Speaking Out: A Difficult Balancing Act

William Pitt, NCLM President

North Carolina cities and towns value their employees. That is not some simple platitude. It’s the truth. And that truth is borne out in how cities and towns treat their employees, with solid pay and great benefits for work that often involves a fulfilling mission of service to a larger community. Every job in every town and city contributes and plays a role in that mission.

To see the value that municipalities of all sizes place on their workers, look no further than the state’s Local Government Employees Retirement System.

It is one of the best-funded pension systems in the country. A lot of times, both the local government

retirement system and state government retirement system are lumped together—as the pension investments are all invested together. But the two systems are accounted for separately, and even considering the strengths of the state system, the local system, or LGERs, is even better funded, with a funding ratio above 90 percent and assets over $26 billion.

The reason for that strong funding is the longstanding, historical commitment by local governments to making solid contributions in good and bad times. In 2018, those contributions totaled more than a half a billion dollars, while employees contributed about $400 million to the system through their payroll deductions.

In that same year of 2018, the system paid out nearly $1.5 billion in benefits.

To cite just a few examples, cities and towns, on average, if you break it down by job, are contributing

about $4,000 per year for retirement benefits for city clerks and planners, and about $2,500 per year for sanitation workers.

And those contributions are rising because investment gains in the system have been slow in recent years. In each of the next three years, contributions by local governments will increase by 1.2 percent of payroll, representing $76.4 million in additional cost in each year. That will happen as employee contributions remain the same as a percentage of pay.

Obviously, local elected officials’ ultimate duty is not to local government employees, but to the voters who elected them and the taxpayers who fund those salaries and benefits.

It is a difficult balancing act to try to keep property taxes reasonable and affordable while also paying for the services—typically delivered by those hard-working employees—which help residents and make local quality of life better.

But it is also clear that to provide those services in the best way possible, cities and towns must attract the best people possible to fill municipal jobs—from police officers and fire fighters to building inspectors to those on street crews. Competitive salaries and good retirement benefits are crucial.

That said, striking the right balance between being good employers and good guardians of the public purse is never easy and never will be. Local government employees would do well to understand the difficulties we elected officials face in that regard, as would voters and taxpayers.

Push that equation out of balance in one way, and voters will toss council members or county commissioners out of office; lean it too far in the other direction, and residents won’t see the services that they’ve come to expect.