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Monday, October 19, 2009

Can Layoffs Avert Tax Hike in Northampton or Lehigh County?

Cut, cut, cut, cut, cut, cut, cut, cut, cut.

That's a knee-jerk reaction many in in both counties take when a tax hike looms. Guess what? The only place where cuts can really be made is in personnel. Layoffs. From what I've seen firsthand in Northampton County, that's a disaster. When former exec Reibman did it a few years ago, he ended up ruining morale, and drove the workforce into the arms of 11 different unions.

In his budget message at Northampton Community College last week, Northampton County Executive John Stoffa flatly stated why layoffs would be ineffective.

"Salaries and fringes make up almost 70% of General Fund expenditures. Some have suggested that spending be reduced by $7 million by laying off employees - as many as 200. Were we to do this, we would have to continue paying unemployment benefits for at least a year following their lay-off. Since we are self-insured, we must pay the total cost of unemployment compensation. If our employees were eligible for the the current maximum unemployment benefit of $558.00 per week or $29,000 per year, laying off 200 employees would still annually cost us $5.8 million in unemployment. It is not the solution it first appears to be while services to the public would suffer dramatically."

But at the Pen Argyl Concerned Citizens debate, Ron Angle still asked candidates about reducing the workforce. "The only meaningful way to deal with that 9.3% tax increase would be a 10% cut in employees. My specific question to all of you - if two people were to put that on the floor, how would you vote, simple yes or no?" (You can see the video here).

Tom Dietrich: "We had a wage study that was done ..."

Angle: "A simple yes or no ... "

Moderator: "Ron, Ron, I'm giving thirty second response time per question."

Dietrich: "We had a wage study. What we will see is some employees are getting paid much higher than private industry. When I was in the union, we referred to those people as fat cats and a lot of time the lower management positions have been elevated to a position where they weren't really overseeing anything other than their own time.

"I could see very much a wage cut. I'd love to see people - not necessarily lose their jobs - but I would love to see our wages in certain county positions being adjust to reflect the ... "

Angle: "Most are under contract. You can't change their pay, you can merely eliminate their position. How would you vote? I didn't get an answer."

Dietrich: "I just said I would reduce their wages to reflect the private industry. And if they can't be adjustable like that, we shouldn't be adjustable. We should move forward to possibly eliminating people that are very much adamant that they just plant themselves ... ."

Barb Thierry: "Yes."

Angle: "Thank you very much."

Gilbert: "Yes."

Angle: "Thank you very much."

Charles Dertinger: "Almost unequivocally not, no. We have - I don't know who you would fire. The people who are in the prison? The people who are providing services that come from the state monies? The vast majority of our budget are pass through monies. They're not taxpayer money from real estate taxes in Northampton County.

"We have services that we are required to meet. We have unfunded mandates that we have to do, and these positions need to be filled."

Lorraine Pasquale: "I would vote no."

Bill Wallace: "Let's look at this real simple. We're in a downturn in our economy. We're going down, down, hopefully at the bottom coming back up again. Everybody talks about cutting services when we're at the bottom. When we were going up and things were great - ten, fifteen years ago - did anybody say 'Hey, let's increase services or let's pay 'em a little bit more?' No. They had a contract, and like Ron said, it was standard. We gotta' get through this bottom time, we gotta' keep our services because some of those people are over-worked.

It's the same in the school districts. You sign a contract when times are good and you're getting 3, 5, 8 per cent, when times are rough, it's more difficult.

John Cusick: "There's certain things that we simply cannot cut. We can't let prison guards go, we can't fire nurses at our nursing home, so there are services we have to provide to the courts, human services, Children & Youth. So there are things we're going to have to look at in totality as we go through this budget."

Walter Garvin: "The citizens of Northampton County expect their tax dollars to be expended prudently, just like you do in your household. So again, you can't fire prison guards unless you have a decrease of population in the prison. the same thing with ... there are certain things that can't be fired.

"Now the Hay Study Group said some of the employees in Northampton County were underpaid. I say at this time, they should not get any additional money because we don't have it to give."

"It's an individual case basis, Ron."

Deb Hunter: "I would vote no and here's why. I think there are other places where you can find that money. That rainy day fund? You can't tap that fund forever, I understand that, because you want to keep your bond ratings up and have to keep your vision going. I would not do because you are committed and also, the administration that I think you so much admire and the cabinet and that sort of thing. You have to have a certain amount of trust. The Council has a responsibility to quiz them, to ask the hard questions, and are they asking the hard questions?

