Morgan Hill’s City Council must close a $1.2 million deficit by
next year, so they asked the city’s three unions to renegotiate
contracts and forego raises that would save $150,000 this year and
$270,000 next year.
Shame on the unions and the city
Morgan Hill’s City Council must close a $1.2 million deficit by next year, so they asked the city’s three unions to renegotiate contracts and forego raises that would save $150,000 this year and $270,000 next year. Incredibly, all three refused. These union members’ position – that they should be receiving raises when city revenues are declining sharply, when sensible people with jobs know that they’re lucky just to have them – is unreasonable.
With the unions unwilling to negotiate, city council has two choices: Pay for the raises with reserves, or pay for the raises with money saved from layoffs. City council should choose layoffs. Unfortunately, city council is poised to use reserves.
Layoffs unpleasant, but responsible
It’s shameful that the residents of Morgan Hill are in this situation: Shame on the unions for forcing city council’s hand. Shame on the city council if it capitulates to the unions and uses reserves to pay for the recurring expense of increased salaries.
It’s fiscally irresponsible to spend reserves on unjustifiable raises, on recurring expenses. Fiscal prudence demands that reserves be used to pay one-time expenses that cannot be planned for. What happens if the city experiences a major earthquake, a devastating flood, a wildfire, a Swine flu outbreak, or a terrorist attack? How will we respond if our reserves are blown on ongoing expenses?
The economic downturn has produced a new normal, and public employees here, across the state and throughout the country need to adjust their expectations. If the city’s unions are unwilling to recognize the fiscal reality that has engulfed us – declining revenues thanks to layoffs, falling home values, foreclosures, and businesses failing; state money grabs of funds that rightfully belong to the city; rising national debt that threatens to slow or stall recovery from the recession – then they’ll have to make do with fewer union jobs. Of course, that means that the good residents of Morgan Hill will also have to make do with fewer services, but that’s a better alternative than closing our eyes, crossing our fingers and hoping that things will be better next year.
Economic crystal balls are cloudy
The city has already renegotiated the union’s contracts once based on economic projections that turned out to be too optimistic. Now, advocates of spending reserves point to weak signs of economic recovery in an attempt to buttress their position. Have we hit bottom? Unlikely. If things don’t get better, the cuts that will have to be made later will be even more severe than those that are needed now.
Spending reserves to pay for these raises (or any ongoing expense) is bad fiscal policy that depends on wishful thinking. The unions ought to give up these unjustifiable raises. If they don’t, the city should immediately begin layoffs. Spending down reserves to pay raises is not the answer.
EDITOR’S NOTE: The editorial board was evenly divided, so Dennis Kennedy and John Quick penned this dissenting opinion.
