Phoenix Budget “Ripple Effects” – Particularly To Public Safety
See The Video – Phoenix city manager in line to earn $56,000 more
Dustin Gardiner, The Republic | azcentral.com 10:11 a.m. MST March 28, 2014
If council members approve the additional salary, the details of which were announced Thursday, it would be the same salary Zuercher’s predecessor, David Cavazos, made ¬before resigning last year [Pensioners First – The City Council later approved the increase].
• Size of Ed Zuercher’s salary rankles some employee-union leaders and elected officials
• Pay defended as way of keeping top quality employees
• Zuercher, whom the council unanimously appointed last month, has been earning a $258,939 salary since he took the city’s helm as acting manager last October
As Phoenix faces a $37.7 million deficit that could lead to cuts in public safety or social services, city leaders are set to vote Wednesday to approve a $315,000 annual salary for newly promoted City Manager Ed Zuercher.
Zuercher, whom the council unanimously appointed last month, has been earning a $258,939 salary since he took the city’s helm as acting manager last October. His new contract would increase his base pay by more than $56,000.
If council members approve the raise, the details of which were announced Thursday, it would be the same salary Zuercher’s predecessor, David Cavazos, made ¬before resigning last year.
Cavazos’ salary was a source of controversy after he received a $78,000 raise in late 2012. He left less than a year later.
Zuercher’s proposed contract, however, doesn’t include some of the perks that Cavazos received. Most notably, he won’t be able to use sick leave or his cellphone and auto allowances to inflate his future pension benefit from the city. The practice, known as pension spiking, allowed Cavazos to significantly increase his retirement payout.
But the size of Zuercher’s salary immediately rankled some employee-union leaders and elected officials, who called it offensive to taxpayers and workers being asked to sacrifice to help the city erase its red ink.
“Because morale is so low, I think this will be demoralizing to them,” said Luis Schmidt, president of American Federation of State, County and Municipal Employees Local 2384, which represents skilled workers.
“They still haven’t gotten back what they gave up (in pay and benefits) four years ago,” he said.
Councilman Jim Waring, who cast the lone vote against Cavazos’ raise in 2012, said Zuercher’s raise would have a negative “ripple effect” as residents and employees are faced with proposed budget cuts, particularly those to public safety.
The proposed budget cuts that Zuercher released last week would close three pools, three senior centers, about two dozen community centers and end all swimming and diving classes, among other popular programs.
The cuts would also eliminate the city’s fire-prevention office and reduce code enforcement and graffiti cleanups.
Council members have also talked about cutting employee pay or creating new taxes to help balance the budget. The city is negotiating new contracts with its unions and has asked all employees to take a 3 percent cut, which could save services.
Zuercher said those concerned about his salary should know he’s at the lowest step of the pay range that the city advertised. He also noted that his total compensation would be 12 percent less than Cavazos’, not including differences in their pensions.
“I think they need to look at the entire compensation package,” Zuercher said of his critics. “I felt it was fair and demonstrated leadership.”
In addition to likely taking a smaller pension, Zuercher would not receive several forms of compensation awarded to Cavazos, including a $4,000 annual “longevity” bonus and $9,450 in ¬pension-contribution reimbursement. He also wouldn’t be able to sell unused sick and vacation days back to the city every year, which earned Cavazos an extra $30,228.
Some employees and council members said Zuercher’s salary is justified given the high-profile nature of the position and Phoenix’s desire to draw top talent. Zuercher leads the sixth-largest city in the country, overseeing about 14,500 employees and a $3.5 billion budget.
A few cities of a comparable size pay their top executives more than $300,000 per year. City managers in Dallas, San Antonio and Austin earn $400,000, $375,000 and $301,000, respectively. And Cavazos is earning $315,000 to lead the much smaller city of Santa Ana, Calif.
“I think for a city our size, anyone who would complain about his salary is not paying attention to the rest of the world,” said Pete Gorraiz, head of the Phoenix firefighter union.
Mayor Greg Stanton said he supports the contract because it strikes the right balance, giving a competitive salary while stopping pension spiking and reducing the city manager’s overall compensation. He said Phoenix needs the “highest quality people up and down the organization.”
Even Councilman Sal DiCiccio, an outspoken fiscal conservative, said he is leaning toward supporting the contract because it sets an example for the rest of the city by ending pension spiking. DiCiccio voted for Cavazos’ contract, though he said he was unaware at the time of the pension-spiking portions.
“The last contract was an eye-opening experience for everybody,” DiCiccio said. “You can’t be talking about ending pension spiking if you don’t start at the top.”
Cavazos was able to inflate his annual retirement check to $234,536 by including perks in his pension calculation. Without the spiking, his pension would be about $88,000 less per year. Cavazos’ resignation allowed him to start collecting a pension from Phoenix at the same time he earns a salary in his new job.
Zuercher’s proposed contract says that his pension would be calculated based entirely on his base pay, prohibiting spiking. The agreement also would require Zuercher to contribute a full 5 percent of his paycheck toward his city retirement. Phoenix reimbursed Cavazos for 3 percent of his pension contributions.
Pension spiking is a widespread practice at City Hall, particularly among retiring middle managers and executives.
It costs taxpayers at least $12 million per year, according to an analysis by The Republic. Cavazos is one of several high-profile officials who have raised eyebrows in recent years with their plush retirement packages.
Council members approved reforms to combat pension spiking last year, and the city is working to implement most of the changes during its contract negotiations with employee unions. The practice is also the subject of several lawsuits.
Zuercher would still receive other perks, such as a $435 monthly auto allowance, $100 per month cellphone allowance and $30,240 per year in deferred compensation, another retirement plan. Cavazos’ auto allowance and deferred compensation were slightly more.
Another key difference in Zuercher’s contract that could save the city money down the road: He could cash in only 20 percent of his unused vacation and sick leave when he quit, compared with 60 percent for Cavazos. The previous city manager walked away from City Hall with a roughly $241,000 check for unused leave time.
A majority of council members appear likely to support Zuercher’s proposed contract. The council negotiated the terms during closed-door meetings, as state law permits.
Phoenix is the largest U.S. city with a city-manager form of government. As manager, Zuercher essentially works as the city’s chief executive, overseeing day-to-day operations and implementing the council’s budget. The council functions like a board of directors, responsible for hiring the city manager and making policy decisions.
Zuercher’s raise would be retroactive to Feb. 19, when the council voted to appoint him city manager. He’s a 20-year veteran of City Hall, most recently working as assistant city manager under Cavazos.
Zuercher hires top executives
Phoenix City Manager Ed Zuercher unveiled his new team of senior-level city executives on Thursday, announcing that former Cincinnati City Manager Milton Dohoney Jr. will be his new right-hand man.
Zuercher picked Dohoney to serve as his assistant city manager. Dohoney was a finalist for the city manager job in Phoenix when the City Council interviewed candidates last month, but Zuercher ultimately won the top job.
“He brings decades of municipal experience in areas including finance, economic development and public safety, and his proven leadership and management skills will help to lead our city forward in a positive direction,” Zuercher said in a news release.
For seven years, Dohoney was city manager of Cincinnati, until he resigned in November. He has nearly 30 years of experience leading organizations in three cities — Cincinnati; Louisville, Ky.; and Lexington, Ky. — which ranged from 3,500 to 6,000 employees and annual budgets spanning $450 million to $1.5 billion.
Zuercher also announced the appointment of two new deputy city managers: Paul Blue and Deanna Jonovich, who both most recently served as senior executive assistants to Zuercher. Interim Chief Financial Officer Neal Young was also appointed to the position permanently.