State-Journal.com - Longevity pay to be eliminated

A last minute change of heart didn’t happen.

As expected, the City Commission voted 3-2 to reduce and phase out city employees’ longevity pay over the next three years – then eliminate it.

The commission members voted Monday as they had said they would in two previous meetings where the controversial issue was discussed at length.

Mayor Gippy Graham and Commissioners Kathy Carter and Rodney Williams voted to phase out the benefit and Commissioners

Sellus Wilder and Bill May voted “no,” preferring to use reserve funds to balance the budget.

The commission also approved 3-2 the new $29.7 million general fund budget, and a $60 per year garbage collection fee for residences, which is projected to bring in $600,000 in revenue. May and Wilder voted “no” on both of those as well.

Near the end of Monday’s meeting, Wilder made a motion to reduce the city commissioners’ annual $14,600 pay by 2 percent – to make a sacrifice as city employees are being required to do.

City Solicitor Robert Moore said the reduction couldn’t legally occur in the current term. So Wilder agreed to have it take effect at the start of the January 2011 term.

Williams suggested making it 10 percent instead of 2, but after a long discussion, the motion failed 3-2 with Graham, May and Carter voting “no.”

Carter initially indicated she would vote “yes,” but later changed her mind.

In a special meeting last week, firefighter Gary Gebhart praised Wilder for spending a lot of time at the last commission meeting going through line items of the budget looking for other ways to cut expenses and save the longevity benefit.

Monday, Eric Burke, of the Holmes Street neighborhood, criticized Wilder. Burke said he shouldn’t be voting on budget issues because his wife, Jessie Bessinger, is an employee of the city sewer department, which is a conflict of interest.

Burke wanted the city solicitor to investigate the matter.

Wilder said his wife was hired before he was elected to office.

“She has spoken to her boss (Director Bill Scalf) at the sewer department to make it clear that she would prefer not to receive any raise in the future, and frankly we don’t need them,” Wilder said.

“We don’t make a lot of money but we balance our household budget not by seeking new revenue but by reducing expenses.”

Full-time city employees had received a 3 percent longevity pay increase after one year, six years and every three years thereafter. That was in addition to their annual cost-of-living increases when they’re available.

Now a 1 percent increase will be given to all employees due longevity pay over the next three years. Then the benefit will end.

Before the vote, several city employees spoke to try to save the longevity benefit. But unlike the last two meetings, there wasn’t a packed room of employees.

Police Officer Steve Sutton, president of the local Fraternal Order of Police, said, “We have over $8 million in surplus. The rainy day fund is supposed to be used for extreme situations.

“What better cause is there than keeping your employees financially alive. Times are tough and revenue is down, but not because of longevity pay.”

Sutton said the money problems stem from bad decisions by the City Commission – going $6.5 million over budget on the city’s Public Safety Facility, and spending $400,000 to build a parking lot and $1 million on a condemned parking garage.

“Now because of the economy and spending issues like these you are placing the entire issue of the reserve fund being drawn down squarely on the back of (city) employees,” Sutton said. “So if you vote ‘yes’ tonight then you in fact have taken the easy way out and turned your back on every employee…

“Why can’t we afford $90,000 for employees, but last year and again this year gave away $190,000 to charity or a golf course that lost over $302,000 last year? Stop robbing my piggy bank to stuff the city’s.”

Police Officer Travis Curtsinger said no city employee is asking to get rich off the longevity benefit.

He said he read in The State Journal recently where Commissioner Carter said the decision to phase out longevity pay has been heart wrenching.

Curtsinger said he has a young daughter with a serious illness, and he talked about a problem with the city’s health insurance.

“I went to three doctors’ appointments today with my daughter,” he said. “One was a cardiologist and we had to ask how long she could live before she had surgery. To me that’s heart wrenching.

“Walk a day in my shoes and go to some of my doctors’ appointments and see what I go through.”

Glenn Mathews, a city payroll employee, talked about the forgotten 51 part-time employees who don’t get longevity pay or health insurance. In the new budget full-time employees are getting what amounts to a $250 annual raise by decreasing the amount they pay on insurance premiums.

Mathews said more than 200 seasonal employees will receive an increase of 70 cents per hour in July because of an increase in the federal minimum wage.

The reduced longevity pay will cost the city $46,000 for the next three years, and have an immediate savings of $91,000 to the general fund in the next fiscal year beginning July 1.

In an interview Friday in City Hall, Commissioner Williams said his recent proposal to eliminate longevity pay didn’t come without “a lot of thought and homework.”

Williams said he’s been asked why he would propose something that would have such a negative impact on employee morale, which would save only $140,000 in the new $29.7 million budget.

And his answer is, “That’s not the whole story.”

Williams said the new budget is actually $4.1 million less than the budget from two years ago and “close to 75 percent of that is tied up in payroll and benefits.

“If you play the numbers or percentages, as some have suggested I’m doing, then you would also have to suggest that we should have laid off 44 people, or 14 percent of the full-time workforce.

“And what I know I haven’t done is to suggest to the board to lay off 44 employees.”

Regarding the economy, Williams – president of Citizens Commerce National Bank’s Frankfort office – said on Friday he doesn’t see any reasons for “immediate” optimism.

If the economy gets worse, layoffs are possible, he said, “but that’s the case with every employer, public or private.”

Looking at the city budget from a business standpoint, Williams said, “The commonwealth is our number one provider of revenue. After all the cuts the state has made, after all the retirements and not replacing people – 3,000 last fiscal year and about 1,400 this year – after all that reduction in payroll, they’re still dealing with a $1 billion shortfall.”

In past years the city had been collecting about $16 million in occupational tax – its biggest revenue stream – and $8 million was coming from state government.

But with the state reducing its employment through retirements and attrition, the city’s occupational tax from the state is down about 7.5 percent or $600,000 from two years ago.

Also, the state hasn’t given significant cost of living raises in the last few years. A 5 percent state pay raise is equal to $400,000 annually in occupational revenues to the city, said city Finance Director Steve Dawson on Friday.
Dawson said the last 5 percent state pay raise was in 2002.

In last week’s special meeting Graham said he believes it’s a good time to start looking at structural changes so when the economy bounces back, “there will hopefully be some funds to reward employees who excel.”

Graham said he’s an optimist, “but I know we cannot continue like we’re going. We cannot continue to spend more than we have.”

Monday Graham said he wants a new compensation plan to be put in place, “and I feel very confident that it will.” He said the process would start at the July 13 City Commission work session.

“It should be one that rewards employees and maintains services and is sustainable, and in my mind the one we have now cannot remain sustainable.”

He said the budget has been out of balance the last four years: $1 million in 2006, about $400,000 in 2007, $1.5 million last year and about $3 million this year.

Graham said the general fund reserve has done down from $14.5 million five years ago to $8.3 million today. About 74 percent of the budget goes for personnel, including salaries, insurance and retirement benefits.