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Morrissey: 5 percent pay decrease for city employees won’t cut it

July 28, 2010

By Stuart R. Wahlin
Staff Writer

Two fire stations on the chopping block remain open for the time being, and four firefighters remain on every engine, but Rockford Mayor Larry Morrissey (I) says that’s little solace for city leaders who are trying to close a projected budget deficit ranging from $5.2 million to $8.7 million for next year.

In an effort to save $500,000 this year, plus $1 million each year thereafter, the mayor had planned to close Station 8, 505 Sherman St. Additionally, Morrissey is poised to shutter Station 3, 1520 S. Main St., at the start of 2011 as part of $1,837,600 in cuts he’s demanding of the Fire Department.

The closures, he says, are the only option to make those savings, unless the firefighters’ union is willing to reduce manning to three on each truck, instead of keeping the fourth that was added in the late 1990s.

Because the fourth firefighter and a minimum daily staffing of 64 are part of the collective bargaining agreement through 2011, the station closures are Morrissey’s way of trying to get around the contract, or to force concessions by the union.

The mayor has accused firefighters of not bearing their fair share of the burden imposed on other city departments, but union leadership disagrees, arguing its sacrifices have saved the city nearly $5 million the last couple years.

The union, which is strongly resisting the closures and additional concessions, was able to obtain a court order July 13 to prevent the city from closing Station 8. The temporary restraining order will keep the station open until at least August while arbitration is scheduled to settle the matter.

“We’re doing everything we can now to expedite that process,” Morrissey said. “In the meantime—and I think, simply, facing the prospect that an arbitrator could rule for or against us in that particular setting—we, as a council joining our community members, have to continue this very difficult task of asking, ‘If not in these particular cuts in the Fire Department, where else can we look to make cuts?’”

During the July 12 Rockford City Council meeting, Ald. Frank Beach (R-10) offered a suggestion. He proposed that all city employees, including the mayor’s office and aldermen, voluntarily take a 5 percent reduction in pay.

“When you shake it out, as far as the adjustment of your taxes…there’s very little impact on the actual take-home pay. That would bring in over $5.3 million,” Beach indicated. “No jobs would be lost. You could, perhaps, say no fire stations close…if that could be done. But that would have to be a willingness on every single employee to do it.”

Meantime, International Association of Fire Fighters (IAFF) Local 413 President E.J. Dilonardo said aldermen can exclude the union from that plan, arguing firefighters have already bitten the bullet.

“I feel bad that the firefighters, before anyone asked us to, took what equates to approximately a 10 percent pay cut in 2009 and 2010,” he posted on the union’s website, referring to wage freezes and furlough days. “Had we waited longer and not been proactive in late 2008, we could have given the alderman what he is asking for, and would have taken half as big of a loss of pay.”

After a review of Beach’s proposal by the legal and finance departments, Morrissey reported the 5 percent cut isn’t nearly enough to stave off budget woes for 2011.

“One of the suggestions that Ald. Beach had made, which I think is a very worthwhile analysis and discussion, had to do with, what are the opportunities for looking at an across-the-board cut?” the mayor responded. “Even though it might seem difficult, if we had cooperation from our various bargaining units, what would it take to try to prevent the types of cuts that we would otherwise be looking at?”

According to Morrissey, across-the-board pay cuts would have to be nearly double the percentage Beach proposed to meet the minimum projected shortfall of $5 million.

“The 5 percent, from our Legal Department analysis and our Finance Department’s analysis—even that wouldn’t be enough, because of some of the particularities of our budget,” Morrissey explained. “You know, the general fund is, give or take, let’s say $100 million, but the percentage of the budget in the general fund dealing with the personnel that you’d have to cut from is not $100 million, so you’d actually…it’d be over 9 percent that we’d have to look at for every person covered by that general fund to make a cut in order to reach the types of numbers that we’re dealing with on the low side, $5 million.

