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Ott says he plans no pay cuts for $100K employees

Thursday, March 5, 2009 by Austin Monitor

City Manager Marc Ott said Wednesday he has no plans to cut the wages of higher paid employees, in spite of rumors that some Council Members are urging him to consider such cuts. Council Members Mike Martinez and Lee Leffingwell reacted negatively to a plan to rein in overtime at the Fire Department and postpone a police cadet class.


Council Member Laura Morrison had also been pushing for answers about the impact of cutting the salaries of employees earning $100,000 or more.


In response to Council requests, Ott sent a memo last night detailing the number of employees in each department earning $100,000 or more and estimating the budget impact of reducing all of those salaries by either 5 percent or 10 percent.


There are two different categories of employees who earn more than $100,000 per year – those whose base pay is in that amount, such as department directors and upper management and public safety employees who earn overtime and various allowances. There are also 62 employees in Austin Energy and 10 in the Austin Water Utility plus a few others who earn overtime doing critical jobs like working on downed electric lines. Nearly 75 percent of those earning more than $100,000 via the overtime route work for police, fire or emergency medical services.  


For FY 2008, there were 827 individuals earning $100,000 or more per year. Of those, 303 are in the Police Department and 134 are in the Fire Department. There are 22 in EMS. Those 469 employees apparently would have been exempted from the wage cut. Both the Austin Police Association and the EMS employees have a contract. And the whole point of the inquiry was to see if public safety spending could be increased by cutting in other areas. See departments by numbers.


Ott wrote, “A 5 percent reduction for the remainder of the fiscal year would reduce costs in the range of $1.2 to $1.4 million city wide with a savings for the General Fund of $500,000 to $600,000. The ranges depend on whether retirement contributions are maintained or reduced for the employees affected by the pay cut. A 10 percent cut would reduce costs in the range of $2.5 to $2.8 million with a savings for the General Fund of $1.0 million to $1.2 million.”


Council Member Brewster McCracken, who opposes such cuts, said the reductions to the General Fund would not result in the money needed to restore either the Fire Department overtime or move forward with the police cadet class now.


Departments such Austin Energy, the Austin Water Utility, the Aviation Department and Solid Waste Services are not a part of the General Fund, so any money saved in those departments would not accrue to the General Fund and could not automatically be reallocated to the police and fire departments.


McCracken said taking money from other departments to fund further overtime in the Fire Department would be “compounding the issue that the Fire Department is not sharing in the sacrifice.”


Ott said, “I think what the (fire) chief was trying to do was to manage overtime costs with the flex staff proposal because already in this current fiscal year the department had exceeded their overtime budget by more than $1 million.”


Although he rejected the idea as an immediate solution, Ott told In Fact Daily he would not rule out pay cuts if economic conditions worsen.


“I’m not taking that off the table,” for the future, he said. “I may have to consider that even during this Fiscal Year.”


Asked whether he thought that would negatively impact employee morale, Ott said, “I don’t know for certain but I’ve heard those kinds of rumors. I think it would likely be demoralizing for a lot of employees to take a significant pay cut and at a time when I’m asking them to do more with less, and in fact I’m asking them to be the best with less. We’ve strived to be recognized as the best managed city in the country.”


Ott pointed out that he has already taken two actions that impact salaries of many of the employees that would be impacted by a pay cut, “eliminating additional pay for performance for employees that are rated as “above average” or “exemplary” and delaying phase two of the Market Study (the study indicated that many of these employees are already behind market).”

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