Riverside’s city manager contract dispute is a wholly Californian problem

Mark Bertumen/Highlander

After the Riverside City Council fired former city manager John Russo among controversy over his high salary in April, they shot down a proposal to impose a cap on the city manager’s salary at a May 1 meeting by a vote of 6-1. The political flip-flop came after loud debate as Riverside Mayor Rusty Bailey attempted to veto Russo’s proposed salary at $323,946 a year, an amount the council originally claimed was necessary to keep Riverside competitive with other cities in California. The turmoil that played out inside of Riverside City Hall is just a microcosm of the highly inflated compensation top public officials are receiving in cities across the entire state of California.

The Riverside City Council voted to approve Russo’s salary at $323,946 for the city of 324,722 in February of 2018. After the vote, Mayor Bailey was quick to announce his distaste for the contract through a veto that quickly fell flat, but led to real consequences nonetheless. Pressured by growing controversy over Russo’s salary as a result of Bailey’s political posturing, the city council that had just approved Russo’s contract two months prior by a 5-2 vote apparently saw the issue much differently when it changed its vote to 4-3 in April, to fire him.

The reason for this political flip-flop, of course, is the public being understandably upset at a city manager of a 324,000 city making about $471,000 in salary and benefits while the governor of the 39.5 million people of California only makes about $274,000 a year by the same metrics.

The impetus of this local controversy, the excessively high salary of the city manager, is a troubling California epidemic. The managers of San Jose and Norwalk made $610,000 and $601,000 respectively, in pay and benefits during 2017. A small beach town in coastal LA, Manhattan Beach, for example, pays its city manager $349,000 for its population of about 35,000.

According to Ryan Hagen of the Southern California News Group, the Riverside City Council justified Russo’s high salary in claiming “if we pay substantially less than other cities, we’ll get substantially worse performance.” This same mindset was typified by the Glendale City Council, which just recently approved a $278,000 a year salary for the city of 200,000 people. Glendale City Councilman Ara Najarian said, “If we paid $200,000, I just don’t think we’d have anyone apply. You look … at the neighboring cities and they’re paying more. There’s an upward spiraling of salaries, and I don’t know that the end is in sight.”

Najarian speaks to the sad truth that has overtaken the state. In just two years from 2014 to 2016, Glendale’s city manager compensation grew from about $306,000 in pay and benefits a year to over $373,000. And just two years ago in 2016, nearby Norwalk’s city manager compensation, which is currently $601,000, was just $331,000. This upscaling of contracts indicates an accelerating race to raise salaries and benefits between cities that feel obligated to offer abundantly generous contracts to potential managers, just to stay competitive. The competition has clearly transformed into an uncontrolled feedback loop in which cities are left with the dubious choice of either grossly overpaying public employees or losing the ability to hire quality candidates from outside the city itself.

Acting as a city manager is, of course, an incredibly demanding and stressful job that certainly requires exceptional compensation. However, due to the nature of public work, the emphasis on service and sacrifice, and the political nature of hiring and firing, it is foolish to treat a city manager like a CEO. The city council, being held accountable to citizens rather than shareholders, lacks the same flexibility as an apparatus of the private sector that could quickly and more easily displace an unsatisfactory CEO.

Elected officials all across the state have devised a number of solutions to this spiraling salary situation. Mayor Bailey’s symbolic veto of Russo’s contract is one such attempt, but even if it were successful, it would have ultimately been a failure; the city likely would have just been left behind if it refused to join the rest of the state in offering inflated salaries to its manager candidates. Clearly any such solution would have to be implemented at the statewide level so that no one city can restart the spiral by continuing to offer increasingly higher salaries and benefits.

One solution proposed locally is Assemblymember Sabrina Cervantes’s (D-Riverside) plan to institute a cap on public official salaries as no higher than the base salary of the governor. Currently, the portion of public officials’ salaries that are higher than the governor’s cumulatively cost taxpayers $1.8 billion a year, according to Cervantes.

This solution seems relatively popular at the bipartisan level, considering that Cervantes’s Republican opponent, Bill Essayli, proposed limiting public official compensation to the level of the governor just two months before Cervantes came out with her official proposal in the State Assembly. Essayli said his proposal was motivated largely by a federal law that prohibits the salary of federal officials from exceeding that of the vice president of the United States.

The proposal has its issues though. Firstly, a statewide cap on the compensation of public officials has the potential to make California less competitive for quality candidates nationwide. Although this would likely have little effect and would be largely offset by California’s generally high standard of living, a flat cap on salary compensation could create vast disparities between city managers of expensive cities like San Francisco and cheaper cities like Barstow.

One proposal that aimed to pinpoint this issue was a ballot measure that passed in Murrieta in 2010 that called for the salary of public officials to not exceed two and a half times the median household income. Although the measure was passed, the city has all but ignored it and is paying its officials at levels similar to those of neighboring cities. The failure of Murrieta to enact this measure in good faith illustrates the necessity of a statewide solution to a statewide epidemic that is creating an array of serious local challenges.

Somewhere around three times the median household income of a city is a reasonable cap, and could allow for a lid to finally be put down over this never-ending upward spiral while still making the job attractive in every city. The salary disparity would of course make poorer and more inland cities even less desirable for candidates, as opposed to richer and coastal cities, but it is more accurately tied to the cities’ resources and is more respectful to the taxpayer. Alongside the cap of around 3 times the median household income, could also be an option to choose a flat cap alternative of around $175,000, which would provide greater flexibility to cities that may need to rely on higher salaries to offset the relatively lower standard of living.

Even with all of these measures in place, cities could still play the exact same game with benefits and perks for managers, which are much harder to regulate than salaries. One solution to this potential problem would be a statewide standardization of city manager benefits, or using the median household income as a factor in determining limits.

While competition between cities for the best managers is good for the state as a whole, it’s unfortunately true that an exceedingly high number of city managers could have their salaries cut by at least $100,000 yearly and still be fairly compensated for the work that they are doing. Ultimately, the role of city manager exists not to provide financial gain to qualified candidates or lure in candidates drawn to generous compensation, but rather to act on behalf of the city’s population and use its resources as efficiently as possible. The competition between cities for the best managers ultimately comes out as a tragedy of the commons, where salaries across the board seem to be inflated by tens of thousands of dollars for no reason other than the competition itself. Whatever the solution ultimately is, it is going to need a statewide scope.

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