During the city’s first budget retreat in January, the city manager suggested Flagstaff City Council might want to look at increasing funding internally, addressing issues of staff turnover and the city’s unfunded pension liability.
After the April budget retreat, it appears that Council will be providing additional funds to both issues, in varying levels.
The council indicated approval of a set of pay raises, suggested by the city manager, for city staff. City staff have not seen any substantial pay increases since the financial crisis a decade ago.
The amount an employee receives would be dependent on how long the employee has been with the city. Depending on whether a staff member has been with the city for a year to more than five years, they will be eligible for a 1% to 3% raise.
Staff turnover has been an issue for departments across the city, as Council was told by multiple division heads during the January budget retreat. In 2018, the city saw 105 staff members leave for other jobs or to retire, a 17% increase from 2017.
To better combat turnover, the city conducted a survey of those who have left employment for other jobs, asking them what their reasons for leaving were. That survey showed the top three reasons city employees left were to get a better job at 91%, inadequate pay at 24% and because they were moving at 15%.
Based on that information, some councilmembers wondered if pay was not the only issue leading to staff turnover.
Tamara Lawless, water conservation manager and co-chair of the Employee Advisory Committee, said while there are certainly other aspects leading people to leave, the employee committee saw the lack of any raises as the top reason causing turnover.
The committee, made up of 17 employees, advocates to the council and city leadership representing staff.
Lawless added that what former employees meant when they cited finding a “better job” as the reason to leave is up for debate and could include higher pay.
These pay increases will mean just over a million dollars extra going toward staff annually.
The city council also indicated they would like increase the amount of money the city is paying into the retirement plan for public safety personnel.
The city owes more than $100 million to the public safety pension fund, which firefighters and police officers receive upon retirement.
Previous iterations of the council have made plans to slowly pay off what the city owes the fund, but it will take some time -- currently, the city is on track to complete payments in about 19 years.
But a number of councilmembers said they don’t want it to take that long.
Councilmember Charlie Odegaard said finding ways to pay that off sooner was one of his top priorities. Vice-mayor Adam Shimoni and Councilmember Austin Aslan agreed and pointed out that once the city no longer has to pay so much into the pension fund, the council will have more money to work with on other issues.
At the moment, the city is paying about $8 million annually to reduce the money owed into the pension fund. That $8 million is coming out of the general fund, which Council could instead use to further other goals.
Other cities in Arizona that are facing similar issues have used voter-approved sales taxes to quickly pay down the fund, but Council agreed that was not something they were interested in pursuing at this point.
However, Odegaard did suggest the city could raise the use tax in order to pay more into the fund.
The use tax is applied to products purchased by residents from out-of-state vendors and most clearly affects purchases like cars. That could prove to be a benefit to local automobile dealers, but Joe Galli, spokesperson for the Greater Flagstaff Chamber of Commerce, also raised concerns about how it might impact some businesses. He said some large technology-based businesses such as W.L. Gore, which often has to buy products that can’t be sourced locally, may be hurt if the council goes down that path.
At the moment, the city collects a 1% use tax, but that could be raised to 2.281% to match the city sales tax.
Mayor Coral Evans said she wasn’t interested in raising the cost of living in Flagstaff in any way -- and that included the use tax. Evans added that even if it is taking some time, the city does have a plan to pay down what is owed to the pension fund.
Councilmember Jamie Whelan agreed with the mayor’s assessment, but in the end, Council directed staff to look at raising the use tax for that purpose. Going down that path would reduce the time it will take the city to pay what is owed to about 17 years.
Updated for correction at 10:21 a.m. on April 25.