With three new members, the Lee’s Summit City Council is returning to a still-unsolved riddle: how to boost the pay of city employees.
During a work session on Thursday, council members considered a plan drafted by new Mayor Bill Baird that would increase wages to make them competitive with other cities and proposes sustainable ways to pay for the added expense over the next five years.
Those proposals include new revenue from increased taxes and fees, as well as significant spending cuts on city operations.
Baird stressed that the plan was conceptual and that it lacks many details. For instance, the council has not yet determined exactly how much it wants to spend on salaries to both make up an estimated 10 percent gap with what similar-sized cities pay their employees and accommodate compensation changes desired by the council, such as graduated “step” plans for public safety workers. The council’s finance and budget committee will ultimately need to determine that figure.
But Baird said council members, who have repeatedly clashed on paying for a wage increase, needed to agree on a plan of some sort to give city employees some certainty and so that the government can focus on other things.
“We’re trying to press a reset with this council,” he said. “So we have to put everything back on the table.”
The council has considered employee pay for some time, but the subject reached a head late last year when a compensation study determined the city was way behind its peers on how it paid workers, a problem that was hurting morale and making it hard to attract and retain high-quality staff.
The city budget currently has up to $1.6 million allocated to increase pay, although City Manager Steve Arbo said that would boost average salaries only 3 percent, not the 10 percent judged necessary by the consultants.
Some council members have advocated for making up the difference by dipping into the city’s emergency reserve fund, but that plan ran into an impasse with members who said such as plan was not sustainable.
Baird’s plan includes asking voters to approve creating a new user tax on items purchased from vendors outside Missouri and increasing the city’s sales tax by a half-cent. Together, those two tax changes would generate almost $8 million a year in new revenue, city officials estimate.
Similar tax proposals failed to gain much support on the council when offered earlier this year, as some members predicted a poor showing at the ballot box.
Baird and Arbo acknowledged those concerns but said that the increased taxes were key to paying for a multi-million-dollar wage increase and that those voter referendums would come only after the city had begun taking other steps to cut costs and increase revenue.
“We should not go to the voters and ask them to increase their burden through their taxes until we feel certain that we’ve looked at our own policies and programs and have done the very best that we can,” Arbo said.
For example, Finance Director Conrad Lamb said the city would use technology to change how it pays its vendors and handles credit card payments, which he estimated could save about $200,000 a year. The city would also look to increase the fees it charges people who use ambulance service to generate an estimated $500,000 a year or more.
Arbo added the city would also look to cut its health insurance costs by $700,000 a year. For example, he said next year’s premiums will go up only 1.9 percent, compared with the 9 percent his staff expected.
He said the city also could consider ways to cut overtime expenses by $700,000 a year. Overtime has grown recently, increasing from $1.9 million in 2015 to an estimated $2.9 million this year.
“Maybe if we pay higher salaries (employees) won’t have to rely on overtime as much,” he said.
One problem with the plan is that many of these elements are long-term even as council members and employees demand quicker action.
To deal with this, Baird’s plan proposes using “interfund” loans in the initial years of the plan, essentially paying for the raises by borrowing small amounts from some of the more than 80 funds used to operate the city and paying them back with the planned increases in revenue. Lamb said the city has the capacity to borrow up to $16 million against these funds, although they would have to be paid back within five years and would charge interest.
Baird said the council, administration and employee groups would need to commit to paying those loans back promptly.
“If we could make all these revenue and expense changes happen right now we wouldn’t have to even consider this, but all of these take time to implement,” Baird said.
Council member Bob Johnson, who joined the council along with Baird last month, said he had reservations over the sales and use tax increases and felt the council could do more to cut the budget, including reducing the number of positions. He also said he was skeptical of using the interfund loans.
“I’d like to see it (paid back) in one year, not five,” Johnson said. “I don’t know how in my mind to justify a loan for an ongoing expense.”
Council member Craig Faith said he still thought dipping into the reserve fund to pay for the wage increases should be an option. But he said Baird’s plan was something he could work with.
“This is a multi-tiered approach,” Faith said.
In other business, the council heard a presentation from the Lee’s Summit Housing Authority, which recently completed a study on the demand for affordable housing in the city.
Darrin Taylor, the authority’s executive director, said that there are around 1,700 applicants on the organization’s waiting list for affordable housing assistance and that no additional affordable or assisted living units have been built in Lee’s Summit since 1996.
Taylor also said the study found that almost half of the people who rent homes or apartments in the city are paying what is considered an excessive amount of their income on housing and that those struggling with housing costs often have to ignore other necessities, such as food or health care, to make ends meet.
The group recommended that the city find ways to add between 300 and 500 affordable housing units, possibly by offering incentives to developers to create multi-family communities with both market-rate and rent-subsidized units to accommodate families of different income levels.
“It’s going to take creative partnerships,” Taylor said. “The longer we wait and do nothing, the bigger the problem is going to be in terms of coming up with the financing and land and those kind of things to address the problem.”
The council was largely noncommittal on the proposal, with some members concerned with how to pay for those incentives.
“My preference on affordable housing is owner-occupied,” Johnson said.
David Twiddy: firstname.lastname@example.org