Article by Erik Smith. Published on Thursday, May 06, 2010 EST.
But it Wasn’t as Big as it Sounded – Embarrassment Over Goof May Have Helped it Pass
By Erik Smith
Staff writer/ Washington State Wire
OLYMPIA, May 6.—With Gov. Christine Gregoire’s signature on the state’s new budget bill, it’s time to write the end to one of the strangest stories of the last legislative session. State officials say they goofed on an important budget calculation. And a salary increase for state employees may have been saved by the sheer embarrassment of it all.
Yes, it’s true. Despite all the talk about pay freezes, furloughs and a statewide economy drive, state employees are getting a pay increase.
It goes to 21,000 workers, union and non-union. The raise comes during one of the worst budget years in the history of the state, when lawmakers said they were doing everything short of putting the elderly out in the snow and they were raising taxes only as a last resort.
The raises are buried in the budget, and while it’s safe to say that lawmakers knew about them, none of them raised the issue during the session. The reason seems to be an enormous math mistake that turned an $83 million pay raise into $6.5 million.
It wasn’t the sort of thing anyone wanted to talk about. It was as if the governor’s office and the entire state Legislature rose up and said – uh, never mind.
The Mysterious Shrinking Pay Raise
The raise in question is what is known as a “step increase,” given to “classified” state workers after they’ve been on the job for a year, and continuing each year until the sixth year of service. Each year their pay goes up 5 percent.
It’s not the same as a general cost-of-living increase. That’s what most of the Legislature’s debates are about. Last year, after the economy tanked, the governor and the Legislature canceled a half-billion-dollar pay raise and caused no end of howling.
The step increases are a different animal, and they’ve been part of the state pay plan for decades. Union officials insist they save the state money, because junior employees are paid less. But it’s also a matter of how you look at things. They also provide a way to pay senior employees more.
The problem with canceling step increases is that employees with similar levels of experience would be compensated differently, says Washington Federation of State Employees spokesman Tim Welch. “That’s the kind of thing we’d sue over,” he said.
So when the governor forced the unions back to the bargaining table last year, the cost-of-living increases were out, but the step increases stayed in.
It was shaping up as one of the top issues of this year’s Legislature – an $83 million pay increase at the very worst time imaginable. Republicans sounded alarm in every Rotary Club, chamber luncheon and editorial-board meeting in the state. Editorial writers thundered denunciation. But the topic seems to have dropped off the radar screen sometime around the first flag salute of the session on Jan. 11.
Number Came From OFM
What happened is that the governor’s budget office made a boo-boo – a big one. Glenn Kuper, spokesman for the Office of Financial Management, said that a legislative staffer called his office late last year to inquire how much those step increases would cost.
OFM made a quick calculation and came up with $83 million. That included $38 million from the state general fund budget and $45 million from other sources, including dedicated state accounts.
“It was a really rough back-of-the-envelope sort of thing,” Kuper said. The numbers were never intended for public dissemination. He said the office insisted it needed to go over them again. But the numbers got out. They showed up in a Republican press release and soon the entire state was talking about them.
Yet it was a natural question. Democrats from the governor on down had been declaring that they’d frozen pay for state employees, and anyone who knew about the state budgeting process knew it wasn’t true. For instance, OFM director Victor Moore declared in a video interview over Thanksgiving week:
“Since the recession hit Washington a year ago, we froze pay for public employees.”
The pay hadn’t been frozen. So of course someone was going to ask.
Issue Catches Fire
Raising taxes to pay for salary increases? Eighty-three million dollars? Outrageous! said Republicans. They demanded that the governor go back to the bargaining table with state employees. They called for the Legislature to reject any budget deal that included the step increases. Said Sen. Joseph Zarelli, R-Ridgefield, “We’re the Legislature. We can do anything we want.”
The governor found herself on the hot seat. Cancelling the pay raises would trigger another round of salary negotiations. She told a reporter during a news conference, “If I unilaterally, in violation of contracts, take some of the actions that you just articulated, I can rest assured I will be sued and I’m going to be the subject of potentially another restraining order, and I could potentially lose the lawsuit, and I don’t think that’s fiscally responsible.”
And then it all faded away.
A Great Big Mistake
Sometime around the beginning of January, OFM decided its $83 million figure was a mistake. Kuper points out that it wasn’t easy coming up with the number, because there isn’t a separate line-item in the budget for step increases. But it turned out the original estimate missed a few things.
n As higher-paid employees leave state service, lower-paid employees take their places.
n The raises are staggered through the year, on employee anniversary dates, and they don’t all happen July 1.
n The number of employees has been reduced by layoffs and attrition.
n The step increases don’t go to all workers – just classified employees.
Add those elements to the equation and the office says the step increases cost only $16 million. And since the debate was really about the impact on the state general fund – that portion is only $6.5 million.
That’s a little less than $83 million. And canceling the raise wouldn’t have done much to ease the $2.8 billion shortfall the state faced this year.
Goes Without Saying
The funny thing is that the goof may have helped keep the step increases in the budget. Not a single legislator raised the issue during the entire 90 days of lawmaking. And with no one making a fuss, the issue went away. The pay increase sailed through without debate or even an objection.
Only one reporter picked up on OFM’s reversal – out-of-towner Harris Meyer. A freelance writer from Yakima, Meyer called OFM the first week of the session to check on the numbers. He wrote a story about them for the Seattle-based Crosscut website Jan. 15, and he was dumbfounded that no one else picked up on the story.
But in Olympia, disputes over numbers are commonplace; the figures change every day and they are less a matter of arithmetic than of political debate. If no one chooses to make an issue of a number, it’s rarely worth mentioning. And none of the principals saw good reason to call attention to the matter. OFM didn’t publicize it; Republicans found a thousand other things to criticize; certainly Democrats didn’t want to call attention to the fact they were providing even a small pay raise.
A reporter asked Zarelli about the affair in February. He said OFM could change its mind about the numbers, but it couldn’t change the fact that a pay increase was the wrong thing for the state to be offering during a budget crisis. And that was the end of it.
OFM’s switcheroo even escaped the attention of Federation spokesman Welch. Asked for comment Wednesday, he said it was the first he’d heard of it. He’d had to defend the step increases whenever reporters called – and now it appeared that the numbers were so small as to be almost a wash. “I wish I’d known,” he said.
And maybe, he said, the next time legislators consider reductions in education spending, they ought to think twice about cutting math classes.
Your support matters.
Public service journalism is important today as ever. If you get something from our coverage, please consider making a donation to support our work. Thanks for reading our stuff.
