Facing a steep cut in service in 2012 and planning a February ballot measure to stop the bleeding, Pierce Transit is making some non-service cuts, mainly by hitting their non-union employees.
On August 26th PT announced the elimination of management positions. Nonunion employees will also not get wage increases in 2011, and will have to pay more for their health care. The savings will amount to $1.2m through 2012, a fraction of their $50m annual long-term deficit. That’s in addition to $72m in savings through 2012 achieved with previous staff cuts, fare increases, and deferred capital projects. And of course another fare increase is coming down the pike.
The TNT has more about PT’s main labor cost:
Those cuts, however, will not apply to the bulk of Pierce Transit’s work force. Some 845 transit union members won a contract that calls for a 4 percent hike this summer. Agency officials wanted to renegotiate; union leaders refused, saying their members earned their wages and benefits – and suggested there are other places to cut.
“We’ve asked (to renegotiate) twice, and they’ve said no twice,” said agency spokeswoman Treva Percival. “Their contract is up again next year. Negotiations will probably start in the spring.”
While I wish there was a way to avoid cuts like this, politically it seems like a very good move to make cuts that they can point to during the ballot measure debates.
What’s happening at Pierce Transit is what is happening at other transit agencies as well as many state agencies. A significant portion of these workforces are unionized, and have negotiated COLAs *and* automatic “longevity” increases for every worker, performing or barely, every 12 months. Together, these two reasons beat inflation significantly, putting pressure on all other expenses, which include the non-unionized workforce and non-personnel expenses. In the past, robust growth in sales tax revenues (about 60-70% of most transit agencies’ funding) along with a willing electorate voting in higher taxes has allowed transit managers to avoid confronting this cost accelerator. Now, sales tax revenues are flat and the electorate seemingly unwilling. Naturally, many in the unions don’t want to give up their inflation-beating gains, even though holding their ground will cost the least in seniority their jobs, roughly 10 per every $1 million of savings, and will require cuts every year that revenues don’t keep pace. The unions are hoping that the resultant cuts in services, the most attractive target for transit agencies (since their services are subsidized), will inspire voters to pony up more money, as it has worked before. The smarter agencies are having performance audits; Metro’s has resulted in $52 million of potential savings, about half of their upcoming deficit. This saves jobs in the near term, but merely kicks the costs can down the road. All agencies need to confront their costs, both in making service more efficient and in their wage, salary, and benefit administration, matching expenses to revenues.
In general I agree. What I’d point out though is benefits are a much bigger issue than direct wages and COLA increases. Pierce Transit I think has done a really good job of being fair, absorbing existing city plans and being open in accounting. Portland is the exact opposite. King County, I think, isn’t too bad but not a regional leader by any means. Benefits are a hard issue. Health care is a huge cost driver and private industry has the same problems. Pensions are almost anachronistic. This has to be shifted to employee funded retirement accounts. Matching funds are a terrific incentive to save.