Council opts for pay hike over bonuses

FRONT ROYAL – Town Council made an 11th-hour change to next year’s budget Monday that increases employee salaries rather than giving bonuses.

Council voted 5-1 to adopt on the second and final reading the annual appropriations ordinance that sets up the fiscal 2017 budget. The total budget of $45.78 million takes effect Friday.

At its June 13 meeting, council voted 5-1 to adopt the ordinance with several amendments that included changing the $1 per hour cost-of-living adjustment to a one-time $2,000 bonus to be paid in December.

Councilman Bret Hrbek on Monday proposed an amendment to the motion to adopt the ordinance to change that one-time bonus, estimated to cost $350,000, to a 2 1/2-percent, merit pay increase for all employees. The merit pay increase is expected to cost $200,000, Hrbek said. The councilman moved to set aside the remaining $150,000 for any pay adjustments deemed necessary by a future salary study conducted in the next fiscal year.

The town would spend less on pay increases than bonuses, Hrbek pointed out. However, the salary increase better serves the employees than one-time bonuses by providing higher pay and contributing to retirement benefits, Hrbek said.

Councilman John Connolly said he talked to staff members about the options.

“I don’t know if council is aware just quite how much of a bonus gets eaten up by taxes as opposed to a raise that goes into their salary throughout the year,” Connolly said. “There are also some issues, logistically I think, with (a) $2,000 bonus that gets paid out in December.

“December’s a very difficult time of the year to be giving out that bonus and anybody that might quit the town in November, for example, would not be entitled to the 5½ months of work that had been put in under the auspices of that year-long bonus that was supposed to be paid out,” Connolly added.

At Connolly’s request, Town Manager Steve Burke provided Front Royal’s history of providing pay raises since 2009. The town did not adjust salaries in fiscal 2010 or 2011. The town provided a 2-percent cost-of-living adjustment in fiscal 2012. Employees received a bonus and a 1-percent pay raise in fiscal 2013, the latter of which offset a 1-percent contribution to the Virginia Retirement System as required by the state. The town provided another salary increase in fiscal 2014 that also offset required retirement contributions. The town gave a $1,000 bonus to full-time employees and $500 to part-time workers in fiscal 2015. Employees received a $1 per hour salary adjustment this fiscal period.

The town needs to set up a policy for salaries that takes into consideration the cost of inflation, Connolly said. Inflation increased 11 1/2 percent in the time frame Connolly cited. Employees paid taxes on bonuses and salary increases largely went to retirement, Connolly added.

The town needs to keep its salaries competitive with those of other localities so its employees stay rather than learn a trade and go elsewhere for better pay, Connolly said. Council also needs to review the process for providing merit-pay increases, he added.

Councilman Jacob Meza concurred with Connolly, noting that employees should know ahead of time whether or not to expect a pay raise each year.

Councilman Eugene Tewalt voted against Hrbek’s motion, reiterating his concerns and criticism of the spending plan he said still contains “fat.” The town can’t sustain a budget that increases $1 million a year, either through increased spending on salaries or on equipment, Tewalt said.

Councilwoman Bébhinn Egger supported Hrbek’s motion but voiced concerns about the budget. Council members had backed themselves into a corner and did not come up with a good solution to benefit the town’s employees, Egger said. Employees, including some in the police department, had confronted Egger about salaries and some said they would prefer a pay increase rather than a bonus, the councilwoman said.

Contact staff writer Alex Bridges at 540-465-5137 ext. 125, or abridges@nvdaily.com