May 26, 2016
9 comments

While Richmond struggles to close a $10.2 million budget deficit that will unavoidably lead to cuts in vital city services, more than 20 city employees are earning more than $300,000 in salary and benefits while another 200-plus received in excess of $200,000.

And while the average Richmond full-time employee earns $130,000 in total compensation, the average resident earns less than $40,000 in the private sector.

These figures were brought up in a guest commentary published in the East Bay Times on Wednesday. The article was penned by Ben Steinberg, of Richmond, and Jack Weir, president of the Contra Costa Taxpayers Association.

“In recent years the city has shifted resources away from providing municipal services to residents while increasing funding for employee compensation,” they said, adding, “Rather than reform an unsustainable salary structure at that time, Richmond just kicked the can down the road.”

And it’s not just the high pay, but the high numbers of employees, that’s concerning. Richmond’s 106,000 residents are served by 735 full-time employees, while nearby Concord’s 125,000 residents are served by 319.

“The city is asking its distressed, low-income population to foot an ever-growing bill while reducing services like street paving and library hours,” according to the guest commentary.

But deep cuts to city programs won’t achieve a balanced budget without addressing the bloated costs for city workers, they said.

A good case-in-point is the passage of Measure U, a half-cent sales tax that was initially aimed at addressing shoddy roads. Those tax dollars ended up being redirected to plugging up the budget deficit.

“If the city manager and City Council cannot rein in these excessive costs, Richmond residents should demand an independent review of Richmond’s salary structure and the makeup of its workforce,” Steinberg and Weir argued.

Comments

  1. FRIENDS AND NEIGHBORS,

    MY ONLY COMMENT ON MR. KNOX’S OBSERVATIONS BELOW, WHICH I BELIEVE ARE ACCURATE IS, IF ANY WORKER TAKES A WAGE CUT, CITY MANAGEMENT, THE MAYOR, AND CITY COUNCIL MUST TAKE A PROPORTIONAL SALARY CUT.

    WORKERS DID NOT MAKE THE DECISIONS THAT CREATED THIS ECONOMIC CRISIS, MANAGEMENT AND THE COUNCIL DID. THEY SHOULD BE HELD RESPONSIBLE FOR THEIR DECISIONS JUST AS THE RANK AND FILE WORKERS ARE HELD RESPONSIBLE FOR THEIR ACTIONS.

    FURTHERMORE, THERE NEEDS TO BE AN OUTSIDE AUDIT THAT CAN DECIPHER WHERE THE WRONG FISCAL DECISIONS WERE MADE AND HOW TO AVOID SUCH MISTAKES IN THE FUTURE.

    THIS IS EXACTLY WHAT THE STATE AND INTERIM CITY MANAGER PHIL BATCHELOR DID WHEN IN 2004 RICHMOND WAS ON THE BRINK OF BANKRUPTCY. THE STATE AUDIT CITED POOR MANAGEMENT AND INADEQUATE OVERSITE FOR THE THIRTY-FIVE MILLION DOLLAR DEFICIT. APPARENTLY OVER THE LAST 11 YEARS, SINCE THE 184 RECOMMENDATIONS WERE MADE OUR MANAGEMENT HAS SLID BACK INTO THE SAME OLD SAME OLD. I GUESS AN OLD SHOE IS A COMFORTABLE SHOE.

    RADIO FREE RICHMOND

    MAY 2016

    The problem isn’t with the Scrabble playing per se, but with the general lack of sufficient focus on the part of some council members on the serious financial problems the City has, and the propensity to “wish away” the need to make hard decisions. Comments have been along the lines of, don’t panic, I am sure we will find the money somehow, the City Manager will come up with some ‘creative’ solutions’ — without any concrete and workable proposals. Since certain council members are very closely aligned with the SEIU, they seemingly must never ever approve a layoff or reduction in salary or benefits, or even suggest one. It is kind of like the Grover Norquist “no taxes” pledge, for the left. Of course, it remains to be seen whether the rest of the Council will have the fortitude to make the hard decisions — none of this is easy.

    The fact is that the general fund budget is something close to 80% personnel costs. The remaining 20% is largely fixed, like debt service, utilities, insurance costs etc. There simply is no way to affect an $11 million or so structural reduction in the general fund budget without impacting labor fairly substantially. The key will be to do so with the minimum impact on vital public safety services. Some “nice to have” programs are going to have to be cut. The city’s mission is to provide effective basic services to its residents, not to function as a “jobs program” or to attempt to solve every perceived or real societal problems.

