Wednesday, March 19, 2008

Fairly? Maybe. Not particularly well, though.

The Statesman has posted an opinion saying that the legislature has treated state employees well with its recent compensation decisions. The legislature approved a 3% raise, but with it also approved a 29% increase in benefits expenses that state employees pay. Essentially, state employees will pay more of their health insurance premiums. I believe that retired state workers have their health insurance benefits substantially cut back.

So, let's look at the numbers. Per the Statesman, a single employee pays around $25 per month for health insurance, and a married employee with a family pays around $90 a month. These are to increase by 29%, almost a third. Let's say by $8 and $30, respectively.

I know several state employees making about $10 per hour, or about $1,750 per month. A 3% raise is $52.50 per month, around $45 after taxes. Taking the health insurance into account, the low paid employee nets $37 ($45 - $8) if paying the single insurance rate, but nets only $15 ($45 - $30) if paying the family rate.

$15 is in the ball park for lots of state employees, which is About $2,600 per month. 3% raise is about $78, or say $60 after taxes. So, the single guy nets $52 ($60 - $8), and the family person nets $30 ($60 - $30).

Note that the raise will be a merit raise (they all are), not a cost of living adjustment. This allows agencies to pay some employees more than 3%, but others less. Not good for the morale of those who get less.

While a 3% raise is nice and will be appreciated, several things make this less than thrilling. One is the "net of health insurance" issue above. Another is that moving salaries to a market rate is postponed and will happen gradually over several years, if at all. Benefits increase are not equally phased in; they happen right now. Most galling is the rationale behind the 3% instead of the 5% the Governor requested.

The legislature cites a $38 million shortfall in revenues as the reason. Well, okay, that's understandable. The galling part is the tax cuts given to business. If the state is so short on revenue, why are they cutting taxes THIS YEAR? If employees have to wait for good times, why don't businesses? If our unemployment rate is 2.9%, that tells me Idaho's economy is humming along pretty well. If so, why tax cuts for business?

Finally, the Gov raised expectations with his 5% request. Getting 3% after hoping for 5% is disappointing, not exciting. Yes, it was an appreciated effort to raise salaries, but I don't think it's going to improve morale or reduce turnover.

Update: Sisyphus has more here. Rep. LaFavour has an outstanding list of inconvenient truths here. Well worth a look.

The Statesman reports on a Forbes article about Boise being such a swell place to have a business or a career. "Boise ranked highest in job growth at 13. It also ranked 17th for the cost of doing business. ... Boise is the second-best place in the country for business and careers, according to Forbes magazine." If Boise has the 17th best rating for cost of doing business, the rest of the state must be even better. So, again, why did the House Rev and Tax Committee pass this bill? Shifting taxes during a revenue shortfall year, when business is doing just fine, doesn't make sense. It just looks like Rev and Tax are toadys to IACI.


Anonymous said...

I agree with your post. And I know from comparing your numbers to those on my pay stub that they are accurate so I must ask in full disclosure. Are you by chance a state employee?

Sisyphus said...

Great analysis Alan. I posted something the other day on this and have updated it in the comments to include your post and some from Nicole. Click my name.

G.S. Avenger said...

Well said! If the legislature were truly concerned with state finances they would not be throwing money down a rat hole to bring back the Teton Dam. Although I wonder if his holiness the governor wanted 3% all along and proposed 5% knowing that the Freddy Krugers on JFAC were going to slash 2% off of anything he proposed.

Alan said...

Anon, you don't need to be a state employee to come up with these numbers. Most were reported in the Statesman. The rest are just common sense and math.