I feel compelled to respond to the East Bay Times guest commentary “Richmond's compensation is driving its budget deficit,” by Ben Steinberg and Jack Weir, because it does not accurately describe Richmond’s fiscal situation.
I don’t know why a reputable newspaper like the East Bay Times will let anybody publish a guest commentary so full of factual misinformation and unsubstantiated conclusions.
First, Richmond does not have a $10.2 million budget deficit. The budget for FY 2015-16 was balanced, and continues to trend toward an even larger surplus as the fiscal year draws to an end. For FY 2016-17, the city manager will deliver a proposed budget that is structurally balanced on June 7, 2016. Hopefully, the City Council will adopt it.
Second, stories like the one authored by Steinberg and Weir often appear to be revelations about public sector compensation, in this case from “Transparent California.” The fact is that public employee compensation in Richmond and everywhere else in California is a public record, completely transparent and readily available to anyone at any time from the State Controller at http://publicpay.ca.gov/. Transparency is 100% all the time.
Messrs. Steinberg and Weir strangely argue, “the city has shifted resources away from providing municipal services to residents while increasing funding for employee compensation.” Who do Steinberg and Weir think provides services? Municipal services are largely provided by people – city employees such as cops, firefighters, building inspectors, landscapers and librarians. They don’t work for free, and there is no evidence that Richmond City employees are paid extravagantly compared to other cities.
In fact, Richmond has been dramatically reducing its number of employees since 2004 when the city had over 1,000 employees, when the population was almost as high as it is in 2016. With slightly over 700 employees in 2016, Richmond has dropped nearly 300 positions but still provides more services on a per capita basis than in 2004.
Comparing Richmond to Albany and Concord makes no sense. Richmond bears as much resemblance to Albany as a Great Dane resembles a Chihuahua. Steinberg and Weir write, “ the average Albany resident pays approximately $700 annually toward public employee compensation, $300 less than neighboring Richmond.” The two cities are completely different. Richmond has a population of nearly 110,000, a General Fund budget of over $140 million and operates a port, a wastewater system, a housing authority and an Employment and Training Department. Albany has a population of only 19,192 and a General Fund budget of about $23 million – and no port, no wastewater system, no housing authority and no Employment and Training Department. .
After making irrelevant comparisons between Albany and Richmond, Steinberg and Weir move on to Concord, writing “Although nearby Concord has a larger population of 125,000, it only has 319 year-round, full-time employees. While Richmond has one city employee for every 144 residents, Concord only has one city employee for every 390 residents.” There is a good reason for this. Concord doesn’t have several major departments that Richmond has, including a Fire Department, Library, a Port, Employment and Training Department, and a Housing Authority, which account for 195 Richmond employees. Concord receives all of these services from Contra Costa County.
Transparent California may report municipal compensation, but they apparently don’t analyze the data. Neither do Steinberg and Weir, who critically note “Richmond's fire chief in 2014 earned more than $560,000 in salary and benefits.” What they neglected to explain is that in 2014, the fire chief retired after decades of service, and the $560,000 was for his final year of compensation, not his salary in a “normal” work year. This number included vacation and sick leave buyouts, totaling $286,233, an amount earned by the fire chief that the city of Richmond was legally required to pay upon his retirement. The current Richmond fire chief’s salary is only $213,900, and benefits add another $165,157.
One place that Richmond stands out from many other cities is the relative amount of the police budget. When many cities cut their police budget, and consequently the number of officers, during the recession, Richmond did not. One of the results is that Richmond disappeared from the list of the ten most dangerous cities in the U.S. and in California. Those Bay Area cities that made cuts are now on the latest list of California’s ten most dangerous cities, including Stockton (2), Vallejo (4), Oakland (6) and Antioch (7). We believe Richmond residents would rather be safe than unnecessarily frugal.
Steinberg and Weir repeat the often played Measure U refrain, “In 2014, Richmond urged voters to pass Measure U, a half-cent sales tax deemed necessary to fund essential city services, like the pavings of roads. After Richmond voters dutifully passed Measure U, the city manager and City Council within weeks redirected Measure U proceeds to plug its budget deficit at that time.” Well, the actual title for Measure U that appeared on the ballot contained 36 words, only two of which mentioned “street paving.”
Shall the City of Richmond adopt a one-half cent transactions and use (sales) tax, to fund and maintain essential city services, such as public safety, public health and wellness programs, city youth programs and street paving?
In fact, the first year’s proceeds from Measure U were used for all these things (“essential city services, such as public safety, public health and wellness programs, city youth programs and street paving”). The budget for street maintenance in this current budget year (FY 2015-16) was substantially increased from FY 2014-15. Steinberg and Weir could have looked at the budget (http://www.ci.richmond.ca.us/DocumentCenter/View/34458) and found, for example, that the number of “city blocks resurfaced” rose from 80 to 96, and the number of potholes filled from 2,100 to 3,000. The Pavement Condition Index (PCI) was projected to rise from 62 to 63. The only thing the City did not do, with an abundance of caution, was to immediately float a bond for street repairs that would have tied up Measure U revenue for many years to come.
Steinberg and Weir naively believe that the way you cut a budget is to just reduce compensation. Unfortunately, it doesn’t work that way in either the private sector or the public sector. There is a marketplace for public employees, and if you want the best people, or even competent people, you have to pay the price. You can’t just make a lower offer and expect to be flooded with good applications. Nowhere is this better illustrated than in law enforcement, where cities and counties compete with each other constantly, poaching each other’s cops with better compensation offers.
