Shawn Vestal: The Six-Figure Club threatens to weigh down Spokane City Hall

The Six-Figure Club at City Hall has more than doubled during the Condon years.

And it’s only going to keep growing, with scores of city employees – police and fire department middle-management, primarily – just a step raise or a cost-of-living adjustment or two away from joining the club.

About 10 percent of city salaries were $100,000 or more in 2017.

“The problem we’re having now is, I believe, with the higher-paid positions,” City Councilwoman Karen Stratton said. “We’re top-heavy.”

Whether you focus on management or labor, the long-term sustainability of city salaries has been a long-term concern at City Hall. The paychecks that go to 2,000-odd employees who police streets, gather garbage, fill potholes and fight fires make up 82 percent of the general fund budget.

The City Council will likely take up legislation this fall that would attempt to put some checks on one part of that picture: the salaries paid to at-will mayoral appointees. Mayor David Condon has expanded the number of such positions, and administration critics on the council have long had concerns that he has overpaid them.

Between 2012 and 2018, personnel costs at the city have risen 19 percent, Stratton said. She said that’s unsustainable, and trying to hold the line on top salaries is the right place to start.

Two-hundred-and-fifteen city employees earned $100,000 or more in 2017, according to a database of salaries provided to The Spokesman-Review earlier this year in response to a records request. In 2011, when Condon was running against incumbent Mayor Mary Verner – when he liked to note how many $100,000 salaries there were at City Hall – there were 103.

Fifty-two of those 2017 salaries went to top managers – “exempt” positions that are at-will appointments outside the civil service process. The overall number of at-will employees at the city has grown from 77 in 2012 to 99 currently, according to figures compiled by council staff.

By far the largest constituency within the city’s Six-Figure Club, however, are police and fire department leadership positions below the level of chief and deputy chief, who are represented by unions. It’s also largely police and fire salaries that make up the on-deck circle for the Six-Figure Club – employees earning salaries in the $90,000-$99,999 range, all of whom are just a step increase or a COLA or three away from crossing the line.

That’s where others see potential sustainability problems – in the workforce at large. Numbers crunchers have talked for years about the consequences of a possible “structural gap” between salaries and revenues. That pressure has eased lately, due to a stronger economy and an absence of big increases, but it hasn’t gone away.

(Overtime pay is another matter altogether; the city paid out loads of it last year and will have to focus on bringing that figure down. This column is focused on base salaries.)

Gavin Cooley, the city’s chief financial officer, said it isn’t as if the city has “solved” the problem of the structural gap so much as benefited from positive economic circumstances. A big boost in labor costs or an economic slowdown – or both – could bring it back in a second.

“The structural gap is always one decision away,” he said. “One recession away.”

Ordinance coming back

Stratton has been working on legislation for months aimed at trying to put some limits on executive-level salaries, and trying to give the council the authority to review and/or approve those salaries. The battle has been – and is sure to continue being – one of several tugs-of-war between the council and Condon over hiring and firing.

A proposal was put forth in November, then tabled for more work. She said revised legislation likely will be brought to the council in September.

A key piece of the ordinance would decouple the raises given to certain managers from those negotiated by the unions that represent workers they supervise. Right now, the raises paid to upper-level managers are tethered to the terms negotiated by a union that represents managers who are civil service employees.

That represents an inherent conflict of interest, council President Ben Stuckart said, because the people negotiating with the union are, in effect, negotiating their own raises.

“To me, that’s the most glaring problem,” he said. “I think decoupling upper management from getting the raises they negotiate is the right thing to do.”

Stratton also said the administration has consistently hired upper managers at higher levels within the city’s step system than they qualify for – creating faster and more dramatic leaps in the top salaries as they proceed through further steps and raises. She and Stuckart are also concerned about something called “out-of-grade” pay, a condition meant to provide temporary compensation for people filling in above their job levels that they say has been used as a way to give de facto longer-term raises.

Stratton’s legislation will likely propose giving the council more authority to review or approve such salary decisions – if only to garner a more transparent explanation, she said.

Administration officials defend the salaries as competitive with or below similar cities, and say it’s necessary to do what they can to attract the best talent to vital leadership positions. They also note that even with additional at-will employees, those positions represent a small portion of a workforce of more than 2,000 people.

Stuckart said the recent union contracts have stayed within the average annual city revenue growth of 2.9 percent. If the administrative salaries aren’t the largest part of the budget, they still represent costs that are growing more rapidly than that, he said – and they represent dollars that don’t go toward cops or other on-the-ground city services.

“We’re not signing contracts with the unions that are outstripping our growth rates,” he said.

Condon has proposed that the at-will salaries be reviewed by the volunteer Salary Review Commission as part of a “total compensation program” applied to all city workers. He said the commission could create and apply an even-handed standard, and remove the possibility of having a City Council review individual salaries, possibly making the issue personal or political.

Stratton argues the city should not rely on a volunteer board, but should use the system it has – a human resources department and civil service process – in conjunction with council oversight.

“Their job is to set those salaries and the ranges AND to make sure the rules are being followed,” she wrote in a text message. “I’m not comfortable expecting that from a volunteer commission, and I really don’t think it’s necessary.”

‘A deficit that will blow your mind’

Of the 215 city employees earning more than $100,000, 20 are classified as directors – at the top of divisions within the city. Those include the highest city salaries, including Police Chief Craig Meidl ($176,000), Condon ($167,000) and Fire Chief Brian Schaeffer ($160,000).

Another 32 are positions at the assistant or deputy director level. All 52 positions are considered exempt and aren’t represented by a bargaining unit.

Others in the Six-Figure Club include judges and city attorneys, engineers and plant managers. By far the largest groups within the Six-Figure Club are fire and police department officers whose salaries are linked to a system of regular steps, as well as negotiated cost-of-living increases.

Thirty-three police sergeants earn base salaries of more than $100,000 a year, according to the city database. Fifteen lieutenants and six captains are in there, too. Meanwhile, 55 fire captains or lieutenants earned more than $100,000, as did 10 battalion chiefs.

If you’re wondering why the ranks of the Six-Figure Club are inevitably going to swell, you need only look just below them, at the highest tiers of the Five-Figure Club: 155 employees make between $90,000 and $99,999 per year.

Most are a raise or two away from crossing the $100,000 line. And then, not too far down, are the 282 city employees who earned salaries in the $80,000s, just a few COLAs away from the $90,000 club.

This upward pressure on wages has been relatively soft in recent years. Coupled with a steadily growing economy and improved fiscal management, the city finds itself with less immediate concern over the structural gap, Cooley said.

And yet Cooley, who also worked in the Verner administration, knows that the gap is never far away. He remembers the budget crisis of 2004, when more than 150 city workers were laid off. Officials described it as a perfect storm of economic problems, but he notes it could also be called mismanagement – the failure to plan for the worst case.

He cites a crucial upcoming decision with regard to sustainability: The city accepted a $9 million federal grant to hire 50 firefighters in 2016. That grant sunsets, and before long the city will have to decide whether to absorb those 50 new jobs into its own budget, expanding personnel costs significantly.

That decision could come at a moment when the city’s financial situation seems solid, and with a lot of accompanying pressure from the firefighters union – which has a whole lot of juice with liberal politicians.

But Cooley likes to emphasize how easily the gap could expand. If, he said, personnel costs were to rise from 2.9 percent annual growth to 4 percent and city revenues drop from 3 percent to 2 percent – which he deems a “reasonably likely scenario” – the result would be huge.

“Then, if a few other things happen, you’ll have a deficit that will blow your mind,” he said.