Council Votes 3-1 to spend $1.6M on Employee Raises, Bonuses and Capital Projects

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At the March City Council Meeting, Ordinance 1, 2013 passed on second reading with a 3-1 vote. A routine adjustment of budgeted initial fund balances, the $1.6M “surplus” reflecting higher revenues collected or lower actual expenses than budgeted, was wholly targeted to new spending.

So what is the context for this apparent relaxation of austerity? Has the local economy turned the corner?

The details of the proposal were first proposed in February by Vice Mayor Premuroso – a 2% across the board raise for all employees, a 1.5% one-time bonus on top of that, and $783K of capital spending, including $611K for golf course irrigation modernization.

Cautionary comments were made by residents. John Chaplik cautioned that the economy has not improved enough to raise spending levels and thought should be given to returning some to the taxpayer. He also suggested that there be a review of how surpluses are handled. Kevin Easton suggested that performance based raises made more sense than across the board increases. Iris Scheibl pointed out that the county property appraiser is projecting a meager 1.5% increase in valuations and that the economy has not turned the corner. She also mentioned that last years’s move to raise the communications tax was based on the threat of declining reserves which we are now apparently spending. Two others spoke in favor of the ordinance.

In discussion, all the Council Members were in favor of the raises, and some wanted to increase the bonus to 2%. “Our employees are the best in Florida, if not in the country” said Eric Jablin. “We will lose these people if we don’t reward them”, said Joe Russo. Marcie Tinsley agreed we should proceed with caution, but the staff has done a good job without complaint. These three were less supportive of the capital spending and Joe Russo went so far as to vote no on that basis, as he believes the normal budget process is the time to consider things like golf course improvements.

The Vice Mayor sealed the deal with a well prepared and somewhat eloquent pitch for his proposal as presented. In his business (Bert Premuroso is a banker), he is seeing an uptick in the economy and across the board raises. He does not favor merit based increases as “some people don’t like them”, and foresees this level of raises as being a normal thing for the next few budget cycles. He reminded us that they have committed to flat millage for five years (instead of reducing it as valuations climb), and the increased property tax revenue that will result will let us continue to improve employee compensation and capital improvements.

With Mr. Premuroso’s closing, only Joe Russo maintained objection (only to the capital projects) and the ordinance passed 3-1.

It should be noted that the 2% increase applies to the Council as well as staff, although they turned down the bonus. A 2004 ordinance described by Eric Jablin as “making it easier to raise our pay”, requires that any cost of living increase given to employees must also be given to the Council. The City Attorney confirmed that to forgo the raise they would have to repeal the ordinance.

Since Mr. Premuroso signalled his intention to offer raises again next year, it may be useful to examine how the city employees are compensated relative to their peers in the county and other municipalities. We will be analysing this in a future article, but for now consider:

1. In the 2013 budget, the average employee compensation (salary and benefits) was $111,488, with an average salary of $73,681. This compares to about $67K for county government employees, and a county-wide average income (all employers) of $51K.

2. The current average city employee salary is 45% higher than the county average income. In 2006, when the average city employee salary was just $61K, it was only 27% above the county-wide average income of $48K.

3. In 2011/2012 a 3% employee increase was implemented for all FRS (Florida Retirement System) employees (not police and fire/rescue) to compensate for the fact that a state law mandates that they would now have to pay 3% in salary toward their pensions annually. It was justified by the Council

4. In the text of the 2012-2013 budget it states:

In the last three budget years, the beginning balance adjustments have been considerable – an increase of over $5M in 2012, $8M in 2013, and this year’s $1.6M. Perhaps in the future it would be wise to project during the budget cycle how such a “surplus” would be spent if it materializes. That would be useful information when the discussion turns to “spending” or “saving” the revenue expected from increasing valuations in the next few years.

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* Note:
1.Employee average salary is obtained by dividing budgeted salary by number of employees. Total compensation contains salary, retirement, FICA, Health Insurance and Workers Compensation.
2. County-wide income is taken from PBC budget documents.