Even so, Richmond has done a good job holding the line on both compensation and benefits. Since 2004, the CPI increase in the Bay Area has averaged 2.5% a year. For Richmond employees represented by SEIU, (which includes the majority of the City’s non-public-safety employees), the average across-the-board increase has been 1.8%. For those represented by Local 21 (mid-level management), the average is 2%; for sworn fire and police personnel the average across-the-board is 3%. While sworn personnel averaged a slightly higher across-the-board increase than the CPI, the positive impact of the slightly higher salaries has been to attract the top candidates for sworn positions. In contrast, Antioch, a city with a similar population, currently has a polic force half the size of Richmond and was just ranked the 7th most dangerous city in California. Vallejo, Stockton, and Oakland, all of which substantially cut the number of their police personnel during the past decade, are each in the top ten ranking of most dangerous cities in California.
In 2004, all City of Richmond employees began paying for their share of PERS retirement (Richmond was the first city in Contra Costa County to have city employees pay the employee’s share of PERS). This change in how PERS was paid, resulted in an 8% pay cut for miscellaneous employees and a 9% pay cut for sworn safety personnel. Taking this into consideration, the above cited across-the-board salary increase, in reality, only resulted in a net gain for employees represented by SEIU of 1%; 1.2% for those employees represented by Local 21; and only a 2.2% across-the board net gain salary increase for sworn safety personnel, which are all below the Bay Area CPI for the same time period.
Finally, Steinberg and Weir believe that poor residents do not deserve the same services and quality of life that wealthier people do. They write, “The city is asking its distressed, low-income population to foot an ever-growing bill while reducing services like street paving and library hours.” There is no question that Richmond is not a wealthy city. In fact, of 101 cities in the nine-county Bay Area, Richmond has the next to lowest median family income of any – exceeded only by San Pablo. Does that mean Richmond residents should just suck it up and tolerate crime, blight and ignorance? Of course not. But we have had to get creative and create revenue streams that are not dependent, like richer cities, on retail sales and real estate values. We have a higher utility user tax than most cities, higher sales taxes (like Measure U) and even a marijuana tax.
Managing a city with Richmond’s challenges takes perseverance and creativity. Criticizing is easy, but finding solutions is hard work. I would hope that people like Steinberg and Weir would roll up their sleeves and become part of the solution rather than simply being problem mongers.
Tom Butt, Mayor
Richmond's compensation is driving its budget deficit (East Bay Times guest commentary)
By Ben Steinberg and Jack Weir East Bay Times My Word
Posted: 05/25/2016 04:00:00 PM PDT | Updated: about 15 hours ago
Richmond is required to pass a balanced budget by June 30, but the city suffers from a persistent budget deficit. Recently, the projected deficit amounted to $10.2 million.
To close the gap, city officials propose to cut vital services to residents while largely ignoring that compensation for municipal employees is really driving the deficit.
Even across the board cuts and the elimination of many city programs cannot achieve a balanced budget without fundamental reforms to salary structure and the overall size of the city workforce.
Why? In recent years the city has shifted resources away from providing municipal services to residents while increasing funding for employee compensation.
The city is forcing financially distressed residents in Richmond to swallow these steep costs. According to Transparent California, a nonpartisan think tank that gathers public employee compensation through public record requests, Richmond's fire chief in 2014 earned more than $560,000 in salary and benefits. In fact, more than 20 Richmond employees earned more than $300,000 in salary and benefits while more than 200 Richmond employees received more than $200,000 in salary and benefits.
The average Richmond full-time employee earns $130,000 in total compensation.
When considering that the average Richmond resident earns less than $40,000 full-time in the private sector, these figures become even more shocking.
With just more than 106,000 residents, the average resident pays slightly more than $1,000 in annual compensation to Richmond city workers.
The city is asking its distressed, low-income population to foot an ever-growing bill while reducing services like street paving and library hours. While people want first responders to be fairly compensated, at what point does "fair" become "extravagant"?
In contrast, the city of Albany's police chief, the city's highest paid employee, earned $255,000 in salary and benefits in 2014. While the median resident earned more than $80,000 annually, the average Albany resident pays approximately $700 annually toward public employee compensation, $300 less than neighboring Richmond.
Additionally, Richmond's workforce appears to be bloated. With a population of 106,000, Richmond has 735 year-round, full-time employees.
Although nearby Concord has a larger population of 125,000, it only has 319 year-round, full-time employees. While Richmond has one city employee for every 144 residents, Concord only has one city employee for every 390 residents.
When including part-time employees, Richmond pays total compensation of $116 million total for all city employees. Concord, on the other hand, only pays about $54 million.
In 2014, Richmond urged voters to pass Measure U, a half-cent sales tax deemed necessary to fund essential city services, like the pavings of roads. After Richmond voters dutifully passed Measure U, the city manager and City Council within weeks redirected Measure U proceeds to plug its budget deficit at that time.
Rather than reform an unsustainable salary structure at that time, Richmond just kicked the can down the road. Unfortunately, as compensation rises, long-term pension benefits costs continue to increase.
If the city manager and City Council cannot rein in these excessive costs, Richmond residents should demand an independent review of Richmond's salary structure and the makeup of its workforce.
This review should indicate market rates in compensation and benefits for city employees, particularly for senior managers and department heads, as well as the typical staffing levels.
Richmond residents must then ensure that the city manager and City Council implement the recommendations fairly. This is the only way to stop the perennial budget deficits and to balance services for residents with affordable compensation for its employees.
Ben Steinberg is a Richmond resident and Jack Weir is president of the Contra Costa Taxpayers Association.