More Syracuse Cops Show Cities Emerging From Crisis: Muni Credit

San Diego, the seaside city flush with money from climbing California real estate prices and a reviving economy, is hiring more workers to fight fires, fill potholes and stock library shelves.

About 2,700 miles (4,344 kilometers) away, Syracuse, New York, is set to train new police for the first time since 2011 to keep the ranks from dropping dangerously low as aging workers retire. Milwaukee, which cut about 500 jobs from 2008 to 2013, is adding about 20 cops this year.

“You get to a point where you ask how many police officers or firefighters are too few,” said Syracuse City Councilman Bob Dougherty. “Nobody wants to find out the answer to that question.”

The jobs recovery is slowly coming to America’s cities, a result of mending municipal finances and pressure to rebuild workforces that shrank by 595,000 in the five years through March 2013. Local governments added an average of 12,000 jobs a month from February through May, the longest stretch of gains since 2008. The Labor Department will release its latest figures tomorrow.

“The economic growth that we’re seeing is giving local governments a bit of fiscal stability,” said Chris Mauro, the chief municipal bond strategist for RBC Capital Markets in New York. “Hiring in that sector is certainly picking up steam.”

Improved Outlook

The turnaround is a result of climbing property taxes, years of cutting expenses and an end to state budget shortfalls in the aftermath of the recession. With the outlook improving, investors have snapped up local government debt, driving a 6.9 percent return through June 30, the best first half since at least 2005, when Bank of America Merrill Lynch data begin.

The increase in government jobs has lagged behind the rest of the economy because it took years for the full effects of the housing market crash and recession to diminish municipal tax rolls. While businesses have been adding jobs since 2010, local government payrolls didn’t hit bottom until last year.

“Government employment is always one of the last segments to go into decline when the economy goes down, and it’s always one of the last to recover,” said Michael Montgomery, an economist with IHS Global Insight, a forecasting firm in Lexington, Massachusetts.

“One of the reasons the decline was so dramatic this time was because house prices fell,” he said. “That source of revenue is coming back.”

Property-tax revenue, almost all of which is paid to cities and other municipalities, rose by $15 billion, or 3 percent, to $494 billion in the 12 months through March, according to Census Bureau figures released last week.

Florida Condos

In Sunny Isles Beach, Florida, outside Miami, Mayor Norman Edelcup said his city of 22,000 is benefiting from the real estate rebound, with a half-dozen large condominium buildings under construction. He said he expects to expand the workforce by 20 people, or 10 percent, over the next two years to staff and police new city parks.

“The city is in a hiring mode,” he said.

About 55 percent of state and local governments hired more workers last year than in 2012, according to a survey released in May by the Center for State & Local Government Excellence, a Washington-based nonprofit. The number of such job openings this year has averaged 346,000 at the end of each month, adjusted for seasonal swings, according to Labor Department figures, up 10,000 from last year.

Lagging Behind

Even with the improvement, governments have replaced fewer than one-fifth of the jobs that were cut after the recession ended in June 2009. If localities continue adding jobs at the pace of the most recent four months, it would still take more than three years for payrolls to climb back to their 2008 peak.

Milwaukee budget director Mark Nicolini said his city is also hiring workers for road work and to tear down vacant properties. Still, he said, the expansion may be short lived: Faced with pension bills, property-tax limits and state aid cuts, the city may cut staff next year by leaving some jobs vacant, he said.

“We feel pretty fortunate that we’re not making big cutbacks or laying people off,” he said. “But our problems aren’t going away.”

1,000 Applicants

Elementary school teacher Rebecca Schapira, 27, said jobs have been scarce since she graduated from Penn State University in 2009.

The native of New York’s Long Island spent three years filling in for teachers on leave there before finding a permanent job in Arlington, Virginia. She’s now hoping to move back by landing one of the 1,000 new jobs opening up after New York Mayor Bill de Blasio won state funding to expand access to pre-kindergarten in the biggest U.S. city.

“It’s been a rough couple of years,” she said. “It’s so competitive. For every job, there’s a thousand applicants.”

San Diego, where a lack of funds once led the city to temporarily shut firehouses to save money, is planning to add about 250 to its payrolls as it hires police, library staff and maintenance workers.

Mayor Kevin Faulconer said the city has improved because of pension-system changes that put employees into less costly retirement plans as well as the reviving economy. In May, the city boosted its revenue forecasts for the year beginning in July, a result of a jump in levies from homeowners and hotels.

‘Right Direction’

“We’re starting to see the benefits of the financial reforms combined with an economy that’s moving in the right direction,” the mayor said. “Now we have the opportunity -- as some of those dollars come back in -- to invest them in neighborhoods.”

Syracuse, a city of 145,000 in central New York, still faces annual projected deficits of $20 million a year through 2018, according to Standard & Poor’s, and has been drawing on its reserves. In April, Mayor Stephanie Miner said the city’s finances had stabilized enough to allow it to add new classes for 50 police officers and firefighters, as more than 200 workers hit retirement age.

Dougherty, the councilman, said the step was needed to push down overtime costs and to prepare for a wave of potential retirements.

“We’re hearing from our constituents all the time that there need to be more cops on the street and we’re hearing from our cops that they don’t have enough people to fill all the shifts,” he said. “Hopefully next year we’ll be in better shape.”

To contact the reporter on this story: William Selway in Washington at wselway@bloomberg.net

To contact the editors responsible for this story: Stephen Merelman at smerelman@bloomberg.net Mark Schoifet

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