If they have not come up with that recommendation, then there's a certain level of trust that you have to put in that, and then you have to demand, well, you have to cut it somewhere else.

I don't like a tax increase any more than anybody else, but I wouldn't cut the employees."

Peg Ferraro: [Unfortunately, I cut Peg off and apologize to her. But she was no enthusiast for layoffs.]

43 comments:

Anonymous said...

Of course there will be personnel cuts. When the personnel have demanded an unsustainable pension benefit, it becomes necessary to cut jobs. Perhaps if county employees were willing to be reasonable in salary and benefit matters, layoffs might be significantly reduced.

michael molovinsky said...

in northampton, if previous layoffs drove into the "arms of the unions" then they're already unionized.

in lehigh, cunningham pushed them into the unions (cedarbrook) as soon as he took office.

Anonymous said...

I refuse to accept the O'Hare/Stoffa line that the situation is hopeless, layoffs cannot be undertaken, and tax contributors must simply pay more.

The work force has already unionized. What you call poor morale is really poor politics for the incumbent. The painful process must start somewhere.

The "knee-jerk" characterization runs both ways, as many run immediately to the wallets of taxpayers in these situations. The suggestion of layoffs is not made because it's easy. Just the opposite, it's made because the process is difficult - but necessary, given the county's fiscal condition.

not so casual observer said...

We should first offer retirement attrition packages at the current plan., Then renegotiate the plan (it is much too expensive and not in line with industry) Then we reduce some non essential positions, witht hat done we look at programs and work force reduction. We may nmot be able to reduce the tax increase to 0% but we may be able to keep it in bounds that will not have a reverse effect on revenue from existing sources.

michael molovinsky said...

only government would indulge in these early retirement incentives, in allentown some employees received it after working only two years.

Bernie O'Hare said...

MM,

Northampton County is almost entirely unionized, with 11 different unions presenting a nearly unmanageable task for administrators. In LC, by contrast, nearly half the workforce is nonunion.

NC and LC were very similar until former Exec Reibman decided to lay off county workers to minimize a major tax increase. He destroyed the morale of couty workers, and some of them are irrevocably damaged. Nothing anyone can do will change that. He also pushed nonunionized workers into the arms of the union.

The notion that we lay people off when people need county services most is ridiculous.

I've previously suggested the Sheriff's office is bloated, but have since learned its size is on a bar with ther counties.

I would not take meat axe to the budget, but would carefully scrutinize each position. That's really always being done. LC is at its lowest level since 1990. In NC, the only major surge in new personnel in the last four years was when the prison expansion was completed.

Anon 6:59, This is no knee-jerk. There simply is no place to cut. The only solution is invading the fund balance, and that is risky.

Anonymous said...

Bernie O'Hare said: "The notion that we lay people off when people need county services most is ridiculous."

Funny, but we didn't seem to see any layoffs when times were good either.

Not only should the counties be looking at layoffs, they should be looking at privatizing services wherever possible to achieve lower costs.

The counties should focus on providing the CORE SERVICES of county government at the lowest cost. It should not matter whether those services are provided by outside firms or the county's own employees.

County government should not be allowed to become a haven for its employees to be paid more (both at work and in retirement) than the private sector.

The taxpayers can no longer afford that luxury.

Bernie O'Hare said...

Anon 9:30,

Go back and read what Stoffa said. If he laid off 200 workers, he would both reduce services and end up with a net savings of $1.2 MM, not enough to avoid a tax hike. You can't privatize jails in Pa., do that's out. We tried privatizing janitorial services, and found it was cheaper w/ in house. We have privatized prison food.

I agree county gov't should not be a haven for parasites, but don't think you have that. Where would you cut? It's easy to make sweeping statements, but it's really hard when you come down to specific jobs.

LVCI said...

Concerning the 2010 budget: From Don Cunningham's statement on Aug. 31st..

* More than 50% of that spending total is either state or federal pass-through money The county taxpayer funded portion of the 2010 budget is $110.9 million, roughly about 25% of the total budget.

* 70% is spend (of county taxpayer's money) on what we call Law and Order

So in essence, if in the case of Lehigh County, they were to layoff all the "law & order" workers there still would only be a 70% reduction from the 25% OR in other words 17.5% reduction of the entire county taxpayers' funded portion of the Lehigh County budget!

Retaining only the necessary 70% "law & order" workers and (heaven help us) getting rid of everybody else (the 30%), we would only realize a 7.5% reduction of the taxpayer's 25% share OR somewhat less then 2% of the TOTAL budget .