    Passage of the “Kids First” ballot measure which attempts to use the ballot box to effect budget decisions would also make things very much harder (hint: vote “NO”).

    Raising new taxes is not a near-term solution, and may not even be a longer term solution given the bad taste many voters have about the Measure U situation.

    I hope that when the budget is finally proposed and hard decisions are made, the voters support all of the council members who take the responsible approach and approve a structurally balanced, sustainable budget that starts to help the City out of its current financial tight spot. There will be complaints from many quarters, and the council needs to know the citizens have their backs when it comes to making tough decisions.

    The alternative is to drive the car toward another financial cliff, like the one narrowly avoided in 2003-04. But unlike then, this time, there are many fewer options to avoid a real financial meltdown.

    JOHN KNOX

    Charles Smith | May 26th, 2016
  2. It’s the white mafia that dominates Richmond through liberalism and Ptm Richmondism….we the brown and black remain deaf, dumb, and blind. How can the mayor oppose the 59 homes at the marina but own 5 acres in Pt. Richmond??? They paint people as bullies….these are the ganester and we let them have it.

    Mike | May 26th, 2016
  3. I feel compelled to respond to the East Bay Times guest commentary “Richmond’s compensation is driving its budget deficit,” by Ben Steinberg and Jack Weir, because it does not accurately describe Richmond’s fiscal situation.
    I don’t know why a reputable newspaper like the East Bay Times will let anybody publish a guest commentary so full of factual misinformation and unsubstantiated conclusions.
    First, Richmond does not have a $10.2 million budget deficit. The budget for FY 2015-16 was balanced, and continues to trend toward an even larger surplus as the fiscal year draws to an end. For FY 2016-17, the city manager will deliver a proposed budget that is structurally balanced on June 7, 2016. Hopefully, the City Council will adopt it.
    Second, stories like the one authored by Steinberg and Weir often appear to be revelations about public sector compensation, in this case from “Transparent California.” The fact is that public employee compensation in Richmond and everywhere else in California is a public record, completely transparent and readily available to anyone at any time from the State Controller at http://publicpay.ca.gov/. Transparency is 100% all the time.
    Messrs. Steinberg and Weir strangely argue, “the city has shifted resources away from providing municipal services to residents while increasing funding for employee compensation.” Who do Steinberg and Weir think provides services? Municipal services are largely provided by people – city employees such as cops, firefighters, building inspectors, landscapers and librarians. They don’t work for free, and there is no evidence that Richmond City employees are paid extravagantly compared to other cities.
    In fact, Richmond has been dramatically reducing its number of employees since 2004 when the city had over 1,000 employees, when the population was almost as high as it is in 2016. With slightly over 700 employees in 2016, Richmond has dropped nearly 300 positions but still provides more services on a per capita basis than in 2004.
    Comparing Richmond to Albany and Concord makes no sense. Richmond bears as much resemblance to Albany as a Great Dane resembles a Chihuahua. Steinberg and Weir write, “ the average Albany resident pays approximately $700 annually toward public employee compensation, $300 less than neighboring Richmond.” The two cities are completely different. Richmond has a population of nearly 110,000, a General Fund budget of over $140 million and operates a port, a wastewater system, a housing authority and an Employment and Training Department. Albany has a population of only 19,192 and a General Fund budget of about $23 million – and no port, no wastewater system, no housing authority and no Employment and Training Department. .
    After making irrelevant comparisons between Albany and Richmond, Steinberg and Weir move on to Concord, writing “Although nearby Concord has a larger population of 125,000, it only has 319 year-round, full-time employees. While Richmond has one city employee for every 144 residents, Concord only has one city employee for every 390 residents.” There is a good reason for this. Concord doesn’t have several major departments that Richmond has, including a Fire Department, Library, a Port, Employment and Training Department, and a Housing Authority, which account for 195 Richmond employees. Concord receives all of these services from Contra Costa County.
    Transparent California may report municipal compensation, but they apparently don’t analyze the data. Neither do Steinberg and Weir, who critically note “Richmond’s fire chief in 2014 earned more than $560,000 in salary and benefits.” What they neglected to explain is that in 2014, the fire chief retired after decades of service, and the $560,000 was for his final year of compensation, not his salary in a “normal” work year. This number included vacation and sick leave buyouts, totaling $286,233, an amount earned by the fire chief that the city of Richmond was legally required to pay upon his retirement. The current Richmond fire chief’s salary is only $213,900, and benefits add another $165,157.
