At a time when CEOs from the major financial institutions and the auto industry are being interrogated at congressional hearings over their performance, Seattle'ês version of the CEO, the Mayor and City Councilmembers, could also stand a little scrutiny. They have just passed a budget for that shows little evidence that the top City salaries will suffer. Alas, there will be no congressional hearings to determine the wisdom of Seattle'ês spending decisions in this meltdown economy.
Seattle officials have, in recent months, been smugy believing our local economy has escaped the deep turmoil of the rust belt states. They also seem to believe, like the ill-fated monorail, that Seattle 'êwill rise above it all'ê and escape the financial catastrophe elsewhere. It'ês fair to ask if they have tightened their belts enough to respond to the short fall in expected City revenue.
We are now experiencing the full impact of WaMu layoffs and downsizing of hundreds of other Seattle area employers. While local businesses and the public are feeling the pinch, Seattle decision makers seem much less concerned.
Consider that the City just passed an increase in spending. Seattle'ês budget for 2009, will be $3.9 billion. The general fund, which pays for most City functions, is $910 million, up 1.6 percent from 2007, and is projected to rise to $925 million in 2010. To fund the increase, the City will raise parking fees, raise the garbage rates 42 percent and water rates by 38 percent to help pay for the increase in spending. At the same time, it will reduce city revenues with property tax deferments to developers.
Mayor Greg Nickels also just announced that a Seattle top administrator needs a 37 percent pay raise to $302,000 per year. So, is spending on City employees getting out of hand, particularly in a time when many others are making salary sacrifices? Let's take a look.
The total City payroll is $743,195,514. The average pay is $66,356.74 each, or about the salary of a Seattle cop. (This does not include retirement or medical benefits.) Seattle public employee pay is near the top in the nation. According to the US Department Of Labor and Statistics, Seattle City workers are paid nearly 20 percent more than private sector employees. While Seattle has some of the finest public employees in the nation, they come at a very high price. Of the 11,201 city employees — up from 10,300 in 2004 — there are 689 employees that make more than $100,000 a year.
Another advantage in working for the City is generous retirement and health care in which City employees have major advantages over their counterparts in private industry. Public employees also have more job security than in private industry. One can easily see why the jobs in government and health care are among the two fastest-growing job markets in America.
Seattle's budget philosophy in recessions appears to be to raise city salaries, to look for big spending items on beautification projects, and to defer maintenance or push maintenance of the most popular projects (such as the Market or Seattle Center) to special levies. Seattle currently has a huge obligation in deferred maintenance for everything from bridges to water mains to roads. The City needs to decide whether to take care of deferred maintenance first or to buy new stuff and raise fees and taxes to do it. How many construction jobs are produced for each beautification or transportation project, and do the benefits end up where we need them the most?
Here are some examples of the City's budget philosophy in action. The City just approved an improvement to Paul Allen'ês neighborhood to beautify the Mercer corridor. That will cost $230 million but only shorten commute times by three to five minutes. On top of that, the City still needs $80 million more for phase 1 of Mercer Corridor work. Meanwhile, to raise more money for the City coffers the Mayor plans to put parking meters in neighborhood business districts. There are few small businesses which can survive with walk-in customers in good times, and in this economic environment adding high-price parking is a killer for small businesses.
Or take another example: the City just approved the concept of a streetcar system that, while cute, will actually reduce existing bus service levels and compete with Sound Transit'ês light rail extension to the University district. The cost for a full expansion of Portland-style streetcars would be $685 million.
A major share of our City revenue comes from property tax, so does it make sense for the City Council to authorize one of the worlds richest men, Paul Allen, to enjoy the multi-family tax exemption to build in South Lake Union? In still another program, the Mayor and Council offered tax deferments on property tax if developers will build new apartment buildings which will rent far above what poor folks can afford and are likely buildings they planned to build anyway.
While the rest of the country appears to recognize that there will be record numbers of folks out of work, many taking pay cuts, others downsizing, our leaders are doing the opposite. They will create special levies to take care of deferred maintenance and raise the salaries of the top administrators. If they ever do make cuts it will be from the workers at the bottom end of the salary scale who do the actual work.