Dear friend,
I would like to share with you my guest column from Sunday's Rockford Register Star below.
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New economy, old rules leave only tough choices for cities.
by Mayor Larry Morrissey, October 11, 2009
I am grateful to Fire Fighters Local 413 for the tentative three-year labor contract we reached Friday night.
With this compromise, our firefighters agreed to a wage freeze for two years. While we failed to reach agreement on manning levels, we made progress in our discussions.
Even with this good news, however, we have long-term revenue challenges that must be addressed.
Our cuts began in March, when we passed our 2009 budget. With our revenue in a dramatic decline, we cut items like capital equipment completely and nonunion pay by 3 percent. We also assumed a wage freeze for 2009 police and fire union contracts.
Although we cut millions and passed a balanced budget, revenue losses have outpaced estimates. Thus, even with Friday's agreement, we must reach agreements with AFSCME and PBPA unions and pass a $3-a-month increase in garbage fees to balance our 2010 budget.
I don't like the idea of a fee increase, but it appears to be the only way to avoid more layoffs.
We have spent about $12 million of our reserves because of snowstorms and budget shortfalls over the past two years. We will need to borrow $15 million to get us through the first part of 2010. And there may be more "rainy days" ahead.
As much as I would like to cut pay or benefits across the board to avoid raising fees or cutting jobs, that is not an option.
Illinois collective bargaining rules give police and fire unions distinct advantages over management. For example, Rockford's fire union bargained control over minimum manning levels well before I became mayor. Those manning requirements do not match our budget reality and actual public safety needs.
We also have a police union contract that places every detective on the same 10-hour-a-day shift Mondays through Fridays. That means lots of overtime. We pay a double- time rate of more than $60 an hour for police officers to work many parades and special events, such as On the Waterfront.
The city spends more than $100,000 for the average firefighter and police officer on wage and benefit packages. The state pension system allows these same employees to retire with 75 percent of their pay at age 50, with 30 years of service. In fact, we have more retired than current firefighters. Those retirees get an automatic 3 percent annual cost-of-living increase. Many of them retire by their early 50s, when they can get a new job and still get a growing, large pension from Rockford.
Rockford pays huge, long-term sums for individuals no longer working for the city, many of whom will make more money over the course of their retirement than they did while working.
Private-sector businesses could never compete with such a cost structure. Cities did it through years of unprecedented national economic growth.
When the economic bubble burst, sending Americans' income and spending levels down, local communities saw their tax revenues plummet.
Long-term revenue predictions make it clear: We cannot sustain the old ways. We have priced ourselves beyond our means.
That's why we need state collective bargaining and pension reform to enable local communities to adjust their expenses to our new economic reality.
Until that occurs, our choices will be limited.
Can we balance the budget without raising the garbage fee? That's an option, but it would require 34 more layoffs or we'll run a $2 million budget deficit next year.
Why can't we just cut pay for benefits across the organization? The collective bargaining process and benefits rules don't allow it.
If union members do not accept additional voluntary cuts, and labor rules make it impossible to get enough savings through arbitration, layoffs appear to be the only other option.
Hard decisions need to be made now, and we're not the only ones making that point.
Moody's Investors Service, the independent bond rating company, recently reaffirmed the city's A1 bond rating, saying: "Rockford's past track record of maintaining stable balances and willingness to make difficult budget decisions is factored into the current rating assignment. Future credit analysis will focus on the outcome of the 2009 budget process and responsiveness, should revenue performance experience another material variance."
Some may call this statement from Moody's an ultimatum. I call it a mandate.
We must make tough choices to maintain our bond rating and avoid insolvency. If you're still unconvinced, compare our plan with the "do-nothing" option selected this spring by the state.
When state government passed an incomplete and unbalanced budget, the state's bond rating dropped significantly. This makes state government even more expensive for all of us.
We can and should expect better performance from our local government. We need to make the tough choice.
All my best,
Mayor Larry Morrissey