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1/20/2011
Who is speaking for the taxpayers? Not the Appleton Common Council
Last night Appleton passed its first contract for 2011, 13-3. Those voting No were Alderpersons Jim Clemons, Chris Croatt and Jeff Lutz. I attended last night’s Common Council meeting and spoke in opposition to the contract.
Approving this contract will set the pattern for future contracts as well as changes for nonrepresented employees [the same folks, by the way, who negotiate the contracts for the city].
…. our police, our firefighters and all who are employed by the City of Appleton are hard working, loyal employees. It is certainly true for me – and I assume for you – that discussion of the terms of their labor agreements does not in any way question their value to the City.
…. Mayor Hanna himself has outlined upcoming difficulties, speaking of increasing financial pressure on local government and a pretty good chance that shared revenue may very well decrease in coming years because of financial pressure on a state budget that is currently $3.3 billion in the hole.
In light of all that, we’re negotiating contracts in which labor costs are projected to increase at least 3.5% in both 2013 and 2014. You are committing now, at a minimum, to 3.5% increases two and three years from now. How will our taxpayers pay for that?
I would remind you that you granted city employees raises of 3% in each of the last two years. That is during a time of deep recession in our country – and a time when most workers in the Fox Valley were receiving increases, if any, of much less than that. [The most recent Chamber of Commerce study supports this – I have those numbers if you’re interested.]…
. City employee benefits are extremely generous. How many taxpayers have access to a $1,000 deductible policy for $0 in employee premiums? Or a $250 deductible family health insurance policy for $40/month in employee payments? How many taxpayers have their employer paying 12 to 18 ½% of their salary for their retirement benefits? It’s absolutely unheard of in the households of the taxpayers you are asking to pay for this contract.
I understand sick leave changes and a minimal 2nd tier program (that jumps to the 1st tier after 5 years) has been negotiated. I understand there is some value to those changes.
What I don’t understand is how you expect City of Appleton taxpayers to pay for this and upcoming contracts.
Jenny Espino at the Post-Crescent recounts the issue here (absent the details I presented that were critical to taxpayers - hmmm). Jenny quotes Mayor Hanna:
Mayor Tim Hanna said a large number of council members were able to come together to vote in favor of the contract, which affects 85 officers, in part because of the lengthy discussions they had in closed session about strategy and the risks involved in rejecting the contract. [Emphasis is mine.]
Yup. That’s the nub of it. As a plain old concerned taxpayer, I (understandably) wasn’t allowed in the closed session discussion last night. But I can hear the recording plain as day. I heard it a million times in my ten years on the Council. “We’ve absolutely got to settle, or the union contracts we’ll get after the arbitration judge rules will be twice as bad [or ten times or fifty times – fill in the blank]. And of course, the union is sure to win.” Blackmail. Those unique Wisconsin mediation/arbitration laws heavily favor public employee unions and are a huge burden on the backs of Wisconsin taxpayers. Governor Walker has pledged to fix them (p. 5 of the .pdf). We’ll see. Municipalities with a spine will demand med/arb reform when they get kicked in the teeth with what will most likely be substantially less state aid than in the past.
When our city tax bills rise by 5 or 10% in 2013 and 2014, don’t say I didn’t tell you so. Communities throughout Wisconsin are drawing lines in the sand. Appleton isn’t one of them.
Jo Egelhoff, FoxPolitics.net
COMMENTS
Jo, were the labor cost increases due to salary or benefits or both?
dave allen (Thu Jan 20 06:47:08 2011)
If the Council approved this because of their fear of arbitration my disappointment is greatly heightened. Let arbitration run it's course and then our representatives and Governor can correct the law.
David (Thu Jan 20 07:09:58 2011)
The City credibly claims they are holding health care cost increases to 4% annually. I believe it through 2012; don't believe they have a clear enough crystal ball to claim that for 2013, 2014. Majority of increased costs come from wage increases, 0% in 2011 and 4% in 2012, 4% in 2013. No allowance for increased cost of pension benefits - which many think is most surely to come.
Jo (Thu Jan 20 07:11:54 2011)
Jo,
Thanks. Keep up the good work on bringing these facts to the public's attention. Budget meetings are important but no one seems to care. How many people were there?
dave allen (Thu Jan 20 07:22:40 2011)
One taxpayer - me (or is it "I") - was there to speak to this first contract. Will more raise the issue as more contracts are approved in coming weeks? Over and out - headed away from computer for several hours.
Jo (Thu Jan 20 07:31:54 2011)
The city held the line freezing wages and making positive changes with non-represented (library) employees. It was then anticipated that would be the model for represented employees.
Where is the breakdown? I would hope that Alderman Jirschle would be able to explain.
