OCEAN CITY – The Mayor and Council chambers at City Hall was standing room only Tuesday night, as the public eagerly waited to hear Mayor Rick Meehan’s decision on whether to veto a package of bills recently passed.
In the past few weeks, the council has discussed proposed ordinances to decrease town employee pay and benefits in efforts to cut down on the city’s costs. The list of 11 ordinances passed through first and second reading by 4-3 votes, with Joe Hall, Brent Ashley, Jim Hall and Margaret Pillas in the majority.
The minority of the council, Doug Cymek, Mary Knight and Lloyd Martin, as well as the mayor, did their best to fight off the ordinances into further discussion in attempts to meet on common ground. That way the entire council could feel comfortable in voting on such important changes, instead of resulting in a constant 4-3 vote.
The majority of the public in attendance represented the public safety departments, which have been concerned over how the new ordinances would affect their re-negotiations on the contract with their union and their future co-workers.
The town’s department heads were also in attendance over concern on how the ordinances would affect new employees. Though most of the ordinances pertain only to newly hired town employees, current town employees have also been in attendance in fear that they would be the next target to have their pay and benefits decreased by the city council.
Within the power of the mayor, he has 15 days to decide whether to veto an ordinance after second reading. The list of ordinances passed through second reading on Jan. 3 caused Tuesday night’s meeting to be the 15th day.
“This has been a very difficult couple of weeks,” Meehan said. “I don’t agree with passing ordinances when we do not have all the information necessary to make what I believe are informed qualified decisions.”
According to Meehan, the town has had a head start by already making changes to reduce the town’s operating system by 10 percent, or approximately $8 million.
The mayor referred to the Fraternal Order of Police and the IAFF, both unions who have voluntarily given up salary increases in the past that were already defined in their union contract in the past two budget years. In doing so it saved the taxpayers of Ocean City approximately $1 million.
“This has been a team effort and everybody is on the team,” he said.
Additional changes have been made in the last year in moving forward into this year’s budget that will save the town an additional $1.5 million.
“Our fund balance is at its highest level it has ever been, and I believe we are in position to address future anticipated expenditures,” Meehan said.
Meehan did not veto four ordinances. Two ordinances that will be passed into law are any pay grade changes requiring notification from the city manager and automatic anniversary, COLA and step raises must receive the council’s approval at budget time.
“I believe this is already being done,” Meehan said.
The other two ordinances dealt with eliminating Achievement Compensation for Excellence Awards and ICMA 457 deferred compensation match for new hires. Although the mayor decided not to veto those ordinances, he asked for the council to re-consider them in the future.
Concerning the Achievement Compensation for Excellence Awards, Meehan said, “this is a tool that allows management to recognize outstanding performance by individual city employees over a period of time…I believe it is good for overall morale.”
Meehan said the ICMA match is a beneficial tool to allow town employees to build up adequate funds for a healthy retirement.
“I choose not to veto this ordinance because the program has not been totally eliminated,” Meehan said.
The following ordinances were vetoed, followed by the mayor’s reasoning:
ν The fifth week of vacation for current employees and dependent life insurance for new hires eliminated. ICMA match reduced from $500 to $200 and holidays reduced from 12 days to 11.
Meehan pointed out that how the ordinance is written it, “takes away the benefit from those who have already earned and are currently receiving the benefit.” He also asserted that the dependent life insurance, which only costs the town $3,800 a year, will create a cumulative effect with other ordinances and would be in the best interest of the town’s employees and citizens to retain the dependent life benefit.
ν Salaries based on 2005 Hendricks Study Chart, with no movement in cap without approval of Mayor and City Council for new hires, excluding returning seasonal employees unless promoted to a higher pay level.
“Although I do support a revised salary structure for new hires, I do not support an arbitrarily across the board decrease in salaries of 8.5 percent,” Meehan said.
Ocean City’s pay scales for lower level employees are in line with the market, it is the middle and upper level positions that are above the average. Meehan suggested a graduated scale instead.
Concerning seasonal employees being restricted from pay enhancements, Meehan said it, “would affect leadership or supervisory positions in seasonal operations.”
ν New employees allowed 10 days for personal, sick or bereavement leave. Maximum accrual of 20 days and unused accrued days will not be permitted towards retirement enhancements.
According to the mayor, this policy would actually allow an employee eight additional days a year of sick, personal or bereavement days, to take or loose. In that case, the policy would actually provide incentive for the employee to take those days off without notice, resulting in the town having to pay overtime to those employees who have to cover their shifts. Also, the ordinance doesn’t include those valued employees who will have to take an extended amount of leave due to long term unexpected illnesses.
ν Retiree health coverage eliminated for new hires. The post-employment benefit actuarial presented earlier this month stated this change would actually cost the taxpayers of Ocean City an additional $810,000 in the first year.
“It is essential that we have a true understanding of how this change effects the yearly cost associated with funding our current plan,” Meehan said.
ν A maximum of three weeks of vacation for new hires, with one week added every five years the employee works for the town.
“This is not a best management practice or public policy,” Meehan said.
Meehan stated that the town employees work around the clock efficiently, especially when the town’s population grows from 20,000 to over 300,000 in a day on any given weekend during the summer season. The policy is also contradictory to Ocean City’s fundamental values as a family resort not to allow town employees to enjoy the same time off with their families.
ν Retirement plan for new hires will be a defined contribution plan.
“I am in complete favor of having ongoing discussions to re-evaluate our current pension plan for new hires in Ocean City,” Meehan said.
However, Meehan feels it is irresponsible to pass this ordinance until the actuary study is completed and presented, in order for the council to develop a full understanding on how the changes of the pension plan would affect the current plan and level of benefits that future employees could expect to receive.
ν Establishment of a cost sharing ratio for health insurance, independent and dependent, for new hires.
“This change would cause the town to lose its grandfather status,” Meehan said.
According to Meehan, while it is anticipated that new hires will contribute an additional $10,000 to $20,000 for their family coverage, loosing grandfather status would increase the town’s cost a net of $130,000 to $140,000 in the fiscal year of 2012 because the town would be required to provide first dollar coverage for preventative care for all employees at an estimated cost of $150,000.
The actuary study requested by the Mayor and City Council is scheduled to be presented during the Feb. 1 meeting. Meehan looks forward to that session to review the information necessary to make responsible changes to employee pay and benefits.
“We can continue to offer competitive salary and benefit packages and continue to hire the high quality employees that we have today at cost that our taxpayers will be willing to spend,” said Meehan, who received a standing ovation.