Fayetteville tackles pay increases

Committee meets for first time

FAYETTEVILLE — The city’s police and firefighters want their pay to match the market rate, but city administration officials want to better define that market and review the structure in which the city pays its uniformed employees.

The Pay Plan Committee, consisting of half the City Council, police and fire representatives and financial administrators, met for the first time Monday. The group was born out of a debate on how the city gives raises to its employees every year.

The city calculates what raises it can give through a combination of available reserves balanced with anticipated growth in sales tax revenue and surplus money. A study released early this year from Fayetteville-based consultants Johanson Group found the city’s police trail the market pay rate by 15.6 percent and its firefighters lag 12.5 percent.

The City Council agreed in March to put $1.7 million toward raises. Police officers and firefighters, who are on a step pay plan, got an average 6 percent raise. Merit employees, or the city’s nonuniformed workers, received a 4 percent pay hike.

The raises represent 100 percent of the amount Johanson recommended to get merit employees up to market but only 25 percent for step-based employees.

The market in Johanson’s study was based on 22 regional cities from Arkansas and surrounding states, such as Lawrence, Kan.; Springfield, Mo.; and Stillwater, Okla.

Chief of Staff Don Marr said he felt the market was wrong. The city’s growth and finances more closely match Fargo, N.D., than say a city in Missouri, he said. Plus, most of those cities were chosen around 2006 when a previous committee on the same topic was formed, Marr said.

Finding a sustainable source of revenue to pay for continuously growing raises became another issue. Chief Financial Officer Paul Becker said implementing the entire Johanson plan to get police and firefighters up to the market rate would compound by about $1 million

every year.

Sales tax, which makes up about 60 percent of the city’s general fund revenue, will only grow fast enough to sustain that plan for a few years, Becker said. Also, eventually the general fund reserves, about $6 million right now, would run out.

Alderman Matthew Petty advised the committee against relying on a “miracle tax revenue” scenario. The city shouldn’t try to give pay increases like it has plus do a full implementation of the pay study and bank on an explosive growth in sales tax revenue, he said.

“Trying to find a solution that hits all three of those is like trying to hunt a unicorn,” Petty said. “That doesn’t exist.”

Building permits also serve as a significant source of revenue for the city, but those are even more unreliable than sales tax growth, Becker said. The city also has to contend with rising insurance costs and pension contributions, he said.

“I’d love to tell you there’s a magical solution,” Becker said.

Capt. Jimmy Vinyard, the Fire Department’s representative, questioned whether

changing the market would drive the course of the discussion away from getting police and fire pay up to the recommended rate. He also worried changing the step pay plan would result in lower pay at a slower rate.

“That’s the question at hand — we’re close to August here,” he said. “Are we going to look at fully implementing what has already been started and making that happen, or are we going to abandon it?”

Detective Leonard Graves, the police representative, said he understood the desire to review which cities define the market. But, city officials already have a recommendation from a consultant in front of them.

“Are we going to make a recommendation on the study that we started to implement, or are we going to do a new recommendation with newly defined cities with different policies to recommend?” Graves said. “That’s kind of where I’m at a loss, and my people are at a loss.”

The committee eventually will make a recommendation to the full City Council. Becker estimated any changes in policy would happen around March at the earliest.