David (Thu Jan 20 07:31:43 2011)
I have to be very careful about how I respond to this since I was part of several closed sessions. As a member of Council who voted against this, I feel obligated to state my position. I didn't support this for 3 reasons. One being the length of the contract. Two being the arrangement of contribution to health insurance. I agree with Alderman Clemons that the City has grossly underestimated the costs in year three and I feel they underestimated it for year two as well. I'd also like to see a percentage of COBRA rates arrangement. Lastly, the biggest reason of all is how to pay for this next year and the year after? I didn't hear that answer Wednesday night. Remember, this is the first of many of these that will be coming through now that look very similar to this one.
It was one of the toughest votes I've had to make but one I felt I had to vote against to best reflect what those I represent needed me to do. We represent the taxpaying citizens of Appleton and I felt a message needed to be sent in regards to these contracts.
I'd really like to respond to some of the questions on this blog about reasons why those who supported it did but I cannot. The supporters can tell you themselves how they think we can pay for it....higher taxes? I expected a closer vote, much closer than 13-3. Apparently several changed their minds.
Chris Croatt (Thu Jan 20 09:59:36 2011)
Why is this settlement such a bad deal for tax payers? Do you and the tax payers forget about when the economy was going great and companies were handing out big bonuses and perks, and public employees still received only a 3% raise. What was the average wage increase for private sector in the late 90’s? Boy public employees missed out on some nice increases over the years.
This is from www.socialsecurity.com
1995 24,705.66 4.01% 23,700.11 134,212 3,180,838
1996 25,913.90 4.89% 24,859.17 136,561 3,394,789
1997 27,426.00 5.84% 26,309.73 139,349 3,666,228
1998 28,861.44 5.23% 27,686.75 141,760 3,924,866
1999 30,469.84 5.57% 29,229.69 145,061 4,240,084
2000 32,154.82 5.53% 30,846.09 148,114 4,568,731
2001 32,921.92 2.39% 31,581.97 148,282 4,683,048
2002 33,252.09 1.00% 31,898.70 148,069 4,723,210
2003 34,064.95 2.44% 32,678.48 147,722 4,827,338
2004 35,648.55 4.65% 34,197.63 149,439 5,110,451
2005 36,952.94 3.66% 35,448.93 151,603 5,374,177
2006 38,651.41 4.60% 37,078.27 153,853 5,704,593
2007 40,405.48 4.54% 38,760.95 155,570 6,030,057
2008 41,334.97 2.30%
joe (Thu Jan 20 10:00:05 2011)
Two Observations:
1. Joe just doesn't get it! Cmpensation increases in the Private sector are based on: The profitability of the Corporation; achievement of organization and personal goals; and Strictly individual merit. Wage increases in the Public sctor are based on surviving another year; longevity, and the political power of one's Labor Union. Inspite of this, over the last 35 years total compensation, in comparable positions, Public Sector compensation has out stripped the Private Sector. This is FACT!
2. Jo, thanks for, "Showing Up" to represent the "Folks" who always pick up the tab for the ineptitude of Politicians and Management in the Public Sector. Unfortunately, you are a, "Lone voice in the wilderness"! When are the "Folks" going to wake up?
GL Schilling (Thu Jan 20 10:30:37 2011)
Joe, in case you haven't noticed, we are in a great recession.
Please be aware that retirees, like me, have not received a SS increase in two years, and since we make up 1/3 of the fox valley demographics, absolutely no consideration is made for us.
We are taxpayers Joe.
It is laughable that liberals always point to "rich" people for validation ,and are just as greedy by demanding "their" share.
Most normal folks Joe have lost 40 % of their 401k's while Government employees have increased contributions to their pensions. In case you haven't looked, companies no longer hand out pensions
Rich Carlstedt (Thu Jan 20 10:41:02 2011)
Rich,
Just like everyone else you make assumptions. I too lost money in my pension do to the recession; unlike the 401k I have no choice what my money is invested in. Maybe you should have picked better investments. How much were you making on the 401k when times were great, when that was happening you could care less about my pension.
Good point about social security raises it is true you haven’t got a increase in the last two years, now let’s see if you can be honest. How much were the increases for the last 10 years I bet more than my 2% to 3% over the same time.
