Council votes no on employee raises next year due to budget shortfalls

Council votes no on employee raises next year due to budget shortfalls

Hucker, Jawando wanted to keep some raises in renegotiated contracts

| Published:

The Montgomery County Council voted against pay raises for the next fiscal year.

File photo

On Wednesday, the majority of the Montgomery County Council voted for no pay raises for union and nonunion employees next year, since the county expects to have revenue shortfalls of up to $600 million combined in the current year and again next year.

The council’s votes in favor of foregoing pay raises for union and nonunion employees were 7-2.

Council Vice President Tom Hucker and Council Member Will Jawando voted against the motions, indicating that they wanted to accept the renegotiated contracts and gives raises to both union and nonunion employees. They said frontline employees deserved pay raises for the services they are providing during the pandemic.

Council President Sidney Katz and Council Members Gabe Albornoz, Andrew Friedson, Evan Glass, Nancy Navarro, Craig Rice, and Hans Riemer voted against pay increases.

“There are too many unknowns at this point to be able to fund these contracts that were presented to us today,” Katz said. “This is not about what our employees deserve. This is about what our county can afford.

“Our employees are fabulous. This is about trying our very best to avoid layoffs and furloughs, to continue to provide services that are necessary for all our residents, and to be able to go above and beyond for those in our community whose livelihoods have been erased.”

Katz said the council would come back to the contracts when there is more information about the economic impacts of the pandemic.

The three initial union contracts that were negotiated before the public health crisis began were rejected by the council through a unanimous vote on May 5. That rejection triggered a nine-day period for union leaders and County Executive Marc Elrich to renegotiate the contracts.

Before the council’s decision, the unions acknowledged that they would have to revisit the contracts and were open to discussions.

The county also rejected a proposed contract with the Montgomery County Volunteer Fire and Rescue Association, for which a renegotiated contract will be discussed later.

The county negotiated three-year bargaining agreements with the Municipal and County Government Employees’ Organization (MCGEO Local 1994) and Fraternal Order of Police (FOP Lodge 35), while a two-year agreement was negotiated with the International Association of Fire Fighters (IAFF Local 1664).

The union contracts renegotiated between union officials and Elrich were sent to the council members late Tuesday night.

The majority of the first version of the bargaining agreements included step increases of 3.5%, as well as other pay raises, retirement benefits, stipends, tuition assistance, meal and uniform allowance, and other benefits.

The renegotiated contracts lowered the increase in fiscal year 2021 costs by delaying some contract provisions until June 2021. The tax-supported cost of the agreements was renegotiated to $12.9 million — a decrease of $14.3 million from the original agreements.

The renegotiated agreements did not modify the annualized cost of the compensation adjustments though , and would increase tax-supported spending by more than $30 million in FY22 and years after.

The only item taken out during renegotiation was a 50-cent per hour raise for MCGEO seasonal employees.

The renegotiated contracts

The renegotiated contract for MCGEO included:

● Delayed general wage adjustments of 1.25% to June 2021
● No change in 3.5% increase for service increments
● No change in 1.25% increase in service increments for employees who did not receive an increment in FY11
● No change in $1,000 lump sum payment for employees who would not receive an increment in FY21
● No change in 2.5% to 3.5% increase in longevity raises

The renegotiated agreement also delayed the retirement contribution shift of 1% of salary increase in the county’s contribution and a 1% decrease in employee contribution.

It kept the military service credit, sick leave payout of $5,000 to $10,000 to employees with certain retirement plans for unused sick leave when they left their jobs, and the creation of a new pension group for public safety emergency communications specialists.

The renegotiated contract for the FOP included:
● Delayed general wage adjustments of 1% until June 2021
● Delayed salary schedule adjustments of 3.5% until June 2021
● No change in 3.5% increase in service increments
● No change in 3.5% increase in longevity raises

The renegotiated contract for the IAFF included:
● Delayed general wage adjustments of 2.25% until June 2021
● No change in 3.5% increase in service increments
● No change in 3.5% increase in longevity raises

Elrich modified his proposal for nonunion employees for a 1.25% increase in general wages to be delayed until June 2021. He also proposed deferring the retirement contribution shift and salary shift differential increases to the same time period.

Rich Madaleno, the county’s budget director, sent a memo to the council on Wednesday morning that said Elrich believed the renegotiated agreements were affordable for the county.

“The drivers of additional cost moved to the very end of the next fiscal year,” Madaleno said to the council.

Elrich proposed several items to provide more room to make the agreements affordable, Madaleno said.

