Dear King County employees:
I am writing to you today to update you on the difficult decisions I have made in my 2009 proposed budget regarding wages and layoff notices for King County employees. More details will be available after my budget speech on October 13, but I felt I should share the information with you first.
As you know, 2009 is shaping up to be one of the most challenging budget years that King County has ever faced. Nearly every day the national and state economies worsen our fiscal outlook, with rising gas and food prices, slumping housing sales, lower consumer spending, rising unemployment and chaos in the financial markets.
These factors have caused King County’s projected 2009 budget deficit to rise from $25 million last year to $60 million this spring to over $90 million as I finalize my proposed budget and prepare to transmit to the King County Council on October 13. Over $54 million of the estimated $90 million is directly or indirectly attributable to the financial crisis gripping the nation.
Therefore balancing the 2009 budget has been one of the most painful tasks I have undertaken in my tenure as King County Executive. We have been forced to make significant reductions in all areas of the General Fund. These cuts will have a substantial impact on King County’s critical public safety, public health and human services programs. Regrettably, the cuts will also have a significant impact on our employees; there will be a substantial number of layoffs associated with my proposed budget beginning January 1, 2009.
I have directed that layoff notices be issued on Oct. 14, the day after my budget speech, to provide King County employees maximum time to plan for their futures.
I want to thank all King County employees for staying engaged and involved for the past six months. I have deeply appreciated your willingness to have open and candid conversations about both the problem and the potential solutions. You have helped identify innovations, efficiencies and reductions that maintain your commitment and mine to provide the best service possible to the citizens of King County in the face of such financial hardship.
Through hard work, tough choices and innovation we have closed all but $15 million dollars of the gap. However, in the end it was not possible to find over $90 million in program and service reductions in one year without drastically compromising King County’s first rate criminal justice system or dismantling King County’s public health and human services safety net.
One of the most challenging aspects of this financial situation has been King County’s Cost of Living Adjustment (COLA) formula. As you know, the majority of our collective bargaining agreements provide for yearly wage increases based on 90 percent of the September to September Urban Wage Earners and Clerical Workers Consumer Price Index (CPI) with a floor of 2 percent and ceiling of 6 percent. This COLA has been a hallmark of our contracts and labor stability in King County. It has also been the basis for increases for our non-represented employees and managers. Historically, though, the COLA formula has generated wage increases of between 2 and 3 percent.
Now, large jumps in the cost of fuel and food (two key elements of the CPI) have resulted in a projected 2009 COLA of between 5 and 6 percent. However, these are times of crisis. No one ever expected a financial situation where this unprecedented COLA increase could occur in combination with an overall economic slow down and large budget deficits.
I cannot make devastating cuts to public health and public safety and ignore the real dollar impact of a 5 to 6% COLA. We have had positive preliminary discussions with organized labor about possible changes to both wages and benefits but we have not had time to reach any final agreements. I needed to make some final assumptions to balance the budget. We are facing a true fiscal emergency. Therefore, I have directed the Budget Office to find the final $15 million in reductions from the wages of both represented and non-represented employees.
Of the $15 million dollars, I have instructed the Budget Office to find $5 million dollars worth of savings from non-represented employees. These savings are created by freezing the step and new merit increases of non-represented employees and limiting the Cost of Living Adjustment (COLA) for all non-represented Executive branch employees in King County to 3 percent. I have instructed the Budget Office to assume the same step and COLA savings in the budgets of the separately elected officials as well. This was a very difficult decision for me as King County employees are among the finest in the state and the classification studies we have undertaken shows that many of our non-represented employees and managers are already paid substantially below market. Nevertheless, a step freeze and COLA limit will save the General Fund $5.1 million in 2009 and I have ordered it not only for the General Fund, but for all non-represented employees in all county agencies.
A similar merit and COLA restriction on represented employees would generate nearly $11 million in additional General Fund savings. There are existing King County labor contracts that do not allow me to impose such measures and I intend to honor the contracts. However, I have instructed the Budget Office to target $10 million of 2009 General Fund savings from the wages of represented employees as part of my proposed budget. Similar savings are also assumed in the other funds.
I have been closely working with labor leaders to identify many methods and means to generate these savings from represented employees. We are exploring many combinations of wages and benefit reductions that achieve the $10 million in savings 2009.
I want to thank all the employees of King County for your hard work and dedication to the public. It is an honor to be your Executive. Together we have worked through many difficult challenges. I know that we will do so again.
Sincerely,
Ron Sims