GL,
So what you saying is in public sector if I do my job well, and thrive to make a better, safer product I shouldn’t be compensated.
joe (Thu Jan 20 11:16:17 2011)
GL,
I wouldn't for a minute believe that private sector pay is greatly based on merit or even in many cases profits. Witness the outrageous Wall Street and other large corporate meltdowns where the perpetrators and others had huge bonus programs while the ship was sinking and then were bailed out by the taxpayer. However, the public sector has STABILITY in pay and benefits that is definitely not the case in the private sector. A stable pressure on wages and benefits can be planned for and adjusted for. And remember that public sector productivity is often hard to measure and reward. Hard to measure because of the nature of the work, hard to reward because the taxpayers wouldn't stand for it and union rules often don't allow it. My bottom line is that times are tough and the Public sector, in a measured thoughtful way needs to be part of the solution.
dave allen (Thu Jan 20 13:00:50 2011)
GL,
I would agree but it seems when times are good nobody ever says the public employees didn’t get much of raise. Public employees just can’t win. Plus how bad is it in the fox valley unemployment is 6.3%
joe (Thu Jan 20 14:48:07 2011)
If private sector jobs are such a golden egg Joe, perhaps you might want to grab yourself one.
Jo (Thu Jan 20 14:59:54 2011)
Jo,
I have had a few, actually turned down one at Appleton papers to take current job. reason for me to take public job two reasons, love what I do and my father asked me before I entered the workforce what’s important to you money or where you live, where I live was my answer. His reply then find a job that can’t be outsourced.
joe (Thu Jan 20 15:36:04 2011)
Dave, I would just have one comment to your obsevation on Private Sector Compensation. You should NOT take one small sliver of the Private Sector business community and assume it applies to ALL of business. I too find what has recently happened on Wall Street to be professionally abhorant. To assume that applies generally to business is simply incorrect. Since I was responsible for Compensation in a 4000 Employee division of a "Fortune 500" Company, I can assure you that our executive compensation was logical, fair and professionally administered. The same was true when I served as Chairman of the Compensation Committee of the Board of a modest $2.3 B bank holding company. The, "Broad Brush" approach to condeming business is never appropriate.
GL Schilling (Thu Jan 20 17:02:26 2011)
Joe: I almost forgot! If you perform your job as you claim you do, you are entitled to exactly the compensation you presently receive- and NOT A PENNY MORE. That's the "System" you signed on for. Government work is the great "Equalizer". If you want the RISKS of MERIT compensation, move over.
You then go on to list the reasons why you prefer the Government Sector. They are apparently logical from your standpoint. Fine! I respect that. However, don't then complain about the system under which you labor. Can't have it both ways!
GL Schilling (Thu Jan 20 17:33:03 2011)
GL,
in my comments I used the word "greatly" to discuss performance vs pay in the private sector and also how performance is measured. I too am part of the private sector and I know a bit about compensation committees and the like. The problem with your earlier statement is that you refer to the absolutes of the perfection of the private sector pay system. For example an unbiased compensation committee can say that a chief executive is worth $10mm in pay based on the $10mm pay of his or her peers. However is $10mm a fair pay based on anything other than the supply/demand of presumed talented individuals? I think not. In the past few decades the compensation of the upper echelon executives has soared massively compared to the average pay of the average employee. And what has this brought us? Nothing. Everyone has a good time bashing the public sector like somehow believing that the intrinsic worth of a business executive is somehow more than the nurse or the cop on the beat when the only difference is pay and that pay is distributed based on the "compensation committees" and the availability of money and not based on any other standard.
dave allen (Thu Jan 20 20:12:56 2011)
I work for a manufacturer here in the Valley. Just this week I informed my employees of thier pay increases. The increase for those employees meeting the standard was 2.7% and depending upon the employees performance they recieved 2.7% to 7.0% increases.
Not every privite sector company is not giving increases...my wife's company also gave raises from 2-6%.
DM (Thu Jan 20 21:46:52 2011)
Dave:
Don't want to beat this to death! Would love to have, "A beer" with you and discuss "Compensation philosopy". But, that's not practicable. First and foremost, I believe People make decisions as to where they decide to spend their "Career Lives" for personal reasons. If one decides to go, "Public Sector", fine! But then accept the fact that you "Play in that Arena". If we, "The Folks" who pay the bills get caught up in the endless debate as to the intrinsic value of, "Cop VS Public Health Nurse", it's an endless argument with no conclusion other than, "The Market Place" will decide.
Now, your comments on Executive Compensation: "Peer Group" comparisons was the creation of contracted Compensation Consultants as a means of justifying increasing compensation for Corporate CEO's, in my opinion. Most Compensation Professionals NEVER bought in to this approach as a primary determinent. It is however, a factor(But only a factor) to determine BASE Compensation only for the "Person" at the top. There are then a number of other factors that SHOULD be used to determine Base Compensation.(Believe it or not, geographic location of the Business is an appropriate factor). ALL OTHER COMPENSATION should be based on the individual performance of the CEO. Results are what matters! The above is where many Corp. Comp. Boards lost their way. Again, I would suggest to you that MANY of Us did not lose sight of the success of the organization for the Benefit of the OWNERS. These Companies will prosper long term while the others fail.
GL Schilling (Fri Jan 21 16:51:14 2011)
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