Downsizing personnel on the city payroll via attrition.

City workers must face facts
 
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By Jake Haulk
Tuesday, June 29, 2004 
In comparison with well-run, mid-sized American cities, Pittsburgh (on a per capita basis) spends 48 percent more and has 37 percent more employees -- even after the city laid off 446 employees last summer. Unfortunately, despite the need for cutbacks, the city's employment had remained largely unchanged over the decade prior to 2003. 
For example, in 1994, the count was 12.5 employees per 1,000 residents and in 2002 it stood at 12.6 per 1,000, fully 50 percent more employees than well-run cities. There is nothing mysterious about how Pittsburgh managed to spend and borrow its way into its financial crisis, notwithstanding the fact that the city's tax revenues are nearly $100 million above the levels of other comparably sized cities. 
Incredibly, the Act 47 report shows the city's expenditures rising by $14 million over the 2003 level despite last year's layoffs. In part, this reflects an $8 million increase in fire department salaries and premium pay even though the number of fire personnel has fallen from 896 to 841. The problem is the city contractually must pay for 1,629,360 staffing hours, the same as in 2003, regardless of how many people are on staff. Obviously, that means an enormous amount of overtime is being paid in 2004. 
Given these facts, it is obvious that dramatic changes to the city's work force and compensation packages must be key elements in the city's financial recovery. Predictably, however, the Act 47 coordinator's recommended changes to staffing levels, benefits, and employee contributions were met with vociferous opposition. Nonetheless, harsh as it may seem to city workers, the Act 47 recovery plan does not go far enough for a city with staffing levels that are far out of line and which offers such generous benefits to its employees. 
 
 
 
Rather than being downtrodden pawns in the game of city finances, the work force has been handsomely rewarded with pay increases and "extras" that surpass the private sector, inflation and state-level employees. Consider the following information taken from the Act 47 report: 
Wage increases for the largest bargaining units (police, fire, white collar employees, and most blue collar employees) substantially exceeded inflation and state employee wage increases from 1999 to 2004. The average compounded increase of 20.3 percent in Pittsburgh was greater than the 13.6 percent wage hike for Pennsylvania's AFSCME members and the 15.9 percent rise in the Consumer Price Index. 
The city's current health benefit package was described as "highly generous." Employees make no contributions for the lowest cost health care option and vision and dental insurance are fully funded by the city. Pittsburgh fully funds lifetime retiree medical coverage for firefighters and spouses, and pays a hefty share of medical care coverage for police retirees. In comparison with other bargaining units, firefighters and Teamsters (refuse operations) enjoyed better benefits, including a $5 co-pay for primary care physician visits as opposed to $10 for all other city employees, and $15 for Pennsylvania and national averages. 
In 2003, more than $26 million was paid by the city to fund a variety of other supplemental programs -- premiums, paid leave, longevity pay, and the like, all of which greatly inflate costs. Then too, there is an additional $20 million per year in outlays for workers' compensation obligations, a figure that amounts to nearly 20 times what some comparable cities spend on a per capita basis. 
Simply put, these benefits and restrictions on work force flexibility (staffing minimums, outsourcing, and no-layoff clauses) are symptomatic of the problems with Pittsburgh's approach to governing: Make ill-advised decisions now in hopes that something or someone will bail them out when the consequences must be dealt with. It is part and parcel of the city's mismanagement. X Sadly, too many city workers and city politicians seem to believe the purpose of the city is to provide jobs with lavish benefits rather than being the provider of necessary, core government services to citizens and taxpayers at the lowest possible cost. X 
Personnel expenditures and the city's massive debt load weigh like a millstone around the city's neck. However, the Act 47 recommendations don't tackle the debt problem that has been bloated in large part by the city's decision to sell bonds to boost funding levels to the overly generous pension system. And while the Act 47 recovery plan calls for $33 million in spending cuts, this is simply not enough to correct the city's egregious overspending. 
It will take much deeper expenditure reductions by the city, cuts in the outrageous taxing and spending by the city's schools and enlisting the city's authorities as sources of financial help in order to assemble a comprehensive, viable long-term solution to Pittsburgh's fiscal woes. 
Jake Haulk, a Ph.D. economist, is president of The Allegheny Institute for Public Policy. Eric Montarti is a policy analyst there. Pittsburgh City Council is scheduled take a final vote on the Act 47 plan today.