Scott Radley: The price tag for city employees is huge and growing fast. What can be done about it?

Ten years ago, the City of Hamilton budgeted roughly $629 million to pay its 7,500 or so full- and part-time employees' salaries, wages, benefits, training, travel and professional certifications.

Last year, that number reached $873 million.

Meaning in just one decade, the price to employ our municipal workforce has risen by roughly a quarter-billion dollars a year. Once the 2022 budget is finalized in the next few days, that figure will rise further.

Services keep costing more," says Ward 2 Coun. Jason Farr. Contracting out services costs more. Wages go up."

This is not unique to Hamilton, of course. But if you want to understand one of the big reasons councillors have struggled to keep taxes down in recent budget deliberations, it's a place to start.

And it's a conundrum.

I don't think it's sustainable, no," says Ward 13 Coun. Arlene VanderBeek. And I've said that for a long time."

Question is, what to do about it?

Ward 15 Coun. Judi Partridge says upper levels of government mandate certain services that must be provided by the city, yet they don't cover the costs of all these things. That adds up.

She and Farr add that the city has to provide competitive wages to acquire and retain talent. Go cheap and good people will be poached by cities and companies that will. Plus, the city has a responsibility to be fair with its workers as the cost of everything rises.

Nobody wanted a city job 30 or 40 years ago," Farr says. Now it's a pretty darn good job because there's security and annualized increases."

Indeed. The city says its 5,300 full-time employees - this figure doesn't include police and library workers whose costs are, however, included in the overall city payroll - have a median salary (half make more and half make less) of roughly $80,000, which included raises during the pandemic. The median for the rest of the people who live in this town was $53,880 in the last census.

And as Farr says, the full-timers' positions are secure.

During the past two years when the local unemployment rate rose from 5.7 per cent to over 12 per cent before, thankfully, returning to a more normal state, many in the private sector were losing jobs, dropping hours or taking a pay cut.

Several hundred municipal employees were redeployed to other tasks to help with the pandemic response, so they surely had to adjust to new tasks. Yet the city's full-time complement has actually edged up from an average of 5,343 in 2020 to 5,388 in 2022.

Property tax increases have covered the added costs over the years. According to a 2021 report by Zoocasa, Hamiltonians pay just over $6,000 on a home assessed at $500,000 (the last time homes were assessed for tax purposes was 2016 when they averaged $376,000) compared to $3,000 in Toronto, $3,900 in Burlington and $5,000 in Ottawa.

And things are about to get even tougher, Coun. Lloyd Ferguson says.

The Ancaster councillor points out that many of the city's collective agreements expire on Dec. 31. With inflation roaring, he expects all the unions will want significant increases. As a result, he says next year is going to be hell."

I would expect if inflation is at five or seven per cent, that's what they'll want," he says.

Jay Hunter is president of CUPE 5167, which represents 2,800 city workers. He says they won't be looking for anything that high because he understands the city couldn't do it. But he says his members will be seeking at least the cost of living, which would mean raises of considerably more than the 1.6 per cent they've received in each of the past four years.

Since the city gives non-union employees raises as well - often in line with what the unionized workers get - the price tag to the city will jump. Unless the city decides to take a hard line and negotiates to keep raises to an absolute minimum.

Ferguson says that probably wouldn't go well.

Unless we're prepared to take a long strike," he says.

This issue stands to become even more complicated since annual raises are a percentage of existing salaries. A percentage of $873 million is more than the same percentage of $624 million. Which means employee-related costs are likely going to grow faster and faster each year.

So what's the solution? Service cuts? Nobody wants that. Especially if it means jobs being lost. Property tax increases? Nobody's excited about that either.

We're going to tax people right out of home ownership," Partridge says. They will not be able to afford it."

Somehow accelerate the anticipated growth of the city to create a bigger taxpayer base? That would drive already soaring housing prices into a new stratosphere. Plus, a larger population would merely require more city staff, which would add new costs.

Which means the answer is?

I don't know what the easy answer is to that," VanderBeek says. I don't think there is an easy answer."

Scott Radley is a Hamilton-based columnist at The Spectator. Reach him via email: sradley@thespec.com