“That being said, I still think it’s a very good exercise to go through, and to have those types of discussions as we look at options moving forward,” the mayor added. “The short and simple mathematics that we have to face is that our revenue is down. …The types of revenue numbers we’re seeing now we haven’t seen for probably close to a decade, if not even longer. …Our expenses have gone up during that time, so we’re in this tough position of cutting staff, but seeing personnel costs go up.”

In a memorandum to aldermen, Hayes stated, “Budget estimates for 2011 predict a $5.2 million shortfall in the city’s general fund, which would perhaps rise to over $8 million if the local distributive share of income tax is reduced by the state as suggested in the original budget proposals.”

He added: “A 5 percent reduction in wages across all city departments would produce $2.7 million savings in the general fund. It would take a 9.25 percent reduction in order to save $5 million in the general fund, and 15 percent in order to save $8 million.”

The heart of the matter

The mayor reasserted a need for pension reform, which he’s stated to be his No. 1 legislative priority in Springfield this year.

“We’re looking directly for some relief to come on the pension side in the fall veto session,” he indicated. “I think it’s easy to get lost in all the discussion statewide about the state’s problems, and the state can look to the fact that they did pass pension reform for a lot of state employees. The reform hasn’t occurred yet for local police and fire pensions, which is where the biggest challenge is?

Morrissey indicated approximately $3.5 million of next year’s projected deficit is directly attributable to fire and police pensions.

“So again, even though we may be cutting staff, those costs for every retiree, even if the employees today took a pay freeze or a pay cut—existing employees, if they did that—all of our retirees get a pay increase every year,” he noted. “We can’t do a thing about it. It’s controlled by the state legislature. And even if they pass the type of pension reform they’re talking about, it wouldn’t impact existing employees. It wouldn’t impact existing retirees. So, we will continue to pay 3 percent increases every year. We now have more retired firefighters, in fact, than we have active firefighters. This is the type of dilemma we face.”

According to city leaders, the general fund deficit in 2011 could exceed $8 million, depending on what action state lawmakers take.

“The state has essentially only dealt with about a half-year’s budget, and their budget is on a different schedule than ours,” Morrissey said. “So, depending on what they do in November, that’s why we’re leaving open the upper end. You know, it’s probably gonna be at least $5 [million] at this point. It could be higher, closer to $8 [million], so a 9 percent cut from every single employee covered in the general fund would be enough to cover, let’s say, that $5 million side, but not enough to cover the upside.”

More immediate concerns

“Other things can happen between now and the new year,” Morrissey acknowledged. “One of the things that has to happen is our immediate focus on 2010’s budget, because the numbers that we received in June, coming off of May revenue figures, were worse than we expected, by a pretty significant margin. Therefore, we’re planning for additional cuts that have to be made right away to deal with the shortfalls coming in 2010. Therein lies the challenge and the problem of the judge’s decision…on closing fire stations. …If not those cuts, what else is there?

“I’d love to be able to say that we could just take closing fire stations off the table, and we’d be left with some other real easy option,” he added. “Well, when you look at the types of dollars we’re talking about, the types of work that we do on a day-to-day basis, it is public safety that is our first and foremost budget concern, and our first and foremost concern for the community. And when you look at it, if fire personnel is off the table, what’s left? The biggest areas, by far, are police and public works. And so, if we save a firefighter, we’ll have to lose a working police officer. What’s going to be more important than folks dealing with the crime, the public safety and the shootings in their neighborhoods?

“Frankly, I’ve been very direct about it: We have more room to make cuts in fire on a manning side, but we don’t have the control locally to make that decision,” the mayor lamented. “Unfortunately, our state has given more power to a judge and more power to an arbitrator, and to the fire union, to control how we allocate our resources, as opposed to the duly-elected public representatives that come here every week and look at these challenges. We are now suffering from the fact that our tools are extremely limited in what we can do.”

Even absent a budget crisis, Morrissey has vowed persistence in reducing the minimum manning per truck from four to three firefighters, arguing only 30 percent of communities opt for the extra body.

Meantime, if an arbitrator does not rule in the city’s favor, other options to offset the budget gap include raising taxes, diverting Motor Fuel Tax funds from road projects, and, of course, layoffs.

From the July 28-Aug 3, 2010 issue

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