Thursday, October 27, 2005
Hats Off to Herb
It is easy to criticize, condemn, and complain. I find this to be true when I don’t agree with something. Yet, let me be the first one to compliment Mayor Bergson on his actions regarding employee heath care at the city. Good job, Mayor Bergson, good job.
Mayor Bergson has accomplished what many before him could not: getting a union to agree to lesser benefits.
Although the retiree health care problem has not been solved, Mayor Bergson’s progress with the union is a start – and a start in the right direction.
Now, I am not against union labor, nor am I against a fair day’s pay for a fair day’s work. There are unions that I admire greatly. The men and women of the Building and Construction Trades here in Duluth, for example, train and equip their people to be some of the best, most efficient, and hard working people I have ever met. Consequently, the companies that their people work for are able to compete even against non-union workers. Simply put, the union workers of the Building and Construction Trades union are top notch and, as a result, their companies are top notch as well. This paradigm results in good wages and benefits.
The city’s union has been seemingly less concerned about efficiency and worker productivity. There are many good workers in the city – but it appears as if the union’s objective within the city is territory protection - rather than helping the city figure out ways to do more with less. While many may think this not to be the job of workers and their union, forces beyond their control will eventually dictate otherwise. Look at Northwest Airlines - who, even ten years ago, would have thought overcapacity and intense competition would have brought such a company to its knees? Our city faces similar circumstances and unless we realize that the city could be brought to its financial knees we would be wise to demand those public employees and their unions adopt the golden rule of business: do more with less.
There are many who will tell you that employees took less in pay increases in order to get better lifetime benefits. What were those employees thinking? This is tantamount to paying a CEO a bonus for declining company shares or stock options. We all know that when the going gets rough, many CEOs are able to walk away and sell their stocks for millions while the company languishes – this is criminal in my mind. Who loses? The shareholders, the employees, and the public who no longer have respect for American businesses – they’re the ones who lose. Giving away future benefits to city employees was a bad idea – where are those politicians who were so shortsighted?
Americans want accountability and common sense in both the business world and in government. The marketplace by its very nature will demand that in the world of business, Mayor Bergson is starting to do that in our city. Mayor, I tip my hat to you.
posted by Andy Peterson www.duluthchamber.com at
Thursday, October 13, 2005
City Budgets, City Administrators and City Services
Mayor Herb Bergson made an unorthodox move when he hired Julio Almanza, former ISD 709 school superintendent, as acting – and some are speculating, permanent - City of Duluth administrator. According to a recent DNT article, the mayor, while firing a supremely competent and popular administrator, Mark Winson, reasoned that Almanza possesses skills that Winson did not. Namely, Mr. Almanza’s ability to lower health care costs of union employees.
Herein lays the rub: lowering the health care costs of union workers will do little to alleviate ailing infrastructure, solve long-term budget problems, or move Duluth forward.
Let me be the first to state that finding resolution to this issue will be a welcome relief, and I wish Mr. Almanza well in his efforts to accomplish this task. However, when one considers two other issues facing our city, he or she has to question the mayor’s thinking in his decision to hire Mr. Almanza as city administrator. The first issue is the federal mandate to fix the ailing sewer system. Having served on the Sewer and Water Task Force, I understand the need to spend approximately $200 million to fix our aged, leaky, and overburdened sewers. The other, more public, issue is that of Retiree Health Care. The latest estimates conclude the city owes $178 million just to make the fund current – and the $178 million does nothing to resolve any unforeseen circumstances that might drive costs even higher.
To be clear, Mayor Bergson did not create either problem and most certainly he will experience the political fallout when he attempts to resolve them; yet, nonetheless, he and his new administrator must face each issue with resolve – our city’s future depends upon their actions.
Given the city’s revenue picture, challenges lie ahead. It takes approximately $75 million to run our city each year. We collect approximately fifty percent of the $75 million from the state in the form of Local Government Aid and/or Inter-Governmental Aid, twenty-four and a half percent from parking fines, earnings on investments, charges for services and so forth, almost fifteen percent from sales taxes, and slightly less than ten percent from property taxes. If any of these revenue streams is disturbed, the city could experience a failure in its fiscal levy - not unlike the great New Orleans flood that resulted from a levy that was not capable of sustaining such high volumes of wind and water.
Although I hope that our dikes will hold, I worry that politics may undermine our fiscal levies. Clearly, we cannot raise property taxes fast enough to reinforce our fiscal dikes. Nor can we guarantee that state aid money will not be cut or that sales tax collections will remain strong. We can, however, swallow hard and resolve both the sewer and retiree health care problems.
To do so, we must rethink how city services are purchased and delivered. First, we must insist upon reform in our employee contracts – no longer can we afford to pay benefits far above those in the private sector. Additionally, we must insist upon competitive sourcing, wherein unions bid with the private sector for work the city needs, much as they now do in several larger Twin City suburbs.
We can no longer afford the luxury of thinking that taxes must increase or services must be cut. We must think and act differently to ensure our fiscal levies hold in the face of any storm.
But isn’t that why Mayor Bergson hired Mr. Almanza in the first place? We’ll all be better off if this is true. Best of luck Mr. Almanza - you’ll need it.
posted by Andy Peterson www.duluthchamber.com at
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