Tacoma’s City Council unanimously dropped the pay ceiling for most city workers about 10 notches Tuesday – from a standard that paid them better than about 70 percent of employees doing similar work to one that’s now above 60 percent of the market.
The move – which amends the city’s “compensation philosophy” approved in 2008 during a city employee pay-structure overhaul – is needed because of Tacoma’s grim budget reality, city officials said.
“This is not necessarily something that says this is the only salary that you’ll get at the bargaining table. Contracts still have to be bargained,” Mayor Marilyn Strickland said Tuesday.
“But given the times that we’re in and our fiduciary responsibility, this is a very sensible, thoughtful thing to do because we need to be on a fiscally sustainable path for the city in the future.”
The council’s action didn’t sit well with at least one city employee union official.
Alice Phillips, president of Tacoma Joint Labor – a coalition of city employee labor unions – said in an email Wednesday her group “is looking at our options.”
“I will tell you it is not acceptable,” added Phillips, who also works as business manager for the International Brotherhood of Electrical Workers Local 483, which represents hundreds of city workers. “(Local) 483 feels that once again the leadership of the City of Tacoma has not followed through on their commitments and have sent a loud and clear message that their approach to issues can not be trusted.”
By adopting the proposed changes Tuesday, the council amended Tacoma’s compensation philosophy – a formalized statement defining values and goals for the city’s employee compensation system – to position “pay at the 60th percentile of the market ”
The adopted changes also included “recognizing the potential for a pay-for-performance program” for nonunion workers, which the city is now considering.
“It is important to review an organization’s compensation philosophy from time to time,” Human Resources Director Joy St. Germain told the council before Tuesday’s vote.
How exactly the changes might affect the pay of current city employees wasn’t readily made clear. City officials said they would not be able to provide a response to The News Tribune’s questions until today.
Tacoma’s compensation philosophy – approved in 2008 after a comprehensive job classification and compensation study – had targeted employee compensation “to be within the 65th to 75th percentile of the market,” St. Germain said.
That meant that once Tacoma employees topped out in the city’s six-step pay system, their pay was above that of 65 to 75 percent of other workers doing the same or similar work in the marketplace. The compensation philosophy also stated that employee benefits should be above the market average.
The City Council set the pay standard five years ago as a way to retain and attract high-quality workers.
Because the market study – completed shortly before the economy tanked – determined that pay for most city union and nonunion workers lagged below the target, the city raised pay for most of its employees from 2009 to 2011.
In all, more than 2,300 workers collected at least $12.5 million in raises during that time, with pay hikes averaging about 8 percent for nonunion workers and ranging from 3.5 percent to 15 percent for union workers. (Police and fire employees aren’t part of the city’s new pay structure and negotiate wages under separate agreements.)
Union officials often point out that, for several years prior to the study, Tacoma’s unionized employees routinely took pay raises below inflationary levels, if they received them at all. The city’s market-based raises merely brought pay levels to where the city promised they’d be, labor officials have said.
But since the study, the economy has soured. During the past two general fund cycles, Tacoma had to close $94 million in budget shortfalls by making across-the-board cuts to departments, shrinking its work force and imposing some new fees.
Yet even amid the budget crisis, the city included about $28 million in new pay hikes to union and nonunion employees in its 2013-14 budget. Most of the increases had been committed to before the latest budget took form, City Manager T.C. Broadnax has said.
Aside from dropping the pay ceiling Tuesday, the city’s amended compensation approach will “address the importance of being fiscally sensitive to changes and business conditions and the ability to pay,” St. Germain said.
“This really represents the fiscal reality that we’re in today,” Strickland added.
“ Given the fact that for ’15-’16, we’re still facing around 5 percent in (budget) reduction, this is fiscally responsible, it’s fair and it helps us maintain our goal of attracting and retaining the best employees.”
Councilman Ryan Mello noted the city also provides its workers with a strong benefits package, including health care, vision, dental and disability coverage and pensions.
“We think about the whole rounded compensation package in order to do everything we can to recruit the best and the brightest,” he firstname.lastname@example.org