Quite a dilemma and not a whole lot of wiggle room!

Proposed 2010 LC Budget

LVCI said...

BTW: "Getting rid of 30% of them".. wouldn't erase the unemployment payments nor pensions.. so that 2% savings would actually be far less then 2% I stated above

Anonymous said...

It's so easy for non-contributors to demand more of those who do contribute. When there become more non-contributors than contributors, the non-contributors will simply demand more - and get it.

I love the pretzel logic of needing more government types during bad times when there's never any discussion about thinning the ranks during good times. When, if ever, is the proper time to thin government payroll?

The NC unionization damage is done. The morale issue is moot. A quick reading of this blog will tell you that morale is still deplorable. Most of us have very low expectations of treatment by government employees. These expectations are met every day.

As the privately employed work into their 70s while government types are long retired and demanding theirs, it's hard to feel sympathy. Nobody forced them to work for the government.

Anonymous said...

Bernie I'm sorry, but how do you spend almost $40 million over the last two years and say I've held the line on costs,ie., taxes? I guess I am confused over Cunningham's repeated crap about not raising taxes. I would be much more impressed if he told me how is reducing costs. And yes, layoffs can be a problem for those being laid off. But isn't it difficult for the taxpayer. (And how many of those laid off are really doing work that has little meaning other that being part of a group of workers that serve for some department head, ie., look how important I am, cause I have all these workers).
I've beem there and have seem it in corporations.

Bernie O'Hare said...

Anon 11:25,

Cunningham has held the line on costs, and has mentioned that, too. Government has grown 1.02% per year since he has been in office, well below the rate of inflation. Workers now contribute 33% more to their health care. Employment is now at its lowest level since 1990. That's pretty tight budgeting. I think he's entitled to say he's held the line.

Cunningham has dipped into a fund expressly set up for the purpose of avoiding a tax increase. Would you prefer that he instead raise your taxes?

Layoffs can be very difficult for the taxpayer, too. C&Y, MH/MR, Department of Aging and other human services are provided by provided by people paid by the county. When the economy tanks, the demand for those services increase. So it would hurt you or someone in your family to see those services curtailed at this time.

Anonymous said...

Liberal logic is always good for a few laughs on a Monday morning.

If one loses his or her house for failure to pay the taxes that support the bloated bureaucracy, at least there is high morale among the bloated bureaucracy in place to catch them for failing to pay for the bureaucracy.

Now go to the back of the line, fill out this form, and don't dare touch my pension, you cold-hearted, money grubbing, kid-hating, poor-hating pricks.

Bernie O'Hare said...

Anon 12:12,

I get the hatred you feel for the public sector. But where do you cut? Where are the practical suggestions?

Should we reduce corrections officers, creating a need for OT and resulting in escapes that may endanger your life? Should we let extradition requests go by the wayside, so some drunk driver ends up killing someone? Should we reduce nurses, so that your aunt or someone else dies at a county nursing hime? Should we reduce services for the Aging, letting them freeze to death in their own homes? Cut down ion C&Y, allowing children to be tortured by sick parents? Should we reduce staff in the criminal division, resulting in lengthier waits for restitution? Should we reduce the civil division, meaning that PFA will just have to wait a few weeks and you're on your own 'till then?

If you can come up w/ some practical suggestions, I'm all for it. But in truth, there's not much you can do about county government. Most of the services performed are vital; you just won't notice until it's not there.

Dean Browning looked closely at LC, but in the end, suggested no reductions in employment. Perhaps some offices could be cut down, but it would have to be done for economic, and not political, reasons.

I'd suggest looking at real estate. Since the housing market is depressed, it stands to reason that staff in those offices might be used in other offices, where need has increased as a result of the recession. Why not do more cross-training, which would eliminate or reduce need for future hires?

But layoffs are not the answer. It sounds good, but results in little savings and the demand for services is still there.

Anonymous said...

"Nobody forced them to work for the government"

Well, not yet, but, be patient. The Progressive Liberal agenda is moving along quite nicely, I think.

:)

Bernie O'Hare said...

Anon 12:59,

Your IP has been duly noted and the re-education police are on their way. There is nowhere to hide.

Where are your specific suggestions? there's a budget hearing today. Will you be there?

Anonymous said...

Stoffa said the upcoming pension contributions are the biggest problem contributor to the increase. So, start there.

If Harrisburg holds the cards, the county administration needs to focus on undoing this unholy obligation and work with the state to reduce, not shift, the costs of public retirement benefits. Promises have been broken in the union-dominated auto, steel, and publishing industries and many other non-union companies, because the companies simply did not have the funds to sustain them. Time to do the same in the public sector.

