(This article first appeared in Broad + Liberty.)
Delaware County Councilwoman Christine Reuther said last week the county was already eyeing a “sizable” new tax increase to meet the demands of an ever-expanding budget that now includes inflation-fueled pay raises, running a prison, and managing a health department that’s only two years old.
Reuther’s remarks at Wednesday’s personnel board meeting comes less than four months after council voted to approve a five percent tax increase on county residents — the first county-wide tax increase since 2014 and the first tax increase since Democrats took over the majority of the council after the 2019 elections.
Reuther seemed irked when responding to a presentation from the director of the county health department who was asking for a number of raises to complete a department “realignment.” Many of those raises, the director said, would be offset by grant funding.
But then the director said, “I think they [employees in other departments] too should consider the opportunity to get paid better.”
Reuther jumped in.
“But the problem is [the other employees are] not grant funded and we’re looking at a sizable tax increase just to keep things where they are for next year. So I mean, that’s the reality. I’m hoping it’s not going to be as sizable as some people think it will be, but there is going to be a…,” and Reuther then cut herself off.
(Video here, minute 25:25)
Reuther’s forecast of a “sizable tax increase” was underscored by comments made earlier in the meeting from Delaware County Controller Joanne Phillips, who questioned some of the raises that were up for approval.
As an independently elected official, Phillips is tasked with being the taxpayer’s watchdog. She is not, however, a member of the personnel board, and as such, addressed the board during the public comment portion of the meeting.
“I just wanted to make it clear that the costs that you’re considering today are just the salaries, not any other benefits, and the cost of our benefits that go into our budget,” Phillips began, (video, minute 1:10).
“Two, I wanted to make note that there’s an impact on our pension ultimately, which hasn’t really been determined as we accelerate our salaries. If that’s the case, our salaries have really gone up in the last couple years. We’ve gone from about $167 million after Covid after the prison came online to looking at really, almost $188 million about two years later. So we are incrementally raising this a great deal.”
In an email to Broad + Liberty, Phillips clarified that her 2022 payroll figure should have been $162 million, and she estimates $187 million for 2024 — in other words, an increase of $25 million in two years. The 2022 baseline payroll number already includes all of the employees added by the county taking over the prison and creating the health department.
Phillips also submitted a memo to the personnel board, which was just as stern in its warnings.
“The [Government Finance Officers Association] warns against excessive labor costs, noting that labor costs comprise a high proportion of most local governments’ budgets,” Phillips wrote.
“Excessive compensation costs can severely damage a government’s financial position.”
“After the grant funding ends, the County will be left with the entire cost of the program, especially compensation increases. That is the situation we see here in a few of the agenda items,” she added later in the memo.
A spokesperson for the county provided little additional information. “The [fiscal year] budget will be presented and voted on later this year. The County doesn’t have any additional comments to add,” said Adrienne Marofsky.
Phillips’ comments that each dollar in salary has other sidebar costs is accurate and apropos.
Broad + Liberty asked the county in 2022 how much it spent in these “parallel” costs on things such as the county’s obligation to make Social Security contributions for every employee, and the cost of fringe benefits like health insurance, etc.
The county gave an estimate of 70 percent. When Broad + Liberty double-checked to see if that meant that the county spent an additional 70 cents for every dollar of employee salary in other obligatory costs, the county did not respond.
Broad + Liberty presented the same figures to the county again for the purposes of this report, and once again, the county did not respond to the core question.
If the county does have a parallel cost of 70 cents for every dollar of payroll, then the $25 million in payroll increases forecast by Controller Phillips means the county has incurred another $17.5 million in additional payroll obligations, like benefits, because of the raises.
Putting the two figures together means the county’s comprehensive cost of payroll increases from 2022 to 2024 will be around $42.5 million.
After Democrats won control of the county council in the wake of the 2019 elections, enacting many of the reforms they promised such as the creation of a county health department and de-privatizing the prison have put constant pressure on the budget. Some of that budgetary pressure was temporarily papered over by funds received from the federal government to help with the 2020 pandemic. But now, four years later, most of that pandemic money is gone.
When the county hired a consultant to estimate how much the county would spend if it operated the prison itself as opposed to the private contractor, the consultant’s top-end projection was $49.9 million.
In the current budget, the county is spending $56.6 million, even as the prison’s overall population has been drastically reduced by twenty percent or more.
In addition, the county is also now seeing the first wave of lawsuits from the prison now that it is the liable party for most of the prison activity, as opposed to the private contractor holding that liability.
Under Democratic control, the county has also spent millions more on outside legal help.
Previous analysis of the budget by Broad + Liberty estimated that even after passing the $5 million tax increase last year, the county was still facing an annual structural deficit of $65 million.
