps said last week.

Still, other governments have managed to put on the pay brakes.

The state Legislature, by comparison, imposed a 12-month freeze on cost-of-living raises for exempt employees in 2009. This year, lawmakers extended the no-raise law through June 30, 2011. Raises built into union contracts are still being paid.

McCarthy’s predecessor, John Ladenburg, said Thursday that even as the pacts were bargained in 2008 and the 2.5 percent “floor,” or minimum raise, was adopted, “no one assumed that we would fall into the worst economy in 80 years.”

BUDGET CRUNCH

The County Council is expected to adopt a $760 million 2011 budget package Tuesday that will include the cost-of-living raises, as well as “step” increases. The general fund, which pays for most public services, including law enforcement and courts, totals around $268 million.

Overall, the cost-of-living raises will total about $5.4 million, budget officials said, split almost evenly between unionized and nonrepresented employees.

McCarthy’s proposed overall budget package is about 6 percent less than the 2010 spending plan. It calls for cutting around 32 positions.

Could the council cancel the raises that aren’t governed by union contracts? The answer is yes. But council members generally agree with Phelps and McCarthy that it would be unwise and unfair to create haves and have-nots by allowing union workers raises and freezing base pay for unrepresented employees, Council Chairman Roger Bush said.

“I don’t think there’s a desire on the part of any council members to drive a wedge between” classes of workers, he added.

Though the council by law adopts the budget, Bush points out that “labor contracts are negotiated in the executive branch.”

The budget is still in the final stages of preparation, but in presentations over the last couple of weeks, department directors told council members they’re planning for – and the public can expect – occasional office closures for furlough days; parks closures in the off season and shaggy lawns during the summer; higher sewer rates; and increased fees for building permits, ballfield rental and a wide array of other services.

McCarthy says she knows it’s likely the media and the public might connect the dots between higher salaries, fewer services and increased fees, but that wouldn’t take in the total picture.

“If you don’t have a conversation in context, you have a skewed view,” she said.

As the recession deepened in 2009, the county cut $6 million out of its budget to make up for declining tax and other revenues. Last year, the council adopted a 2010 budget that cut more than 300 jobs and raised fees in many areas. Sewer bills went up by 15 percent. Surface water charges went up, parks fees were increased, and building and permit fees were raised.

Since 2005, the county’s work force has shrunk by 187 – from 3,216 in 2005 to a projected 3,029 next year.

Those kinds of cuts and increases are happening in governments everywhere as tax receipts sag and building activity is sluggish, McCarthy said. She says she’s sleuthing for efficiencies whereever she can, combining departments and closing expensive facilities such as the energy-gobbling Puget Sound Hospital to save money.

LABOR COSTS

There’s no getting around it – people are by far the county’s biggest general government expense. Pay and benefits account for 72.5 percent of the proposed $268.5 million 2011 general fund budget. That’s up from 68 percent of the county’s $233 million general fund in 2005.

By whatever measure, there is evidence that salaries are rising, often in ways that consternate taxpayers.

A News Tribune analysis earlier this year found that 1 of every 8 full-time county employees was paid at least $100,000 in 2009.

When the newspaper reported on new contracts negotiated by McCarthy’s office, then approved by the County Council in July, many readers were outraged.

The Pierce County Captains Association, which represents some officers in the Sheriff’s Department, got a contract with raises totaling 10.5 percent between Jan. 1, 2009, and Jan. 1, 2011,

“Powerful unions are at the heart of the matter,” GaryW209 commented on thenewstribune.com. “Public sector unions are doing to cities and counties exactly what the auto workers did to Detroit. … It’s time to call their bluff.”

County Council members approved the Captains Association agreement and two other pacts July 19 but made it clear they weren’t happy.

“We can’t keep going in the hole,” Councilwoman Joyce McDonald, R-Puyallup, said at the time. The consumer price index was a negative 0.5 percent for the previous year. The unions keep getting increases, she said. “I think we’re all lucky to have jobs at this point in the game.”