And that includes the schools.

Everyone who pays county real estate taxes also pays school district real estate taxes, and I would venture to say that county tax increases might be a little easier to swallow if we weren't getting hosed by the school districts for $50 million showpiece schools, $500K weightrooms, and vastly overpaid and overpensioned administration and staff.

Anonymous said...

I have every confidence the re-education police have HAD me on their list for quite some time!

Problem is, I am not all that teachable to begin with.

This puts me in the category of people (that Bill Ayers and other revolutionaries theorized a long time ago) who could never be "re-educated" and will have to be killed outright immediately.

(Did Mao Tse Tung not slaughter 60 million Chinese during his Cultural Revolution?)

-----------------------------------

What time and where, this budget hearing?

(My initial professional background is in mortgage banking - ten years plus for me - I understand financing and underwriting a little even if I am not "The Banker")

Anonymous said...

My suggestion is no layoffs and a 10% salary and benefit reduction across the board. Reinstatement of the 10% may be reviewed at a later date - when the economic situation is improved. Nobody loses a job. Everybody gives a bit. If some chose to leave, there is a quality force of 9% unemployed - many well educated and well trained, who'd likely take a shot at the jobs. This approach delivered my company from the brink last year and nobody lost their job. Attrition was minor and 5% was reinstated last month. It won't solve all the county's problems, but it's a start. And every bit helps.

Anonymous said...

And this hearing is where and when then?

Anonymous said...

Ohare and Angle will defend anything Stoffa does. This guy is the one to find the cuts not council. Stoffa can't find cuts because he is a lifetime bureaucrat.

He claimed some positions were unnecessay and then gave do nothing jobs to old buddies.

Employee morale isn't all on Reibman, many employees are angry that Stoffa lied to them four years ago. They can't trust anyone.

Anonymous said...

Agree on the Stoffa-morale point. Like the 10% suggestion. Doesn't seem draconian and everybody keeps working.

Anonymous said...

"Some have suggested that spending be reduced by $7 million by laying off employees - as many as 200. Were we to do this, we would have to continue paying unemployment benefits for at least a year following their lay-off."


Fine, I'll eat the cost for one year and take the savings going forward. If not, we are doomed to the same short-sighted outlook that will put the following year budget in the red.

As to your suggestion that someone should tell you where the cuts should come from - they should come from everywhere.

Tell the department heads to cut x percent from their budget while still providing their core services. If they can't find the cuts, they're gone.

Government budgets are seldom balanced with the "home run" you are looking for. More often the balancing comes from a hell of a lot of singles - a few thousand here and a few hundred there.

But you have to want to cut the budget and size of government. If your perspective is that you need more government or that nothing can be cut, then nothing will end up being cut.

Trust me, there is NO multi-million dollar operation that cannot be cut and still deliver - especially in government.

Anonymous said...

Stoffa can't do that 5:01. First, he doesn't know how. second, he was to;d to hirte these people by the Republican money that got him in in 2005.

No win for the taxpayer. This is the worst County government in its history.

Anonymous said...

BOH 12:27 pm -

No I don't hate the public sector, but I pity the fool(s). Sorry, couldn't resist.

You wrote, "But in truth, there's not much you can do about county government. Most of the services performed are vital; you just won't notice until it's not there."

Really? Ever wonder if that sounds correct, but in reality it's the opposite. There are people who believe if we disbanded an organized police force that there would be absolute chaos. But I've often wondered, since most police work occurs after crimes occur, there's little preventative effect, so the actual level of crime would probably not alter much. Indeed, if people individually or as part of larger groups defended themselves, criminals would likely be less inclined to commit crimes, leading to an actual DECREASE in crime. Add to that, the cost savings in not having an organized police force, I think it adds up to a pretty compelling case that we could get by very well with, at most, a handful of contracted law enforcement agents, who could work part-time.

The problem with most people's perspective is that they automatically believe that certain problems are essential, when in fact we could (and indeed for most of the past have) easily gotten along without them.

Bernie O'Hare said...

"Agree on the Stoffa-morale point. Like the 10% suggestion. Doesn't seem draconian and everybody keeps working."

That is a good suggestion. In fact, it's so good that Stoffa told his department heads to cut their budgets 10% before producing his own. So that suggestion has already been adopted. What else?

Anonymous said...

Savings from layoffs when you are self insured is a savings in year 2 but when there is nothing else to cut we all say cut people.

