The Financial Crisis & Public Safety

Michael Cooper wrote a front page article for the NY Times on cities that are struggling financially closing firehouses, firing firemen, and instituting “rolling brownouts” in which different fire companies are shut on different days. (The link to the article is to the right.)


Five of the key paragraphs (see below) point out that public safety (police and fire) are often the last places cities cut as this can put people and property in danger. Pension costs and minimum manning agreements are two key bones of contention. While Newton is in a relatively better situation than others, we also have to wrestle with the costs of pensions and minimum manning while ensuring safety.


Cooper writes:

“Fire service was once a sacred cow at budget time. But the downturn has lingered so long that many cities, which have already made deep cuts in other agencies, are now turning to their fire departments.

Some are trying to wrest concessions from unions, which over the years have won generous pension plans that allow many firefighters to retire in their 40s and 50s — plans that many cities say are unaffordable. Others want to reduce minimum-staffing requirements, which often force them to resort to costly overtime to fill shifts. Others are simply cutting service.

Analysts worry that some of the cuts could be putting people and property in danger. As the downturn has worn on, ISO, an organization that evaluates cities’ fire protection capabilities for the insurance industry, has downgraded more cities, said Michael R. Waters, ISO’s vice president of risk-detection services.

‘This is generally due to a reduction in firefighting personnel available for responding to calls, a reduction in the number of responding fire apparatus, and gaps in the optimal deployment of apparatus or deficiencies in firefighter training programs,’ Mr. Waters said in a statement. …

Several cities — including Lawrence — have said that they were forced to cut service because the unions failed to make concessions. Mr. Schaitberger, the union president, who was here for a union convention, said that protecting the pensions his members have won over the years was a top priority this year.”

Pensions and Retiree Health Care

Check out the Op Ed by Arnold Schwarzenegger in the Wall Street Journal on August 27, 2010. (The link is to your right under “Interesting Articles.”)


Gov. Schwarzenegger writes, “State employees are hard-working and valuable contributors to our society. But here's the plain truth: California simply cannot solve its budgetary problems without addressing government-employee compensation and benefits.”

Ditto for the City of Newton.

Like the state of California, employee salaries and benefits comprise nearly 80% of all municipal costs. (77% to be precise.)

Costs for the City of Newton are growing at a faster rate than our revenues. Opportunities to increase our revenues are modest at best. We certainly need to implement cost efficiencies. But, the bottom line is that the City of Newton provides a broad array of necessary public services accomplished primarily through the employment of staff. We will need to control the rise in salaries (forecasted to grow at approximately 4% to 4.5% annually) and benefits (projected to grow at 7% annually).

We will need to reexamine each part of the compensation we offer from salaries to health care benefits to pensions.

The benefits portion of this review will be especially important because Newton may not be able to bear the same level of benefits in the future that it has committed to in the past.