Published on -7/6/2014, 4:35 PM
In 2004, when voters approved a 0.75-percent sales tax increase to provide money for the city of Hays' general fund, the stage was set for sound financial planning.
Although the tax took effect Jan. 1, 2005, the entire first year's collection was placed into what staff called a budget stabilization reserve. That 12-month lag is designed to minimize the effects of any potential economic slump, and give commissioners time to adjust the upcoming budget if necessary.
The plan has exceeded even the high expectations of those who envisioned the process. Only once, in 2010, have sales tax collections fallen short of forecast.
It appears that will happen again this year. Receipts for 2014 are expected to decrease 2 percent from the year before. No time for panic -- that's why there is a stabilization reserve. But it is also not a time to be extravagant.
Which is why City Hall decided against pay raises for 2015. Instead, it opted for a 2-percent bonus based on accruement for one year, then plans to reassess sales tax figures for 2016. Both the Service Employees International Union and the Fraternal Order of Police tentatively have agreed to the plan, which also will affect all non-union city employees.
The International Association of Fire Fighters local, however, is pushing for more. This union countered the city offer with 5-percent raises for firefighters and 7-percent raises for lieutenants.
Naturally, the city rejected the request and has asked the Public Employee Relations Board to mediate the standoff.
We're not against the concept of firefighters attempting to improve their position. But it appears their timing is off. This is the type of request one makes the year after sales tax collections surpass budget, not when everybody involved is cautiously optimistic for a rebound next year.
The stabilization fund will cover an even much worse scenario than a 2-percent drop in sales tax. That isn't the issue. It's whether the next year rebounds or not. If it doesn't, then the commission begins scaling back services. If they're dealing with large salary increases the general fund doesn't support, even more services are scaled back.
"The city's position is that this type of salary increase is unsustainable at this time given the negative sales tax," Paul Briseno, Hays assistant city manager, said at a press briefing. "Also, it's not justified."
The latter comment was offered because Hays firefighters have received a pay increase every year since 1989, except for 2011 when the preceding year's sales tax revenues were negative.
There is no question firefighters perform jobs that are beyond most people's capabilities or desires. It is a dangerous occupation, one worth rewarding with a great compensation package.
But it also must be affordable and sustainable. The current position of the firefighters is neither. Not for 2015.
The fact-finding and federal mediation efforts should prove this the case. If they don't, and the city is pressured into treating all employees to 5-percent raises, the budget stabilization reserve itself will require stabilization.
We don't believe the wants of one group of employees should place the entire financing plan and all taxpayers at risk.
Editorial by Patrick Lowry