Solutions for Phoenix's billion dollar labor bubble

Phoenix, like every level of government in this economy, is facing a huge budget shortfall – about $245 million over two years – which requires either a lot more money or a much different way of doing business.

The former isn’t happening. We must concentrate on the latter – not only because it’s our only reasonable choice, but because the city needs major structural shifts regardless of today’s economy.

The biggest revelation since I’ve returned to the council is that the average cost for all city employees is $100,000 a year, including all benefits. That includes all employees – clerks to managers (the average private sector total compensation in the Phoenix-Mesa area, according to the U.S. Bureau of Labor Statistics, is $54,100 – about half the Phoenix average). For an enterprise the size of Phoenix, with about 14,000 workers, that’s simply unsustainable, which is why we need to look to the private sector to perform some functions less expensively.

Phoenix is facing a billion dollar a year labor bubble.

One step I rule out is raising taxes. A food tax – an idea recently floated – is regressive and hurts the poor and those on fixed incomes the most. Most importantly, it shifts responsibility for solving this money problem from government to you, the public. Phoenix families are hurting enough and have done their share. This problem is our, government’s, responsibility to fix. I recommend three solutions:

• Focus on core responsibilities. Out-source non-core functions.

• Examine departments for greater efficiency and innovation.

• Make Phoenix the best place in the country to do business.

Focus on core responsibilities:

The city’s primary job is to protect citizens and to provide basic services. We must protect functions that protect us. We want cops on the streets, firefighters in the trucks – maybe even more than now. We want water to the homes, and streets and sewers maintained.

I want the city to look at all areas of government that can be done as well or better, and less expensively, in the private sector. With $100,000 average employee costs, Phoenix must look elsewhere to get things done.

Areas could include vehicle repair, printing – even some planning and building approval roles. Advantages of managed competition include competitive bidding, self-preservation innovation, greater pressure for good customer service and less pressure to expand the government work force to meet temporary demand. I would apply the Yellow Pages test – if you can look it up in the phone book, perhaps we should consider if someone other than government might be the best provider.

Greater efficiency and innovation:

We recommended and the council approved departmental efficiency studies, and the city manager appointed an innovation task force to look for savings and better ways to do things. Business people must be on that group as well, and it must be open and transparent.

Outside systems analysis can identify procedural roadblocks and dead ends, eliminate steps and improve the outcome for the customer.

Make Phoenix the best place to do business:

Nothing will fix city budget problems better than good jobs created by a vibrant business community. Private sector jobs create real wealth, not government jobs, so Phoenix must do all it can to attract, maintain and grow good, sustainable jobs. At the very least, we must eliminate bureaucratic roadblocks.

Phoenix recently restructured its business services division, the department that approves business expansions, to make it more efficient and friendly. Within the parameters of protecting safety, the environment and neighborhoods, we must develop a system and reputation that makes companies and entrepreneurs clamor to set up and grow in Phoenix. But we must do more to cut red tape and get people working again.

We can handle this recession one of two ways. We can do everything we’ve done before, only less of it and not as well. Or we do what’s most important better, out-source more to local professionals, and create a city that drives business and jobs. That will give us the system and resources to make sure our neighborhoods and homes are protected and services are delivered efficiently and prudently.

Government created the problem. You, the taxpayer, should not be responsible for the burden. I believe solutions are in finding efficiencies, out-sourcing non-core functions if they can be done better elsewhere and growing private sector jobs by making Phoenix the best place to do business in the country.

Phoenix Councilman Sal DiCiccio represents District 6, which includes Ahwatukee Foothills, North Central, Arcadia and Biltmore. He can be reached at (602) 262-7491 or council.district.6@phoenix.gov.