A 2% Approach?

At the June 14th City Council budget meeting the focus was on identifying potential methods of increasing revenue, i.e., taxes.  Council Member Duff objected to any discussion of “revenue enhancement” until expenditures have been thoroughly examined.   I agree, workers and businesses are tapped out and they should not be asked to contribute one more dime until other options are exhausted.

One option is to look at cutting pay. No one seems to want to talk about this.   Candidates for office don’t want to talk about it, and City Administration seems loathe to talk about it.  But why should public workers be immune from the effects of this economy?  Have you checked the unemployment rate for public sector workers?  When a City worker, whose job is to throw trash into the recycling truck, is making $23/hr. plus benefits, we have problems.

The average City worker now makes $62,360 at year, twice the income of the average Red Wing worker in the private sector, and this is not taking into account benefits.  ($11.1 million / 178 FTEs) This imbalance presents immediate and long-term structural budget issues that must be addressed.  Private sector workers have long suffered wage cuts, layoffs, terminations, foreclosures, and bankruptcies.   It’s time for a shared sacrifice.

I propose the following:

•  At a minimum, a modest 2% wage cut for City workers. The Council can decide how to apply this by possibly exempting lower-income employees and applying a larger cut to those with higher pay.  With $11.1 million in payroll, this would amount to $222,000.  But the City would save more than that due to other decreased employment costs, such as workers compensation insurance, so add an additional savings of 20% for a total of $266,400 annually.  Over four years the savings would equal $1,065,400.

A 3% cut over four years would save $1,598,400. A 4% cut over four years would be $2,131,200.

A pay cut would save jobs and maintain the current level of services.  It’s time for the City to sit down with the unions and start talking about concessions.  A 2% cut would simply roll back wages to 2008 levels. More than this will be needed, but it must be considered.  We can’t keep dinging the workers and businesses with what are often terribly regressive taxes and fees.

Click here to see the effect of a 2% wage cut on an average worker.


1 Comment

Filed under Accountability, Economic Development, Minnesota, Red Wing, Red Wing City Council

One response to “A 2% Approach?

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s