Take a lesson from Cunningham and Panto -- they are reducing the size of their budgets without layoffs. The best comment I read was by Panto (I live in Palmer, not Easton) when he said "I can't find $100,000 but if I find 100 line items to cut $1,000 I have affected the same."

Easton's budget next year has an increase of less than 1% and Cunningham's budget is just over 1% and that's amazing.

We need leaders that set the stage for smaller government and these two are Democrats. Imagine that!!!

Keep up the good work guys and if I could vote for either of you you would have my Republican vote.

Anonymous said...

The 10% suggestion applies to all salaries and benefits across the board. Everybody takes a pay cut. Department reductions of 10% without a reduction in payroll and benefits is not what was suggested - or nearly as effective as a solid 10% reduction in all salaries and benefits. This is the big pie of paychecks; not the pot pie of paper clips. Nobody loses a job. Everybody gives a little. Taxpayers are not simply handed a higher bill.

It's time to incur short-term pain for long-term benefit. A journey of a thousand miles begins with the first step. The current system is not sustainable. Our children and grandchildren will appreciate our thinking of them for a change.

I've still not seen an answer to the question of how we eliminate government positions and spending in good economic times.

JFK admonished us to not do things because they're easy. But to do things because they are hard.

Anonymous said...

I also like when the political philosophy that created the unsustainable spending mess, demands concrete suggestions about how to get of the heroin. We all know how to break addictions. We have to admit the problem first. And the enablers don't want any job reductions.

Bernie O'Hare said...

"The 10% suggestion applies to all salaries and benefits across the board. Everybody takes a pay cut."

Nice suggestion but you can't do that w/ reopening contracts w/ 11 different unions. That won't happen. Nothing is so simple as that.

Bernie O'Hare said...

"Easton's budget next year has an increase of less than 1% and Cunningham's budget is just over 1% and that's amazing."

I agree. It's a remarkable feat. Stoffa, on the other hand, has actually decreased spending for the second year in a row.

Anonymous said...

"When, if ever, is the proper time to thin government payroll?"

I can answer that question and it's a good question. The answer lies with the public. It's simple economics really. When the demand goes up, payroll goes up. When the demand for services goes down, that's when you thin payroll. For the record, each year the public (taxpayers) demand more. So the public (taxpayers) are in a conundrum.

Anonymous said...

Non-union employees take the cut immediately. In the city of Chicago, they're being forced to take five weeks unpaid. Deal with the union contracts as they come up. Even if it doesn't help this year (although the immediate non-union cuts will), it starts the path toward protecting the future for our children.

None of this will happen, of course, because so many politicians use compensation for public employees as their personal campaign slush funds. Just look at the SEIU goons who are double-dyed-in-the-wool Ds. They have lots of friends on council.

Any who, I thought unions were the greatest. President Obama would argue that 11 unions is not enough and they're not paid enough as it is. Obama worshiper Jeff Stoffa should know this. Can't he get through to his father?

A good union job could get those Stoffa parking spaces for $250,000 apiece with proper work rules enforced. Call it stimulus.

Bernie O'Hare said...

Suggesting Chicago as an example for the Lehigh Valley makes me want to hurl.

What you propose, which by your own admission will have no impact on this year's tax increase, penalizes the few county workers left who belong to no union. That's poor management.

The Village Idoti said...

You want to talk about "conundrum?"

Riddle me this: Why won't they throw the ball to Da' Player?

He's always open!

THROW HIM THE BALL!

Peace out, ~~Alex

Bernie O'Hare said...

Amen.

The Village Idoti said...

God bless the Phillies! If you don't hear from me in a couple of days, I will be at Georgetown Hospital getting my chest pains checked out. God bless the Phillies!

Throw Da' Player the ball!

Peace, ~~Alex

Anonymous said...

Get off this blog angry priest and your chest pains will go away.

GOD!

Anonymous said...

Oh, give it a break already..Stoffa said the tax increase will cost taxpayers pennies a day. Why lay off people and ruin their lives and the lives of their families because these pathetic tea bag heads are screaming for cuts everywhere. They need to stop spending their money on anti Obama signs and use it to pay their damn taxes.

Anonymous said...

Hey 8:06, I agree. I will send you my tax bill and you can pay those pennies, since it means so little to you.

I hope Stoffa doesn't snore and keep you up.

Anonymous said...

Hey 10:06,

Go march on Washington with the rest of the tea head morons who shout alot and know crap about government!

Anonymous said...
This comment has been removed by a blog administrator.