October 11,
2005
Dear _____,
The Las Vegas
Chamber of Commerce represents nearly 7,000 businesses in
Nevada who employee more than 250,000 people, the majority
of which are located in Clark County. As one of the largest
business organizations in the state, our focus is to promote
a strong local economy and protect the interest of all
businesses. We believe in supporting efficient government
spending and recent police salary contract negotiations
raise several questions and concerns for the Las Vegas
Chamber of Commerce.
The Chamber
believes that a healthy and well-funded law enforcement
force is necessary to preserve not only the safety and
well-being of our citizens, but to also ensure businesses
operate in a secure environment. We commend the thousands of
public safety officials who operate throughout our valley
and state to ensure that our families, neighbors and
businesses are safe from crime and violence. However,
balancing public policy needs with financial realities and
sound management of taxpayer dollars is also a priority of
the Las Vegas Chamber.
Ballot
Question 9 was designed to increase the Clark County Sales
Tax by a quarter percent on October 1, 2005. The Chamber
remained neutral on this ballot question because we believed
it was a policy decision for the voters and taxpayers to
evaluate.
Again, we
believe that the City, County and the Fiscal Affairs
Committee are faced with a policy decision when ratifying
the proposed contract between the Metropolitan Police
Department and the Police Protective Association. As such,
we respectfully ask that we have the opportunity to share
with you some of our questions and concerns as they relate
to the current contract negotiations.
Proper Use
of Taxpayer Dollars:
As one of the
fastest growing counties in the United States, its vital
that Clark County has the necessary staff to provide
important government services that are clearly needed—not
only in the realm of public safety but also in other key
areas. As our community grows, we recognize the need for
adding new officers and public safety officials. However, we
must question how funds are being allocated - not only for
new hires, but also for existing officers.
It is our
understanding that the current proposal would increase
police salaries and benefits by more than 25% over the next
four years. This is substantially more than the increases
awarded in previous contracts, which are closer to a 17%
increase over four years. In addition, this contract asks
taxpayers to give larger annual increases to public
employees than what they receive in yearly salary increases.
We are concerned about this increase for the following
reasons:
The Cost of
Living Adjustment (COLA):
The Las Vegas
Chamber of Commerce is opposed to COLAs, believing pay
raises should be merit based. However, if COLAs must
be part of the public employee compensation package, then
the adjustment should be based on the Western-Urban Consumer
Price Index (CPI). The Western-Urban CPI is a more accurate
reflection of the inflationary pressure on our market as
compared to National CPI figures. Both CPI’s are more
appropriate than an arbitrary cost of living increase
figure. It is also our understanding that in addition to a
3.5% COLA increase in year one of the contract and 4.5% in
the following three years, officers may also receive a 4%
merit pay increase annually. Bringing total annual
compensation to almost 10% a year.
Limiting
Future Hires And Government Services:
Additionally,
The Las Vegas Chamber of Commerce has questions about
these substantial increases because of their impact on
future hiring and government services. The 2004 ballot
question to fund more police was estimated to pay for more
than 150 new cops on the street in year one and in the first
decade to hire 1,278 new officers. Based on the higher
salary figures and estimates from the Review Journal, $8.9
million would pay for 200 newly hired officers at the
current entry-level salary. But by the fourth year of the
contract new hires would be down to 136 per year. While it
is our understanding that the funds from the sales tax will
not be used to pay directly for the 25% increase, it is our
concern that increases to starting police salaries will
limit the number of officers hired in future years and harm
Southern Nevada’s ability to deal with the demands of
increased population growth.
Additionally,
the County public safety system is not only composed of
police officers. It includes judicial officials and other
public safety staff. Given limited financial resources, we
believe that substantial increases in one segment of the
public safety system may result in under funding of other
segments of the public safety system. Additionally, the
Chamber is concerned by the on-going trend of spending more
public revenue on salaries and less on services. We believe
this is potentially another example of this problem.
Driving
Higher Costs for Other Public Sector Wages:
The Las Vegas
Chamber of Commerce is also concerned that the 25% increase
may set a precedent for future public sector contract
negotiations. Often, public sector salaries are compared to
one another during the contract negotiation process. Public
sector salary increases have historically been in the 12% to
17% range. Our concern is that by driving up police salaries
at unprecedented rates, other public sector workers will
seek higher salary increases through the comparison process.
Thus taxpayers will not only see more of their hard earned
dollars used for salaries in this contract, but also in
future contracts in other areas of the public sector.
Wages
Higher than Those in the Field:
Several
sources also note that Metro officers already make
competitive wages. The current starting salary for officers
is more than $44,000 a year and it will be $64,000 by the
end of the contract. Compared to the private sector, the
current average wage in Nevada is closer to $34,000 annually
based on August 2005 results from the Department of
Training, Employment and Rehabilitation. State highway
patrol officers’ starting salary in 2003 was
$33,136.
Finally, national information suggests that Metro officers’
wages are in the top third of comparable areas. While we
value the contribution of police to our community, we must
question the wage discrepancy.
Public
Employee Retirement System (PERS):
The Las Vegas
Chamber of Commerce also questions the impact these salary
increases will have on the long-term funding of PERS. It is
our understanding that the proposed contract has a 1.75%
increase in the employer (or taxpayer) contribution for
officers’ pensions. Under Nevada law, public employees
(state and local) enjoy a defined benefit not defined
contribution pension. Public employees receive a flat
percent of their three highest earning years of public
sector service as their guaranteed retirement payment. This
lucrative and expensive benefit is certainly not typical in
the private sector, where most businesses have moved away
from defined benefit plans in favor of defined contribution
plans, such as a 401K. Our concern is that as wages
increase, the real dollar amount of the flat percentage
benefit payment increases, and costing taxpayers more in
public employee retirement benefits. In our opinion,
increasing police salaries increases the long-term
retirement liability for the taxpayer.
As a result of
these concerns, the Las Vegas Chamber of Commerce must
question the rationale for increasing salaries more than 25%
over four years. We request the Fiscal Affairs Committee
seriously evaluate this contract and suggest that you
require the parties to go back to the negotiating table.
The Las Vegas
Chamber of Commerce is calling on local governments in
Nevada to take advantage of our vibrant economy - making
sure that maximizing tax dollars isn’t just what we do
during bad times, but what government strives to do every
single day.
Again, our
state and local employees do a great job for the citizens of
Nevada and the Las Vegas Chamber of Commerce appreciates
their efforts. However, with public employee salary and
benefit commitments growing at an alarming rate, we must
make our concerns known.
Additionally,
thank you for the opportunity to share our concerns in these
contract negotiations. Please feel free to call me
(702)-735-2460 with questions.
Sincerely,
Christina
Dugan
Vice
President, Public Affairs
CC:
