Posted by: Lisa Pampuch | September 1, 2009

Pay raises boost blood pressure

Sometimes, reading the newspaper is bad for my blood pressure; that’s certainly been the case lately.

First, the backdrop: Taxpayers — the folks who pay the salaries, benefits and retirement packages of public employees — have had a really bad few years.

The typical taxpayer’s major investment is his home. That investment’s value is sinking fast. Morgan Hill home values dropped 25.2 percent in the last year, according to, and more than 38 percent since peaking in 2007. Meanwhile, Gilroy home values dropped 34.2 percent in the last year, and more than 50 percent since peaking in 2006.

But things could be worse; many taxpayers are losing their homes. South County foreclosure rates hovered at around 0.007 percent until 2006, when they began to climb, spiking to 0.2 percent in Morgan Hill during 2008, reports. In Gilroy, the increase was steeper, peaking at about 0.55 percent in 2008.

Increasing unemployment is one reason for high foreclosure rates. The statewide unemployment rate is 11.9 percent, the California Employment Development Department reports. South County unemployment rates outstrip the state’s rate, with Morgan Hill’s unemployment rate at 15 percent and Gilroy’s at 17.3 percent.

Taxpayers fortunate enough to have private-sector jobs aren’t getting raises; instead, many endure pay cuts, forced furloughs and benefit reductions. Many employees must work harder for the same or lower salaries, picking up duties that laid-off colleagues once handled.

The businesses that taxpayers operate are struggling and many are failing. Both Morgan Hill and Gilroy lost several business recently: Alpine RV, Courtesy Chevrolet, Mervyn’s, Circuit City, Gilroy Pontiac, Gilroy VW, Gilroy Ford, to name just few. Sales are lower at most businesses that remain open, meaning less tax revenue for local governments.

That backdrop highlights why I was stunned to read that Morgan Hill City Council members are seriously considering covering staff raises with reserve funds. Times reporter Natalie Everett wrote that “None of [Morgan Hill’s] three union groups have agreed to give up cost-of-living raises that take effect [Sept. 1] … The raises, including a second Police Officers Association raise scheduled for April, total $150,000 this fiscal year … and $270,000 next fiscal year. This would have taken a bite out of the $1.2 million shortfall projected for this fiscal year.”

Everett reported that City Councilmember Greg Sellers said it would be “unconscionable” not to use reserves.

I couldn’t disagree more. It’s unconscionable that the city’s unions expect taxpayers who have less and less to pay more and more.

Councilmember Marby Lee asked, “If this is not the situation we have [the reserve fund] for, what is?” Ms. Lee, reserve funds ought to be used for one-time unexpected expenses, usually resulting from act-of-God type circumstances: earthquakes, floods, terrorist attacks, outbreaks of communicable disease. Reserves should not be used for ongoing expenses like labor costs, and most especially not for cost-of-living raises negotiated before an economic paradigm shift and in a time when the cost of living is falling (ask your favorite Social Security recipient if she’s getting a cost-of-living increase).

Using reserve funds for ongoing expenses is what’s truly unconscionable.

I expect city council members to negotiate hard with unions, not speak in positive terms about using reserve funds to cover raises that taxpayers — who city council members are supposed to represent — simply cannot afford.

But it’s not just Morgan Hill news that’s spiking my blood pressure. The Dispatch’s Chris Bone reported that Gilroy City Council recently approved — in closed session, with no public reporting of the vote, in possible violation of the Brown Act and, I’m told, likely violation of Gilroy’s recently adopted sunshine ordinance — 5 percent raises for the city administrator and city clerk.

On behalf of the strapped taxpayers of Gilroy, council members approved spending $14,700 more a year on these two employees in a climate of high unemployment, service cuts and layoffs — including January layoffs for 48 other Gilroy employees.

But I shouldn’t be surprised. As Bone wrote, these raises follow “the $26,000 in merit raises the council approved for 29 rank-and-file workers between March and June.”

These raises are so manifestly boneheaded that I still cannot fathom them even as I reread the article and write this column. What were they thinking? And where are my blood pressure pills?

Until taxpayers speak up and demand that our representatives keep our interests top of mind, this won’t change. Is your blood pressure spiking too? Let your elected officials know now and at the ballot box.



  1. Unbelievable.

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