How Can a City Issue Pay Raises and Layoff Notices in the Same Week?

Houston firefighters are getting what they wanted. But it's coming at a cost.

Houston firefighters huddling and talking
(AP/LM Otero)
Houston’s standoff over pay parity between firefighters and police officers is coming to a crescendo after more than a year of legal battles and political posturing.

This week, thousands of firefighters received pay raises thanks to a voter-approved law to give them equal pay compared with police officers of the same rank.

But no one’s celebrating.

The raises came along with 220 layoffs -- nearly 6 percent of the force -- and 454 demotions within the city’s fire department. Mayor Sylvester Turner has said this was the only way the city could afford the roughly $80 million per year in additional costs.

Pay parity between fire and police officers has long been an issue -- and not just in Houston. For decades, firefighters and police officers of the same ranks received the same base pay. But starting in the 1970s, many cities began paying police officers more, according to a Bureau of Labor Statistics (BLS) report from the mid-1990s. Civil unrest that began in the 1960s put more strain on local law enforcement, leading to the job becoming more professional and requiring new education and training standards.

But this happened mainly in small and mid-sized cities. Many other big cities -- including Chicago, Dallas and New York -- still have pay parity. Not Houston. As a result, Houston firefighters are underpaid compared with their counterparts across the state, receiving nearly 30 percent less in their first-year base salary than in other large Texas cities.

Before voters passed Houston’s Proposition B last fall, Turner warned that implementing it would mean layoffs. After it passed, Fitch Ratings dropped the city’s credit outlook to negative. Turner has painted the situation for firefighters as a “self-inflicted wound.”

But Houston Professional Fire Fighters Association President Marty Lancton says the administration kept moving the goal posts on them during the post-Prop. B negotiations. Finally, things broke down last week. The union would agree to a four-year phase-in of pay raises, but it wouldn't agree that Prop. B was unconstitutional. (There's an ongoing lawsuit over whether the proposition conflicts with the state’s constitution.) The failed talks were followed by the layoff notices.

“No single person should ever be allowed to upend the will of people,” says Lancton. “Instead, the mayor has manufactured this crisis so that now there’s a problem he can fix.”

Manufactured or not, it is indeed a crisis. Turner faces reelection later this year, and this week, he unveiled a budget that had to close a $179 million gap. Rather than cut his losses and cast himself as a hero by working out an agreement with the firefighters, he has chosen to lay off hundreds of them and demote hundreds more. Turner has had success in the past by employing an all-in, take-no-prisoners approach in political standoffs. But this may be his biggest gamble yet.

“He can’t stand the fact that they beat him in getting the city to pass the proposition,” says Bill King, a local businessman who lost the last mayoral election to Turner and is running against him again. “It’s a blood feud, and all the rest of us are caught in the middle.”

 

In Other Public Finance News:

 

The Amazon Effect Continues

Long Island City in New York doesn’t seem to be hurting that much from Amazon’s decision to pull out of its plans to build a second headquarters there.

Initial reports of the real estate market taking a hit appear to be short-lived. Now, reports Axios, “other companies have grabbed much of the 1.5-million-square-foot, all-glass building that was to be the beachhead of Amazon's Queens expansion, and interest has surged in nearby commercial real estate.”

But entering the Amazon HQ2 contest may still ultimately cost Long Island City, even if it didn’t win the grand prize. That's because it gave other companies a window into what it's willing to give up to win businesses. Now, some smaller tech companies are poised to take advantage of some of the same tax incentive programs that were being offered to Amazon.

 
This appears in "The Week in Public Finance." Subscribe for free.

Liz Farmer is a former GOVERNING fiscal policy writer.
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