2020/12/16 Council Agenda Packet

planners, construction inspectors, civil engineers, economic development specialists, street maintenance crews, etc. Some of these jobs do not have equivalents in the private sector. The City competes with other cities and counties that have historically offered comparable compensation and benefit plans to attract quality and qualified employees, but like the City, now face severe financial challenges. The City is subject to a variety of limitations on its ability to control employee salaries and benefits. Eighty percent of the City's workforce is unionized: changes to salaries, benefits and working conditions of union employees must be negotiated with their unions. Union contracts and state laws impose a variety of restrictions on the City's ability to control its labor costs. For example, disputes between the City and its police and fire unions are subject to binding arbitration. The rate of growth in labor costs for General Government programs has exceeded the rate in growth of General Government revenues for years, and as shown in Figure 4, will continue to do so without voluntary participation from the City's u nionized workforce to help our community achieve fiscal sustainability. As part of our due diligence, we asked City staff to estimate the potential annual savings if all eligible City employees participated in a standard 401k program vs. existing pension plans. While this was a hypothetical exercise, the projected savings was estimated to be $5.1 million per year (See Attachment B, end of report). This provides a sense of scale and magnitude as to how the City's benefit structure is impacting funding for community services and programs. We also noted that the City's healthcare benefits exceed what is typically provided in the private sector. While the City is limited in its ability to n egotiate compensation and benefit reforms, we encourage all parties to come together to help our community achieve a fiscally sustainable path. Another cost pressure comes from the fact that the City offers a broad array of General Government services. In comparison, several cities in Snohomish County have taken steps in recent years to e liminate the cost of fire and emergency medical services by joining or forming regional fire authorities. Cities elsewhere have offloaded other services such as parks to parks districts, or have joined regional library systems rather than continue to offer their own library services. Everett has implemented none of these changes — but has begun to consider them. Unfunded state and federal mandates have also contributed alarmingly to the gap between revenues and expenditures problem. The City estimated that the annual cost of unfunded state and federal mandates between 2016 and 2018 was $16.5 million.' • What major cuts and adjustments have been made to balance the General Government budget so far? All General Government departments have faced cuts in the last decade. But nearly half of the General Government budget gap in the past decade has been resolved by reallocating the annual "budget variance" — appropriated funds remaining unspent at the end of the year. Budget variances are largely the result of savings from staff vacancies that occur throughout the year. In addition to applying budget variance, a variety of small tax and fee increases have been imposed. Examples include raising gambling The City stopped tracking this data in 2018; the main reason for collecting it was to highlight the issue for state legislators. 8