    One place that Richmond stands out from many other cities is the relative amount of the police budget. When many cities cut their police budget, and consequently the number of officers, during the recession, Richmond did not. One of the results is that Richmond disappeared from the list of the ten most dangerous cities in the U.S. and in California. Those Bay Area cities that made cuts are now on the latest list of California’s ten most dangerous cities, including Stockton (2), Vallejo (4), Oakland (6) and Antioch (7). We believe Richmond residents would rather be safe than unnecessarily frugal.
    Steinberg and Weir repeat the often played Measure U refrain, “In 2014, Richmond urged voters to pass Measure U, a half-cent sales tax deemed necessary to fund essential city services, like the pavings of roads. After Richmond voters dutifully passed Measure U, the city manager and City Council within weeks redirected Measure U proceeds to plug its budget deficit at that time.” Well, the actual title for Measure U that appeared on the ballot contained 36 words, only two of which mentioned “street paving.”
    Shall the City of Richmond adopt a one-half cent transactions and use (sales) tax, to fund and maintain essential city services, such as public safety, public health and wellness programs, city youth programs and street paving?
    In fact, the first year’s proceeds from Measure U were used for all these things (“essential city services, such as public safety, public health and wellness programs, city youth programs and street paving”). The budget for street maintenance in this current budget year (FY 2015-16) was substantially increased from FY 2014-15. Steinberg and Weir could have looked at the budget (http://www.ci.richmond.ca.us/DocumentCenter/View/34458) and found, for example, that the number of “city blocks resurfaced” rose from 80 to 96, and the number of potholes filled from 2,100 to 3,000. The Pavement Condition Index (PCI) was projected to rise from 62 to 63. The only thing the City did not do, with an abundance of caution, was to immediately float a bond for street repairs that would have tied up Measure U revenue for many years to come.
    Steinberg and Weir naively believe that the way you cut a budget is to just reduce compensation. Unfortunately, it doesn’t work that way in either the private sector or the public sector. There is a marketplace for public employees, and if you want the best people, or even competent people, you have to pay the price. You can’t just make a lower offer and expect to be flooded with good applications. Nowhere is this better illustrated than in law enforcement, where cities and counties compete with each other constantly, poaching each other’s cops with better compensation offers.
    Even so, Richmond has done a good job holding the line on both compensation and benefits. Since 2004, the CPI increase in the Bay Area has averaged 2.5% a year. For Richmond employees represented by SEIU, (which includes the majority of the City’s non-public-safety employees), the average across-the-board increase has been 1.8%. For those represented by Local 21 (mid-level management), the average is 2%; for sworn fire and police personnel the average across-the-board is 3%. While sworn personnel averaged a slightly higher across-the-board increase than the CPI, the positive impact of the slightly higher salaries has been to attract the top candidates for sworn positions. In contrast, Antioch, a city with a similar population, currently has a polic force half the size of Richmond and was just ranked the 7th most dangerous city in California. Vallejo, Stockton, and Oakland, all of which substantially cut the number of their police personnel during the past decade, are each in the top ten ranking of most dangerous cities in California.
    In 2004, all City of Richmond employees began paying for their share of PERS retirement (Richmond was the first city in Contra Costa County to have city employees pay the employee’s share of PERS). This change in how PERS was paid, resulted in an 8% pay cut for miscellaneous employees and a 9% pay cut for sworn safety personnel. Taking this into consideration, the above cited across-the-board salary increase, in reality, only resulted in a net gain for employees represented by SEIU of 1%; 1.2% for those employees represented by Local 21; and only a 2.2% across-the board net gain salary increase for sworn safety personnel, which are all below the Bay Area CPI for the same time period.
    Finally, Steinberg and Weir believe that poor residents do not deserve the same services and quality of life that wealthier people do. They write, “The city is asking its distressed, low-income population to foot an ever-growing bill while reducing services like street paving and library hours.” There is no question that Richmond is not a wealthy city. In fact, of 101 cities in the nine-county Bay Area, Richmond has the next to lowest median family income of any – exceeded only by San Pablo. Does that mean Richmond residents should just suck it up and tolerate crime, blight and ignorance? Of course not. But we have had to get creative and create revenue streams that are not dependent, like richer cities, on retail sales and real estate values. We have a higher utility user tax than most cities, higher sales taxes (like Measure U) and even a marijuana tax.
    Managing a city with Richmond’s challenges takes perseverance and creativity. Criticizing is easy, but finding solutions is hard work. I would hope that people like Steinberg and Weir would roll up their sleeves and become part of the solution rather than simply being problem mongers.
    Tom Butt, Mayor

