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New York Daily News

 

Stark Budget Math For Cities: Newark Forced To Choose Between Cops On The Beat and Sky-High Salaries

May 08, 2011

By Josh Barro

Last November, under severe financial stress, the city of Newark laid off 167 police officers, or 13% of its police force. This was part of a plan to close an $83 million hole in a nearly $600 million city budget, over $400 million of which is spent on wages and benefits.

Now the results of that layoff appear to be showing up in the crime stats: For the first quarter of 2011, shootings are up 29%, auto thefts 39% and murders 71% compared to the same period in 2010. Yet arrests are down.

It didn’t have to be this way. Newark could have tackled runaway public worker pay rather than slashing services. But they failed - as many other cities across American are failing.

To his credit, Mayor Cory Booker tried. His hand forced by a fiscal crisis driven by the national recession - made even worse because Newark is heavily dependent on state aid and has a weak tax base that cannot support significant new levies - he looked for other sources of revenue.

But Newark’s city council defeated Booker’s plan to generate cash by leasing out the city’s water resources. The only remaining option was deep cuts. And because Newark spends about three-quarters of its operating budget on employee compensation, that meant one of two things: employ fewer people or pay them less.

Booker then sought agreement from the police union to avoid layoffs by renegotiating the city’s police contract - but the union refused. That means the average Newark police officer will continue to receive a base salary of over $85,000, plus overtime and a Cadillac health plan. Officers will still be able to retire in their early 50s on a pension around 70% of final salary and draw free city health benefits in retirement.

Actually, average police salaries went up with the layoff, because Newark had to conduct its police layoff on the same “last in, first out” basis that Mayor Bloomberg has railed against in New York City schools. Newark laid off the most junior, lowest paid officers, meaning a 13% reduction in force was necessary to achieve just a 6.5% reduction in the police budget.

In Newark, protecting the perks of public workers has come at a significant cost to public well-being. And New Jersey’s largest city is far from the only place where union demands are squeezing out public services.

Look at California. Sharp limitations on property taxes have constrained municipalities’ ability to raise money, and as a result school spending per pupil is only about the national average. Yet the state’s powerful teachers’ unions have managed to command the country’s second-highest teacher salaries; only New York teachers make more. How is that possible? With enormous class sizes: Only Utah has more students per teacher.

It is possible, at great taxpayer expense, to accommodate both high employee compensation and high staffing levels. This has long been New York City’s model, made possible by the country’s highest income tax and (intermittently) strong tax receipts driven by the financial industry.

Yet even on this side of the Hudson, we are not immune from the squeeze of ever-expanding employee compensation: Uncontrollable wage and benefit costs have led to bus and subway service cutbacks, and thousands of teacher layoffs loom in city public schools.

Of course, some government agencies are overstaffed and should just cut headcount. But in general, layoffs are one of the most disruptive ways to balance a city’s budget; when possible, it is usually best to avoid them. For this reason, municipal governments must negotiate employee contracts that are sustainable even if the city faces an unexpected recession.

In the last few years, urban leaders have too often failed to exercise such prudence. Mayor Bloomberg even agreed to a union contract guaranteeing 4% annual raises on the day after the Lehman Brothers failure. It doesn’t help that local officials are further hampered by state mandates and bargaining rules that tilt the playing field toward unions. (In both New Jersey and New York, the availability of binding arbitration has made it particularly difficult to control police and fire compensation.)

New Jersey Gov. Chris Christie’s “toolkit” of local finance and labor reforms is intended to give cities like Newark more options so they won’t end up resorting to layoff plans like the one enacted in November. Gov. Cuomo has also talked, less specifically, about the importance of mandate reform for local governments.

Until such reforms come through, cities will face more tough choices between sharp tax increases and big layoffs. And as the Newark experience shows, that can have real human costs.

Original Source: http://www.nydailynews.com/opinions/2011/05/08/2011-05-08_stark_budget_math_for_cities.html

 

 
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