Teamsters Local 769 vs the City of Coral Gables

August 21, 2010 Leave a comment

This coming Monday at 9am the City Commission, in an Impasse Meeting, will take up the failed negotiations with the International Brotherhood of Teams Local 769, who represent employees of the City of Coral Gables, and are unable to reach agreement with the city over a series of proposed salary and pension concessions.

In a talk before the Ponce Business Association, Mr. Mike Scott, Local President of the Teamsters Local 769, gave the views of a group of city employees (excluding police and firefighters who have their own contracts) who he represents.

The head of the Teamsters Local indicated that a required mediation process between the union and the city has failed; and the union will not accept the city’s proposals that includes an increase to 10 percent in pension contributions, a change from a rule of 70 to a rule of 80 to join the DROP and an across-the-board reduction in salaries

The view of the Teamsters is that the employees included in their negotiation should not have to take a larger concession than the police or the firefighters are taking.  The firefighters made a volunteer contribution of 5 percent (and as I understand it is compensated in later years by an earlier participation in pensions, which rough equals the value of their 5 percent contribution), and the police will negotiate a new contract later.

The problem with the Teamster’s representations is that, since the firefighter and police contracts are not up for negotiation at the same time, the other employees will not accept concessions unless the police and firefighters are treated the same.  This is a classic Catch 22 in which none of the unions want to begin the process of concessions.

It is urgent that the city start a process of reductions in salaries and pensions, and it should begin now with the employees represented by the Teamsters, although this may be painful for employees.

The ultimate beneficiaries are the taxpayers who cannot live with the huge pension liabilities that we have to pay now and in the future.

Filed under Budget, Coral Gables, Employees and Unions, Finance

Coral Gables’ Budget: No Relief from Personnel Salaries and Pensions

August 19, 2010 Leave a comment

Let’s take a look at the trends of personnel costs in the last three or four years with the number of positions cut from 875 in 2007-2008 to an estimated 791 in 2010-2011.  We have a city with fewer employees being paid more on average–this is not a formula to reduce pensions and other benefits.

  • Total personnel costs fell by about 6% in the period 2007-2010;
  • But personnel costs per employee increased by 4%;

In the Police Department

  • Total personnel costs are being reduced 4.67% in 2010-2011.
  • This is the first real proposed reduction in the personnel budget for police in three years, and the number of staff positions has fallen by 3.41%.
  • Average police salaries are reduced by an insignificant amount of 1.3%.

For the Fire Department

  • The total personnel budget is being reduced by 3.74%,
  • The number of staff is being reduced by 1.34% and outlay per firefighter increased by 2.43%.
  • Only two Fire Department positions have been eliminated in four years.

A look at the Public Works Department

  • Personnel costs are being reduced by 13.51% in fours years,
  • The number of staff is cut by 14.86% in three years (but very little in the 2010 estimated budget) and
  • The average position costs is increased by 1.59%.

Regarding the Development Service Department

  • Staff numbers have fallen from 70 to 63, or a 10% decline,
  • The personnel budget is expected to fall by only 2.2% in four years,
  • And average staff costs are expected to increase by 8.66%.

In the Information Technology Department

  • Personnel costs are the same as they were in 2007 after rising for two years,
  • The number of staff has been reduced by 6.25% in four years,
  • Average staffing costs have increased by 6.6% in four years, another department in which average employee costs have increased

Filed under Budget, Finance, Taxes and Fees

More on the Coral Gables Budget: Property Taxes as an ATM Machine

August 13, 2010 Leave a comment

It is interesting to look at the historical budget and tax revenue data supplied by the city in the latest Estimated Budget, 2010-2011.

  • City property tax revenues rose from $29.5 million in 2000 to $66.4 million in 2009.  Let’s say that these property taxes had risen just by the inflation rate from 2000 to 2009.  How much would it have increased?  It would have increased from $29.5 million to $36.8 million in 2009, not $66.4 million.  In other words, property tax revenues have increased by more than 80% above the inflation rate.
  • Assessed values increased from $5.5 billion in 2000 to $13.0 billion in 2009.  The equivalent inflation rate would have seen values increasing from $5.5 billion to $6.85 billion.  Thus assessed values increased by 90% more than the inflation rate level.  That was the abnormal real estate value.
  • We can conclude that Coral Gables increased taxes as fast assessed values increased.
  • Like many families in Coral Gables, the city used its property taxes as an ATM machine–spending as fast as the money came in thinking that assessed values would keep rising.  Unfortunately, even today the city keeps increasing taxes as if property values were increasing just like the good old days instead of adjusting to the economic realities that may continue for years.

Filed under Budget, Coral Gables, Finance, Property Values, Taxes and Fees

US Taxes, Spending and Deficits: Big Consequences for Coral Gables

August 7, 2010 Leave a comment

A recent statement of Simon Johnson clarifies the taxing and spending options of the US now and in years ahead.

In summary…

Most of the discussion of federal budget issues today is misdirected.  The shorter run issues are dominated by the likelihood of another financial crisis – and the implications that would have for the budget deficit – but no “fiscal hawks” even want to acknowledge the issue.  It is very hard to take anyone seriously if they refuse to look at these (uncontroversial) numbers.  Medium term, we obviously need tax reform.  The good news, in a sense, is that the US has an antiquated and inefficient tax system; it would not be hard to improve how this operates, raising revenue and actually reducing distortion.  Longer term, Medicare is obviously a tough problem with no easy solutions yet in sight.  But the argument “just cut entitlements” cannot be taken seriously. [underlines added]

He raises what are important facts and risks for the US economy, and indeed for the future of the City’s budget, spending, taxes and economy.  Coral Gables authorities and leaders should not be too optimistic about the future of the US economy.  Stagnation is more likely than a happy growth even for a premier city like Coral Gables.

Filed under Budget, Business and Commerce, Coral Gables, Finance

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