The raises are significant.

The three-year fiscal impact of raises in the five-member Captains Association is $352,000, county records show. The one-year tab for raises in the 305-member Pierce County Corrections Guild, which represents jail workers, is $549,000.

DANCING WITH LABOR

Some 1,700 county employees are covered under union contracts; 1,400 workers are not.

It may sound easy to simply freeze wages if nonunion workers aren’t covered by contracts, Deputy Executive Phelps says. But it’s not.

“The minute we give the prosecuting attorneys a 2.5 percent raise but not the attorneys in the Department of Assigned Counsel,” a union could form overnight, he said.

Former Executive Ladenburg agrees. “That’s exactly what the unions wanted us to do is not grant any raises to nonrepresented employees,” he said, so they would organize and boost the ranks of union workers.

Having workers with whom you don’t have to bargain every shift change, duty assignment or furlough gives the county more flexibility to manage in every economy, particularly during a recession, Phelps and McCarthy said.

Some analysts point out that higher wages in the public sector can reflect both bargaining power and higher numbers of white-collar workers with college degrees than in private industry.

Other factors increasing public sector average wages include greater job security than in the private sector, resulting in less turnover and more senior employees high on the salary scale, said Bruce Mann, a professor of economics at the University of Puget Sound.

“Almost everyone gets an increase every year in the public sector,” he added.

In addition, there’s a “much more effective and stronger union presence in the public sector,” Mann said. “Unions exist because they deliver.”

McCarthy asked Pierce County’s unions in August to forgo their cost-of-living raises in 2011 in an effort to curb costs. But that required reopening contracts, a complex move than didn’t happen in time for the budget process.

King County recently reached agreements with nearly all of its union workers for no cost-of-living raise next year. Executive Dow Constantine plans to extend it to nonrepresented workers.

Phelps says it’s not fair to compare the two. There are differences in health care and other benefits between the counties, he said.

Overall, Pierce County is lining up all its union contracts with common expiration dates, so it will be easier to bargain with all parties on the same level, Phelps said. Last week, McCarthy wrote to the county’s bargaining units, asking if they’d consider rolling their existing contracts over into 2012 “with a different COLA formula that reflects the unprecedented lack of growth (deflation) in the Consumer Price Index and our continued fiscal crisis.”

Alice Phillips, business agent for IBEW Local 483, which represents seven traffic signal technicians, said her union is “always willing to step up to the plate and help our companies remain healthy,” though she chided the county for its August request.

“The county would be well-advised to include us much sooner in the process,” she said.

“You go out to your employees after the crisis has become evident, you say, ‘We need this done in a month.’ … These things have to be well-thought-out,” she added. “You can’t just run into a fire with a garden hose.”

She noted that IBEW has put in a zero floor in other contracts, which would mean no raises if there was no inflation. But members also want to be protected in case of runaway inflation, she said.

County officials point out that they froze the amount the county pays toward employee health insurance benefits. For the first time ever, employees were asked to pay part of their individual health insurance premium in 2010. Until this year, they paid a portion only if they covered family members.

That change, plus reductions in some benefits and higher copays for services, transferred about $4.5 million in costs to workers – more than canceling out the $4 million paid out in cost-of-living raises for 2010, Phelps said.

The move “was huge” for union members, Phillips said. “It makes the household budget challenging” when something’s taken out of your paycheck that wasn’t before.

Employee costs will rise again in 2011, Phelps said.

Said McCarthy of the county’s labor relations: “If I’m a citizen, what I would want to know is, ‘What have you done to live within the means that we have provided you? Have you made appropriate accommodations? Have employees had to shoulder this burden?’”

If you consider health care cost sharing, furloughs and layoffs, she says, the answer is yes.

Kris Sherman: 253-597-8659 kris.sherman@thenewstribune.com