Municipal employees have been asked to give up two weeks of pay over a six-month period to avert mass layoffs due to a large budget shortfall, according to memo business administrator Vaughn McKoy sent to employees on Wednesday.
If all 1,500 full-time employees participate in the salary deferral scheme, the city will generate $4 million in savings, says the memo. Two-week salary deferral will kick-in in January and run through the next nine pay cycles. One day will be added to each pay period. At the end of the tenth payroll cycle, employees will have deferred two weeks of pay.
“To make this work, we need 100% participation from employees from the mayor on down the line,” says McKoy in his memo. “Otherwise, our hands will be tied [sic] we’d have to implement a layoff plan that would be devastating to the City, it’s employees and their families who rely upon the City for their livelihood.”
Mayor Andre Sayegh could not immediately be reached for comments on Wednesday afternoon. He referred questions to his chief of staff Kathleen Long.
“We see this as an innovative option that might save the city from needing to layoff hundreds of employees,” said Long.
Municipal labor unions appeared mixed on the proposal.
“We understand. We had a huge meeting about it. We’re willing to do what we can to help the city,” said Michael Jackson, president of the public works supervisors’ union.
Sayegh administration officials met with the unions in early December to share their plans.
“I don’t really have a reaction right now. We’ve been down this road before,” said Kyle Hughes, president of the firefighters’ union. “We’re a little less than a week away from having a vote to see what the guys think. I’d say not many seem to be for it because they are not making any guarantees with regards to layoffs.”
Indeed, even with the salary deferral the city is not completely ruling out layoffs.
“If they are going to lay off people everything should revert back,” said Jackson. He said the city ran a deferral scheme in 1994. He said pay period was moved by a day.
“The main objective is to keep everyone working,” said Robert Moody, president of the public works blue collar employees’ union. He said, referring to employees losing their jobs, “It’s one of those pains that could destroy a lot of families.”
Council members said the pay deferral scheme is better than laying off employees before the holidays.
“The administration’s explanation was that it’s either that or layoffs,” said Flavio Rivera, chairman of the finance committee.
“It causes the least amount of pain. We still have to pay, but you’re pushing it further down the road. I don’t know that it’s going to close the entire gap,” said William McKoy, 3rd Ward councilman.
Employees will be entitled to the two weeks of pay upon separation, says the memo. Counting their two-week holdback, employees will have four weeks of pay when they leave their employment.
The $4 million in savings from the pay deferral scheme is not enough to close the city’s $40 million budget shortfall. The memo says the state has advised the city to anticipate $29 million in transitional aid. It’s also allowing the city to earn another $4 million by enrolling employees into the state healthcare system and creating a sewer utility.
Sayegh sought $40 million in state assistance.
Business administrator McKoy’s memo states he is confident the city will meet the conditions and secure $33 million. The memo states this still leaves a $12 million shortfall. Health benefit costs widened the gap, says the memo.
The pay deferral scheme reduces the gap to $8 million.
Rivera said the state is asking the city to increase sewer fees by $3 million. He also pointed out the administration has $1 million from the tax lien sales. It is anticipating another $1 million from grants that have been expended, but not yet reimbursed.
The deficit drops to $6 million. If the sewer fees are raised by $3 million, the deficit drops to $3 million.