Does the South Lake Tahoe city manager make more than the California Governor?
November 15, 2017
Scroll through any Facebook thread concerning government in the city of South Lake Tahoe (especially the topic of roads), and it's possible to find some version of the claim that City Manager Nancy Kerry makes more money than California Gov. Jerry Brown. But is that assertion true? And if so, is it an anomaly?
According to Transparent California, a database of public employee salaries maintained by the Nevada Policy Research Institute, Kerry's base salary in 2016 was $185,792, though combined with "other pay" and benefits, her total compensation for the year amounted to $297,229. The database describes "other pay" as payouts for unused sick/vacation time or bonuses.
This June, Kerry received a 5-percent raise, increasing her base salary to around $195,081. However, Kerry elected to reduce her reported annualized pensionable compensation by $30,000 to be deposited in her 401(a)/457 — a retirement savings plan for public sector employees. This reduces the city's contribution to CalPERS — which will increase from $4.7 million a year to $9.7 million by 2022 — by about the amount of the salary increase. Kerry was also awarded with an annualized amount of $20,000 to her 401(a)/457 for a period not to exceed three years for her "outstanding performance particularly in the area of fiscal responsibility," according to city documents.
Starting in December, Brown and state politicians will receive a 3-percent pay hike, bumping his base salary from $190,102 to $195,805. This does not factor in the governor's total compensation, however, which includes housing and nearly all other living expenses.
Though Brown is the highest paid governor in the country, it's not uncommon for city manager salaries to outweigh that of the governor, according to Robert Fellner, transparency director for Nevada Policy Research Institute, the group behind Transparent California.
"While there is an assumption that a city manager's pay is tied to the size of the agency they run, we've found no evidence to support that. The fact is, most California city managers earn more than the governor, despite overseeing much smaller agencies," explained Fellner.
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"There are a few reasons for this. First, the governor is an elected position and obviously the most intensely scrutinized election statewide. I think this limits the desire to push for a higher salary — as the political blowback far outweighs the benefits. In other words, the real benefit of being elected governor is the power and influence, not the salary.
"By contrast, city managers have much stronger incentives to push for higher pay — as it is not an elected position — and the negotiations receive far less scrutiny than what is applied to the governor, particularly in the smaller cities," continued Fellner.
He pointed out that some of the highest paid city managers come from smaller, poorer California cities, like Escondido. In 2015, Escondido city attorney (now city manager) Jeffrey Epp's $521,204 and former city manager Clayton Phillips'total compensation packages made them the state's highest-paid city attorney and manager — and the second and third highest-compensated city workers of the more than 245,000 employees surveyed. Escondido has a population of roughly 151,000.
The highest base salary for a city manager in 2016, according to Transparent California, is Santa Ana's David Cavazos, who earns $343,101. With other pay and benefits, his compensation package totals $466,796.
Fellner said another reason for higher salaries for city managers is "concentrated benefits and dispersed costs."
"So while the benefits of receiving a $25,000 salary raise are tremendous to the person receiving it, the cost borne by any individual taxpayer from that raise would be negligible. This, on top of the practice wherein public agencies compare pay to other public agencies, results in an ever rising climate of higher and higher pay," concluded Fellner.
And it's not a trend that's limited to California. Colorado Gov. John Hickenlooper earns $90,000 — the second to lowest governor salary in the country — while the new city manager of Vail, Greg Clifton, has a base salary of $175,000.
South Lake Tahoe's Kerry said that comparing "other CEOs" — a city manager to a governor — is like comparing "apples to oranges."
"Overall, most salaries in public sector are compared in the same way that private sector salaries are generally compared. That is, salaries are comparable based on the type of work. A journalist might use the salary of another journalist in another city as a comparative. Private sector hospital CEOs would be compared similarly, not to that of other CEOs," said Kerry, who has been city manager since 2012.
Further, said Kerry, many of these comparisons regarding her salary are used to back up claims that the city mismanages its budget — something she asserts is not true.
"The only way for others to make statements such as 'financial mismanagement' is to ignore the elimination of over $30 million in debt, ignore the balanced budgets, ignore the positive cash flow each year, ignore the City Council's financial capability and decision to invest in the community, ignore the independent auditors findings of 'good fiscal management,' ignore the city's receipt of awards from Government Accounting Standards Board for excellence in budgeting, ignore [Standard & Poor's] upgrading of our redevelopment bonds (upgrading of bond rating is rare these days)," said Kerry.
Kerry said that had tough financial decisions, like reducing retirement health care costs, not been made "the city would not be in the position to have invested more money in roads in the last five years than in the previous 12 years combined. But it is not enough."
Mayor Austin Sass said that when it comes to the hot button issue of roads, the current City Council can't be held accountable for the decisions of past councils.
"If you want to say that the city mismanaged expenditures, you have to go back to when that expenditure was made. You can't hold this City Council for the condition of the roads when for the last 50 years there was no real money set aside from roads," said Sass. "The issue of why didn't the city budget for roads a long time ago rests with the former councils. Today, we are trying to deal with fixing the roads and are not kicking the can down the road."
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