Let me state at the outset that I am a strong supporter of the comprehensive employment benefit packages espoused by labor unions, progressive employers and proponents of the Western European style welfare state.
These comprehensive employment packages consist of almost total job security, generous defined-benefit pension plans, regular CPI adjustments, employer-paid health insurance that extends beyond retirement, liberal disability and workplace injury policies, liberal leave policies for pregnancy, sick relative care, and the like, domestic partner benefits and many other job-related perks.
City of Berkeley employees, while they will never get really rich on the job, enjoy all or most of these benefits—decent salaries, tremendous job security, peace of mind in their old age and fair working conditions.
Around the world and in our own nation, employment situations like this are becoming rare. The famed welfare states of Sweden, Germany and France are failing because of economic downturns and demographic realities. There are simply not enough taxpayers and monies to support the generous benefit levels. In the United States, only about one in five workers has a defined benefit retirement plan, and fewer still have job security.
Even with the program cuts, bureaucratic belt-tightening and fee and assessment increases that balanced the city’s 2003-2004 budget, the city still faces a $7.5 million deficit in fiscal year 2005-2006, $10.11 million in 2006-2007, $11.67 million in the next year, and $13.74 million in 2007-2008.
Most (maybe 80 percent) of Berkeley’s projected budget deficits are attributable to salary/benefit increases negotiated last year by a generous council and community that was not fully aware of the looming economic crisis. These increases amount to about 6 to 7 percent annually, and compound over time. The logic of a CPI type-increase is to keep up with inflation. However, when there is deflation and economic recession, many of these increases make no sense.
Unfortunately, city leaders have already embarked on plans to raise property-based taxes and assessments to address a goodly portion of this deficit. Berkeley’s property-based taxes, special assessments and fees are already the highest among neighboring jurisdictions—more than 10 percent higher than Oakland, more than 36 percent higher than Hayward and more than 41 percent higher than Emeryville.
These are preliminary figures from a chart being prepared by the city manager, and it looks to me that the final figures will show that Berkeley is even more heavily assessed on a relative basis.
I believe that our city leaders—city manager, City Council and union leaders—need to do the right thing and defer the generous but now inappropriate annual and compounding salary/benefit increase of around 6 percent. Such increases are right in good times, but wrong, wrong, wrong in a time of deflation and serious economic hardship faced by so many in our community. If these increases were deferred until better times, and a few other minor belt-tightening measures were undertaken, we could wipe out a goodly portion of our city deficit and avoid tax increases on an already overburdened and under-benefited taxpaying population.
We would not have to fire one single person or decrease anyone’s salary or job security. We could save most of the worthy social programs of which our city is justly proud. This is the right thing and we should do the right thing!
Barbara Gilbert, a longtime Berkeley resident and former mayoral aide, is a frequent contributor to the Planet.