Wage freeze plan gets hot, cold responses

ST. PAUL -- The debut hearing for a plan locking all public employees' pay in place through mid-2005 sparked questions Friday about savings it would produce, layoffs that would result without it and the job climate it would create.

The Senate State Government Budget Division didn't take action after listening to 2 1/2 hours of testimony from business groups, labor leaders and local officials.

"I've been wearing a bulletproof vest for the last month," Sen. Tom Neuville, R-Northfield, joked as he presented his wage-freeze plan.

His kidding aside, the issue has stirred passions among thousands of Minnesotans drawing public paychecks, covering everyone from snowplow drivers to tax collectors to food inspectors. His office has fielded 800 phone calls, letters and e-mails. He's been called a moron and an idiot, and his wife, a public school teacher whose pay would also be frozen, has gotten the silent treatment at work.

But Neuville is undeterred, arguing that giving raises will drive up Minnesota's projected $4.2 billion budget deficit and could result in more drastic actions.

"I don't want to lay off any more government employees than we have to," he said. "We're going to lose enough as it is."

Some 1,500 state jobs are expected to be eliminated under Gov. Tim Pawlenty's budget. Without a freeze, 790 more would go, an official with the Department of Employee Relations testified. The local level impact isn't as clear.

In short, the plan would prohibit managers for the state, cities, counties and school districts from agreeing to new contracts that increase pay, including those based on seniority. The bill allows for raises for promotions and wouldn't affect health coverage or pension plans.

The University of Minnesota, which has special constitutional status, would be strongly encouraged to go along.

A preliminary analysis projects savings of $26.5 million a year for the state, $114 million for local units of government and $31 million for the university -- figures Neuville considers too conservative.

Finance Department officials have reported that every dollar frozen wouldn't result in a full dollar saved because flat employee pay would affect sales and income tax revenues.

Sen. Jane Ranum, DFL-Minneapolis and the committee's chairwoman, isn't convinced the proposal is a sound one. She said it fits in the category of "simplistic solutions to complex problems."

Ranum said it strips local government and school districts of flexibility to manage budget cuts.

One skeptical official is Bloomington Mayor Gene Winstead, who said 70 percent of his city's operating budget goes for salary and benefits. He said he's worried about a freeze making city jobs less attractive than private sector jobs.

"A pay freeze, although an option, may not be the best alternative for each city," he said.

Neuville and the business group representatives countered that the private sector also has cut jobs and frozen wages -- or reduced them -- in recent years to deal with a slumping economy.

Union officials said the collective bargaining process would suffer if the state dictates a freeze in law. They noted that a decade ago, when the state's budget was in rough shape, unions agreed to go without raises for a year in exchange for health coverage protection.

"Wage negotiations belong at the bargaining table," said Julie Bleyhl of the American Federation of State, County and Municipal Employees. "The bargaining process allows for trades."