Bozeman Mayor Asks City Employees to Give Up Pay Raises

By Greg Lemon, 2-26-09

In her annual State of the City address this week, Bozeman’s Mayor Kaaren Jacobson asked city employees to voluntarily forgo their annual pay increase to help save jobs at the city.

“I come to you at a time that’s not nearly as rosy as a mere 12 months ago,” Jacobson said in opening her speech, which she gave as part of the regular commission meeting Monday night.

The mayor described a fiscal forecast that has revenues increasing for the city at a smaller rate than last year – 3.5 percent rather than 7.5 percent. This projected increase translates into about $350,000 dollars in revenue, she said.

However, the projected increase in personnel costs is about $290,000, Jacobson said. This increase is predominantly from scheduled pay increases and employee benefits.

That leaves the city with only a projected $60,000 for inflation increases in operating costs and capital improvements, she said.

“This situation indeed imposes a dilemma because in spite of a recession, demand for services does not decline,” Jacobson said. “In fact the demand for some services will increase.”

When people are looking for work or are struggling financially, they use the public library more; they take more advantage of public parks and facilities – so the costs of providing these services will increase, she said.

The city has already lost 10 positions in the planning and building inspection departments since July. Some of these jobs were lost by simple attrition, but some were layoffs due to a dramatic drop in building permits issued and building developments proposed, said city manager Chris Kukulski, during an interview Tuesday.

Jacobson is pleased that city departments are looking for efficiencies in the way they do business, but it may not be enough to save all jobs, she said. That’s why she is asking all employees to voluntarily give up their scheduled raises.

“We need your help and the help of your unions,” she said during her speech.

Of the roughly 320 city employees, about 260 are represented by four different unions: the Teamsters, Montana Public Employees Association, the International Association of Firefighters, and the Bozeman Police Protective Association, Kukulski said.

The only labor contract up for negotiation this year is with the Teamster’s union, he said.

When it comes down to it, a contract is a contract, said Mark Langdorf, field representative with the MPEA.

“We have a collective bargaining agreement in place,” he said. “ We’re under a binding labor agreement with the city. It’s binding on all parties.”

At this point the city hasn’t come back to MPEA and asked to change the contract, Langdorf said. So any question of employees voluntarily giving up their scheduled pay increases is moot.

“It’s not what I believe, it’s not how I feel, it’s not what the future predicts,” he said. “The parties met in good faith and they ratified a collective bargaining agreement. We have a negotiated contract. It is what it is. It’s the reality of the situation.”

The MPEA represents 52 Bozeman city employees, including employees in the planning and building inspection departments, Langdorf said. He pointed to the layoffs in those two departments.

“The collective bargaining agreement has provisions in it for reductions in force,” he said.

But reducing the city’s workforce is exactly what the mayor is hoping to avoid.

It’s not that the city is in a poor financial situation, Jacobson said.

“Our overall financial condition is sound,” she said Monday night.

The city has planned for the projects currently underway and scheduled to begin this year, including the downtown parking garage, a new fire station and the expansion to the wastewater treatment plant, she said.

The city has around $4 million in its reserve fund. This amount has allowed to city to secure a good bond rating as well keep reserves for emergency capital costs, Jacobson said.

“I look at our city’s glass as half full instead of half empty,” she said.

However, staffing costs are the problem area.

She has been mulling going public with her request for employees to forgo their pay increases for sometime, but had no support for the idea with the rest of the city commission, Jacobson said in an interview Tuesday.

So she decided to make it the point of her annual speech.

“I thought maybe it would get some attention and so I could get it out there publicly and simply request that the unions and their members to simply volunteer that,” she said.

She thinks the idea will save jobs that would otherwise be lost. Without some freeze on salaries, like she’s requesting, the outlook for saving all city jobs is grim.

“There’s no question in my mind that jobs (would have to be) cut,” Jacobson said. “Something’s gotta give here.”

The potential for dipping into the city’s reserve money is out of the question. Not only is it considered poor money management, but it wouldn’t have any support on the city commission, she said.

“You could drain that (reserve fund) down in a hurry if we diverted too much from there for operational expenses,” Jacobson said.

Plus it’s crucial to have the reserve funds for emergency costs and unforeseen capital expenditures, she said.

Jacobson doesn’t know what to expect from the city’s labor unions, but is hopeful something can be worked out.

“I would think that people would rather save jobs and keep their same salary,” she said. “Every time somebody loses a job in town it hurts the overall economy too. It hurts the family, it hurts the community, it hurts our level of services.”

This story also appears in this week’s The Sun.