After symbolically forgoing a raise last year because of the recession, Tacoma City Manager Eric Anderson this week cashed in on a big pay hike due to him – almost $35,000 per year.
The 17.4 percent raise in annual pay — triggered by a national study showing the economy is improving — bumps Anderson’s base salary from $200,450 to $235,373.
The raise is retroactive to Jan. 1, 2010, meaning that on top of his bigger new salary, Anderson will receive about $32,000 in back pay for this year.
“I appreciate the city council’s commitment to bring me to market as they have and will with everyone else in the organization,” Anderson said Wednesday. “I have to remain committed to earning it every day and working hard to make sure I’m worth it.”
The pay raise comes amid the city’s push to fulfill a promise made two years ago to bring all city employee pay to the 70th percentile of market wages, based on a consultant’s study of Tacoma’s pay rates compared to those in other cities and in some cases the private sector.
It also comes at a time when the area’s unemployment rate is high, local budgets are getting slashed and Anderson is seeking a wage freeze for all city employees, beginning next year.
Had he wanted to, Anderson could have taken a pass on his pay raise again.
He did so in March 2009, volunteering to forgo a raise recommended for him under the pay study. Given the recession and the city’s uncertain budget situation at the time, Anderson had said it would be better “fiscally and symbolically” not to accept the pay raise then.
Instead, the City Council added language to Anderson’s contract that froze his salary “until such time that the National Bureau of Economic Research announces two consecutive quarters of growth.”
The Cambridge, Mass.-based research organization determines, among other things, when economic recessions and recoveries occur. The nonprofit often makes such declarations well after such changes in economic conditions are underway. In September, the NBER issued a report indicating two straight quarters of growth – the trigger for Anderson’s pay raise.
As a pre-approved contractual issue, the pay hike was an administrative action made without city council approval. When Anderson indicated he wanted the raise, the city legally had no choice but to honor his request – or break his employment contract.
“We didn’t’ have a debate about whether he should continue to voluntarily give up his raise,” Mayor Marilyn Strickland said. “The triggers were in place. Plus, we’ve already made the promise to bring every employee’s pay to market.”
To help the city balance a coming budget that’s $40 million less than the last one, Anderson has proposed that once all employees get raises per the pay study, the city will seek to freeze wages.
Two union-represented bargaining units have yet to agree to city-offered raises, but all of the roughly 940 non-union employees already have gotten such hikes. Averaging about 8 percent, those raises were made retroactive to Jan. 1, 2009 – a year earlier than when Anderson’s pay hike kicks in.
“I am the last unrepresented person (to receive a raise),” said Anderson, noting his last raise occurred in July 2008.
Councilman Ryan Mello, who joined the council this year – after Anderson’s contract had been amended – said the council should have hinged Anderson’s pay raise on locally-based economic factors.
“I wish they would have negotiated something different,” Mello said. “Something real tangible to the City of Tacoma that showed the people here are doing better, not some indicator put together by academics in Washington DC.”
“These are tough times,” Mello added. “I do understand that people are going to have some heartburn when they learn about this. I get that.”
Strickland, one of the four remaining council members who approved the pay raise trigger, said the NBER is a well-respected organization that provides comprehensive financial analyses based on a host of variables.
“Bringing a CEO to market is never a popular decision no matter when you do it,” she added.
The previous hourly pay rate for Anderson, 64, who was hired in 2005 after serving as city manager of Des Moines, Iowa, was $96.37. That ranked him as the sixth highest paid among a dozen other city managers and administrators from similarly-sized American cities analyzed in the 2008 pay study.
Anderson’s new hourly rate of $113.16 places him fourth on that list, which ranges from the highest paid city administrator in Reno, Nev., making $122.64 per hour; to the lowest paid administrator, earning $60.57 per hour in Spokane.
“I think that’s a good salary,” Strickland said of Anderson’s new pay. “It really is market-based.”
Even with the raise, Anderson isn’t the highest paid city employee. That distinction goes to Tacoma Public Utilities Director Bill Gaines, whose $136.54 hourly pay rate garnered him $290,262 in 2009, city pay records show. In fact, before his raise, four TPU employees were paid at a higher rate than Anderson.