“First, he proposes a reduction in operating expenses, not personnel costs, for all executive departments equaling 5%,” Madaleno said, adding that it would free up $20 million of planned spending.

Another proposal was to eliminate 100 vacant positions in the county and freeze some additional vacant positions until October to free up additional money, as well.

Madaleno said Elrich “strongly believes” that the service increments are more than paid for by employee turnover — higher-paid staff members who leave are replaced by lower-paid staff members.

That employee “churn” results in savings in compensation, Madaleno said, and the service increments don’t cost additional money.

Bob Drummer, a senior legislative attorney for the county, and Aron Trombka, a senior legislative analyst for the county, disagreed.

“It doesn’t actually save you money when new people come in,” Drummer said. “I don’t think you’re looking at the whole picture when you’re doing that.”

Trombka said the service increments are still new costs.

A reduction when staff members leave their jobs offsets the costs of increments, but they are still costs, he said.

“To say that an increment has no cost — that’s contrary to all the data that (the Office of Management and Budget) gives us,” he said.

Council members disagree over raises

Riemer said he was concerned about Elrich’s recommendation to cut all executive department expenses by 5% that would result in reduced services.

“We know next year’s budget is going to be far worse than this year’s budget,” he said. “This is the FY21 [budget] and this is the high-water mark likely for the next several years. FY22 could very well be one of the worst budgets we’ve seen.”

Leaders from each of the three unions spoke to the council and said employees are under an “extraordinary amount of stress” and that morale was at an “all-time low.”

They said they were concerned that employees would leave their jobs for better-paying positions elsewhere if the raises were not approved.

Hucker said retention could worsen and recruitment challenges could continue to increase. Overtime costs could also increase, he said.

“Our employees are the best asset we have during a crisis. … They have to go to work because we said they’re essential workers. That can’t just be a slogan. That’s a responsibility we put on them. It’s also a responsibility on us to treat them like they’re essential and to value them and to pay them like they’re essential,” he said.

The council can’t ask employees to do more with less, Hucker said.

Jawando said it’s a critical priority to recognize employees who expose themselves and their families to the coronavirus.

He said the council asked the unions to work with the county to renegotiate the contracts. To reject all provisions of them would not be a reflection of working together for a solution, he said.

“We said we wouldn’t forget them,” he said. “We said we would continue to negotiate. … I heard and they heard that we were going to try and work together. I heard and they heard that we were not going to turn our backs on our workers.”

Through a savings plan, the county can find money to help fund the contracts, he said.

“We can afford this,” he said. “We can certainly afford it in FY21.”

The idea that funding certain pay raises is going to directly cause furloughs or layoffs is not “intellectually honest,” Jawando said.

But Rice said the county needs to focus on people in the community who have lost their jobs and are struggling.

“How about we talk about what we’re going to do for them versus talking about how we’re going to do pay raises in addition when people are struggling to put food on their damn tables,” he said. “I just don’t get it. Where have we gone to where we are saying raises are more important than people trying to save their livelihoods. There are people out there who are struggling right now.”

Friedson said the council has had to address the most “flagrantly irresponsible budget that has been proposed in the county.”

“Unfortunately, the county executive has put us in a deeply difficult and uncomfortable position and I think he’s done this council no favors. I think he’s done our public sector employees no favors,” he said.

He criticized the fact that Elrich shared his savings plan the morning before the council was to discuss major budget items. Friedson said the council requested such a plan for the last 10 weeks.

The county is pursuing a line of credit because it’s projecting revenue shortfalls of up to $600 million — an action to prepare for an unprecedented fiscal climate, Friedson said.

The council has not received a plan for savings “until just a moment ago,” he said.

Madaleno defended Elrich and said he is taking the task of saving money seriously, as well.

“Just because his approach in decision-making is not yours does not make it any less credible or appropriate,” he said.

Albornoz said unemployment keeps rising and the county is at the beginning of realizing the fiscal implications. Officials should show restraint now to avoid furloughs and layoffs in the future, he said.

Elrich’s proposal to require 5% cuts in budgets of departments would most likely mean cutting the staff and programs, he said.

After Rice moved to reject all provisions in the contracts, Jawando suggested a friendly amendment to separate the contracts for individual votes. Rice declined, mentioning Jawando’s comment about council members being “intellectually dishonest” about funding the raises.

Hucker also tried the same motion to separate the contracts for separate votes, but it was rejected 7-2.

Briana Adhikusuma can be reached at briana.adhikusuma@bethesdamagazine.com.

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