City Mulls Funding Options For Employee Salary Hikes

SALISBURY — A number of cost reduction efforts and revenue boosts were examined by the Salisbury City Council this week with the goal of finding a way to fund a city-wide employee pay increase.
City administration was able to put together a plan that would cover the pay increases, though members of the council questioned whether some were necessary or possibly even damaging to the relationship between Salisbury and Wicomico County.
There may have been some dispute over how pay raises would be financed, but there was unanimous agreement from Mayor Jim Ireton and the council members at Monday’s work session that an increase is a necessity.
“We’ve balanced the budget the last six years on the backs of our employees with our furloughs, with frozen positions,” said Ireton. “The amount of money they’ve given up over the last several years, that’s their retirement, that’s all of the things moving forward.”
The pay increase is based on the results of a study concluded in August by Evergreen Solutions, LLC, which found that city employees are about 14-percent below market averages in salary and that the current policy is “no longer competitive with its overall ranges and structures.” In response, Evergreen suggested a three-step, nearly $750,000 plan to make Salisbury more competitive in attracting and retaining employees.
Using that study as a starting point, Ireton explained that the city’s Human Resources Department further analyzed the numbers and came up with a slightly modified plan that would require a $698,846 compensation increase over a longer time frame from the general fund. Of that, $450,832 would go toward increasing minimum salary and step increases for employees with $248,014 funneled toward making existing salaries more comparable to the public sector market.
Only $225,416 would be applied in Fiscal Year 2014 and would be used for the minimum and step portion of the increase.
To cover the nearly $700,000 compensation increase for the remainder of this year and next year, $1,016,000 would be generated from the general fund. Besides the $1,016,000 that would come from the general fund, $424,991 would be pulled from expense reductions from the water and sewer fund for a combined $1,440,991, which would fund the pay increase for the remainder of FY13 through FY14. The water and sewer fund would come with an additional compensation increase for employees of $344,089, bringing that total up to $1,042,935.
The numbers may be slightly different than what Evergreen pitched, said Ireton, but the effects should be felt by more employees.
“The amount that we are recommending today is less than Evergreen’s recommendation and there also is a plan that covers all of our employees,” the mayor said. “We looked at all of our employees and not just the ones that were bench marked by Evergreen.”
The new plan would guarantee all employees at least a 2-percent raise, with those in areas like public works, who have gone the longest with the lowest rates, seeing a higher bump. There would also be a reorganization of pay steps to keep the city more competitive in the years to come.
Such a pay increase is past due, according to Councilwoman Shanie Shields, who was enthusiastic about moving forward.
“I want to dance,” she said. “I’m happy.”
Council President Jake Day was also in favor of the pay bump.
“In principle, I think there is nothing worse than showing your team that you’re not concerned with them and you don’t value them and under-compensate,” he said. “And I think that’s true in any business or any organization and I think that’s true here. Not only do we owe our employees but we should have the best team possible and to motivate them we should have fair compensation.”
How the city would fund it was Day’s concern. Day took issue with one of the cost reductions, deferring repairs for the River Walk, and one of the revenue increases, taking over fire inspections from the county.
“I just wonder if that’s really the best place to raise revenue in order to implement this plan,” Day said.
The takeover of fire inspection services, a projected $150,000 revenue increase, especially concerned Day. The service is currently run by the county, and while Day acknowledged that the city might want to start a dialogue and perhaps eventually perform that role, taking the service over for quick revenue might sour things between Wicomico and Salisbury.
“I don’t think we’re in a position where we know enough to say that needs to be implemented at the expense of our relationship with the county or the relationship that we’re trying to form with the county and the direction we’re trying to head with them,” Day said.
Day recommended removing the fire service inspection from the list of new revenue sources and also questioned the savings coming from deferring River Walk. The project wouldn’t be delayed but bonding on it could be, saving the city $119,000 in FY14.
Councilwoman Laura Mitchell also had some questions about the funding sources but not to the degree that Day did. Bond flexibility with River Walk could be advantageous, she admitted, but if the current bond rates jump then the city will lose money in the long run by waiting. Mitchell also had some concerns with fire service inspections, though more so with the fact they are not required regularly post-construction than whether the city or the county should be the one conducting them. A city takeover could be complicated, she added.
Councilman Tim Spies had his own funding suggestions and encouraged administration to further explore the revenue from speed enforcement cameras and how that money could be used. The revenue is only supposed to be applied to public safety, he continued, but that can be a broad term.
The most important thing, said Ireton, is finally giving employees a raise, especially those in departments like public works who are some of the lowest earning in the city. Mitchell agreed, saying that even the most loyal employee might jump ship if Salisbury falls too far behind.
“When it comes down to it, they’ve got to feed their families,” she said.
The topic is expected to re-appear at another work session in the near future, though it’s possible that the council could agree to take it right to a legislative session.