    Tom Butt | May 27th, 2016
  4. Give em hell Harry! …er..I mean Mayor Butt!
    The Mayor is the right person, at the right time for the job in my own humble opinion, a fierce defender of Richmonds image.
    John Knox, who is quoted above, also and as usual makes some very salient points. I would hope that our esteemed council members on the extreme left will consider that even Bernie Saunders has made compromises and worked together with the Democratic Party for the further good, like when he supported ‘Obamacare’ for example, and not allow the perfect be the enemy of the good.
    Richmond voters would be wise to take Mr Knox’s advice and remember who “had the fortitude to make the hard decisions” come election time.
    Good luck to the Mayor, City Council, and City Manager.
    Thank you all for your service to our city.

    Financially Distressed Richmond Resident | May 27th, 2016
  5. Numbers don’t lie. I’ve often wondered how a small city like Richmond, with a major refinery, port, train depot, Interstate Highway, and eager workforce is constantly broke and asking for handouts from the State and Federal government. Now we know why. I suspect by the sheer number of employees that there is much duplicity. And we Richmond residents all know about the graft; if one family member is a City employee, then most of the other ones are hired as well, even if they cannot perform the duties of the job.

    I think it’s time to perform an audit of the human resource practices of Richmond, and hire outside assistance to reduce the employees by 40-50%, to be in line with other similar size Bay Area cities. Maybe then The City could fund some programs to bring in private sector jobs, that add to the city revenue instead of take from it.

    bill | Jun 1st, 2016
  6. Richmond residents don’t be fooled. City officials do not want an independent review or audit, because City officials know exactly where cuts should take place and where the waste and mismanagement is happening at the taxpayer’s expense. This City is top heavy with to many overpaid heads and to many employees for our population. If they don’t change their salary and benefits packages and structure and eliminate half the staff (many that are unnecessary) this city will go bankrupt sooner than later (we are already head that way). All city employees should be put on notice (especially those at the top where the biggest waste takes place).

    Tired of the incompentence | Jun 2nd, 2016
  7. Agreed. I don’t think there is outright crime and embezzlement going on, just incompetence at the HR level. There may also be a failed social engineering experiment; where it was thought that over-hiring and distributing more of the treasury to more of the citizens (how many Richmond employees live and shop in Richmond?) would somehow enliven the economy, or reduce crime, or be a solution for any number of untested hypotheses.

    The problem is that once people are hired by a public entity, it is very hard to un-hire them. Eliminating the position or department seems to be the only way to reduce employee roster, via attrition. That way they are not firing the individual, they just do not have a job for them to fill anymore.

    Not being privy to the accounting, I would like to venture a plausible scenario anyway. The City should strive to get its operational budget to equal that of the guaranteed revenue of it’s largest sources (Chevron, other refineries and major businesses) that have an established generation of revenue for the city. All other sources of revenue would then be superfluous and could be used for programs and services beyond the basics.

    This would never happen, though, because all public departments are encouraged to spend their entire budget and ask for more. If a department spends less than it is budgeted, it is not rewarded, it’s budget for the following year is reduced to them amount they spent this year. Department managers will always use their entire budget even if they don’t need to.

    bill | Jun 6th, 2016
  8. Yes, Measure O, concerning Lindsay’s salary, was turned down. But – Council take the hint – it failed by only two hundred votes. You all really need to pay attention here. Despite the fact that the measure failed, it was VERY close and a bunch of us are REALLY unhappy with your money management. You put new taxes on the ballot: we will NOT pass them.

    Sandra Davenport | Jun 8th, 2016
  9. Bill, I think that you will find that a major problem with so-called high salaries is police and fire over time. Mr Tired of Incompetence, maybe you should learn more before crucifying the wrong people.What have you personally done to avert this overtime? Most likely nothing, but everytime there is a demonstration, fire, major crime, etc. it happens. Mr Tired of Incompetence – you too should think of this. I think you know very little about City government, but pretend to do so.

    Roger | Jun 9th, 2016

About the Author

Mike Aldax is the editor of the Richmond Standard. He has 13 years of journalism experience, most recently as a reporter for the San Francisco Examiner. He previously held roles as reporter and editor at Bay City News, Napa Valley Register, Garden Island Newspaper in Kaua’i, and the Queens Courier in New York City.