City Should Not Increase Employee Union Salaries

There is something concerning with the recent arbitration ruling between Jamestown and the Kendall Club Police Benevolent Association — and it isn’t the 2 percent retroactive raises for 2016 and 2017 the arbitrator granted to the city’s police officers.

It’s difficult to say the city can afford raises for other bargaining units while not being able to afford raises for police officers — though perhaps an agreement on raises could be reached if the sides didn’t begin so far apart in the first place. Jamestown will never be a city that can afford 5 percent pay raises each year, particularly when the city has exhausted its constitutional taxation limit.

What’s concerning is arbitrator Howard Foster’s logic regarding the city’s ability to pay.

The arbitrator said the city’s $1.2 million surplus in 2017, despite not taking a profit-sharing dividend from the Board of Public Utilities, and the state Comptroller’s Office “no designation” of fiscal stress in 2016 or 2017 are signs Jamestown’s finances are strong. One can make the argument that the surplus that arbitrator Howard Foster relies upon is a paper tiger and not proof of the city’s ongoing solvency.

Joe Bellitto, city comptroller, told the City Council in April that the 2017 revenues were $833,218 more than budgeted — $413,273 was for highway and road projects from the state, $210,000 was reimbursement for the Greater Jamestown Riverwalk project and $175,074 was left over from the state’s $1 million in additional aid to balance the 2017 budget. At the same time, spending was $377,514 less than budgeted. Roughly two-thirds of the additional $833,218 in revenue the city received in 2017 was either restricted or reimbursement for money already spent. It looks good on the books, but one certainly can’t be counting on that revenue every year to pay for recurring pay raises for employees. And, realistically, how often in recent years has spending in city benefits come in a half million dollars less than budgeted? Foster combines one year of good fortune in a budget balanced on the state’s checkbook with the state Comptroller’s Office Fiscal Stress Rankings that have for years understated Jamestown’s fiscal stress as an argument for ability to pay.

Foster also touches on the city’s ability to request dividend payments from the Board of Public Utilities, saying the city made a business decision not to seek a profit-sharing payment and gave up revenue that could have paid for pay raises for police officers. Foster’s logic regarding the BPU dividends is troubling given the BPU’s discussion earlier this week of looming shortfalls in its overhaul reserve fund and its dismantling fund. Both funds are based on off-system sales so that ratepayers aren’t paying for such projects.

After overhaul projects in 2020 and 2021, BPU officials will have less than $1 million in the overhaul reserve fund while the dismantling fund will have about $3.5 million left at the end of 2018, but more than $3.5 million worth of projects yet to do. The issues come in the aftermath of the 2016 Public Service Commission electric rate increase decision that dictates any off-system sales in excess of $1,225,000 are to be used to fund an overhaul reserve fund, up to $1,000,000 annually. Any off-system sales in excess of $1 million will be deferred and credited to customers through its monthly fuel adjustment clause in the following fiscal year. The 2016 decision also put a cap on the dismantling fund. If the utility isn’t seeing enough revenue to pay to dismantle coil boilers or capital overhaul projects, how will it have the money to make a dividend payment to the city in future years?

Jamestown can’t raise local taxes — and even if it could, it shouldn’t. Jamestown residents were taxed more than enough even before the city hit its constitutional taxation limit. Jamestown can’t ask the BPU for additional money because Public Service Commission decisions are limiting its ability to reinvest in itself, much less give the city money. Eventually, Jamestown won’t be able to ask the state for additional state aid. The city could book some additional outside income from sales taxes and BPU tax equivalency payments, but that’s a dicey proposition since the city doesn’t directly control those revenues.

We aren’t as convinced as Foster is that Jamestown has the ability to pay increased salaries. The City Council should, until the city lessens other expenses or grows its tax base so that it has room under the state’s constitutional tax limit, implement a firm policy of no pay increases for any employee union unless it can be demonstrated that the pay increase will be offset by savings in health insurance costs.