Here is my full column that ran in the Washington County Daily News earlier this week:
This column has been warning for some time that the city of West Bend’s government has skewed more liberal in recent years. After almost a decade of thoughtful conservative leadership, local conservatives got lazy, and the Common Council was taken over by liberals and big government enthusiasts. After choosing to increase taxes as much as legally possible last year, the council is considering a hefty pay increase for city employees.
At the Common Council’s July 19th meeting, City Administrator Jay Shambeau shared the results of a compensation study. That study compared the city of West Bend’s employee compensation to several other cities including Manitowoc, Fond du Lac, New Berlin, and Brookfield and found that West Bend’s compensation lags other cities. Citing employee turnover in some departments and perceived below market pay, the city administrator advocated for a pay increase for almost every nonunion city employee in addition to an annual cost of living increase of about 2%. The overall proposed cost would be $451,940 with an average pay increase of $4,519 per employee.
While evaluating and adjusting compensation is a normal part of any organization, there are some concerning aspects of this proposal that require further inquiry. Several years ago, the city of West Bend implemented a compensation system that more closely resembled one from the private sector that rewarded employees based on merit. The proposed compensation plan abandons compensation based on merit in favor of a model that provides blanket pay ranges based on job function. The proposed compensation plan is a return to an old-school government plan where everyone is paid the same irrespective of how good they are at their job. Furthermore, it is difficult to see how the pay increases will result in more talented employees. The purpose of any compensation plan is to attract and retain the level of talent that the organization requires to be successful. The justification for the pay increases is that West Bend is having difficulty attracting and retaining talented people in a competitive labor market.
At the same time, however, the plan would give almost every current employee a pay increase because they are all good at their jobs. According to the plan, only employees in good standing would receive a pay increase, but there are also no employees who are not currently in good standing. If the city is having difficulty finding good employees, would it not stand to reason that some of the existing employees would be sub-par performers?
If all of the employees are performing to standards, then why would the taxpayers need to pay more to attract better employees? If the taxpayers agree to pay city employees more, will the city management leverage the better pay to replace some of the employees with more talented ones? What are the taxpayers going to get for their increased spending on employee compensation?
As proposed, the spending increase would not result in a tax increase this year. This is because the city is proposing to use some financial gimmickry to hide the spending increase until it is baked into the spending pie. The total proposal would spend $451,940. $283,553 of that total would come out of the general fund that is supported by the property tax. But the city administrator is touting it as tax neutral because that amount would be covered by debt payments being paid into the general fund by Tax Incremental Districts 5 and 9.
TIDs are property tax set asides where the property taxes from those properties are segregated for improvements only in those districts. They are used to encourage development. TIDs 5 and 9 ran debts in previous years and the taxpayers filled the gap from the general fund. Now those districts are in the black and paying those debts back into the general fund. The proposal would fund most of the pay increases from those debt payments and then, when the TIDs expire, with the funds that those properties contribute to the general fund. The balance of the pay increase would be funded by surpluses from the water and sewer utilities.
Does it sound like gimmickry? It is. The fact remains that all of that money is taxpayer and utility-payer money. The city could reduce taxes and utility bills or spend the money on other priorities, but is proposing to increase employee compensation instead.
While there is not a tax impact for the proposed pay increase in the first year, it does set a new baseline for all future budgets. There is no such thing as a free lunch. The taxpayers will keep paying these bills forevermore.
The West Bend Common Council meets again to consider this proposal on Aug. 2. At the previous meeting, only two members, Randy Koehler and Meghann Kennedy, expressed any skepticism. The majority — including the mayor — expressed support for the proposed new compensation plan. It is clear that the taxpayers are not a top priority for a majority of West Bend’s Common Council.