Is Salarygate a Financial Crime?
An editorial by Joe Murphy (with Spencer Henderson)
Their opinion does not necessarily convey an official position by A Just Quincy
As the presidential candidates have outlined their plans to combat inflation, I’ve been reflecting on a very specific cost spike to Quincy taxpayers. We have been subjected to terrible self-dealing from our elected leaders during a time when we are already struggling with inflation, price gouging, and other anti-consumer practices.
AJQ continues to try and burst our elected leaders' bubble.
Late this past spring, Mayor Koch put forward ordinances to raise his salary by 79% and the city council’s salary by 58%, starting this coming January. The members of the city council voted to pass the mayor’s 79% pay increase, and their own 50% salary boost. These raises come at taxpayers’ expense, and I started wondering whether they share similarities with other anti-consumer practices, like price gouging.
You could understand why someone might view the recent raises the mayor and city council have given themselves as a type of price gouging. Key characteristics of price gouging – and my assessment of whether the raises meet them – include:
☑ excessive price increases of essential services
☑ exploitation of consumers' lack of alternatives,
☑ a lack of justification, meaning there are no corresponding price increases that necessitate these increases, and
☐ an emergency or crisis being exploited.
The raises tick the first three boxes, but not the last – there was no emergency that required the council to quickly pass the mayor’s requested raises. While that lack of urgency actually makes the increases all the more frustrating to many taxpayers, it means they don’t technically qualify as price gouging.
Price fixing is an illegal practice where competing businesses agree on setting prices for goods or services, rather than allowing market competition to determine them. This doesn’t seem to be the right label for the situation at hand. In this case, the mayor and city council are agreeing on high, artificial pricing, but they are not competitors. Therefore, they are not suppressing competition because they are already the only game in town. One of the reasons elected leaders are not paid as well as their hired counterparts is that there is no competition. “Elect me and I’ll do it for less money” is not a natural campaign tactic. Furthermore, price -fixing is typically conducted in secret among competitors. While there were certainly private conversations held out of public view, much of this was done openly.
A different type of collusion?
We’ve ruled out price -fixing for now, as it's typically used by competitors to bypass the pricing constraints imposed by competition. However, some hallmarks of collusion are evident in this case:
☑ mutual benefit
☑ harm to consumers
☑ artificial conditions*
☑ intent to deceive or manipulate
Do we need a specific term for this type of governmental collusion? The Justice Department usually focuses on government procurement, where bid rigging (pre-determined winning bids through collusion) may occur, and on wage suppression by colluding competitors. What we’ve observed in "Salarygate" seems different, with no apparent safeguards to prevent it.
But isn’t that what elections are for?
I don't see elections as an adequate safeguard against the scheme employed in Salarygate for the following reasons:
Rackets like this are typically carried out by those already in office (these raises were proposed and passed just a few months after the mayor and councilors started their new terms). Incumbents win re-election 70-90% of the time, depending on the study. With such a huge advantage for incumbents, concerns of losing their next election cannot be relied upon as a deterrent, especially when the changes are pushed through well before the next election cycle.
On the contrary, Salarygate illustrates how timing can provide a strong incentive for misfeasance. The mayor will receive his new salary of $285,000 during each of the last three years of his current four-year term – a staggering $402,000 more than he would have made with no raise. Additionally, with three years of salary at the new artificially high number, the mayor will have triggered a significant increase in pension contributions upon retirement. So even if the mayor were to run again and lose because of the raises, Quincy’s taxpayers will still be paying for them for years to come.
I've been asked by more than one person, “Why are you still hung up on this?” and others have advised my cohort to move past it. However, finding this situation and the behavior of our elected officials odious, we have no choice but to indict and conduct a trial in the court of public opinion. This is how we are trying to restore sanity and democracy to our municipal government; this is how we hold those we elect accountable.
While there are countless local implications – about a quarter of a million dollars in taxpayer funding per year (when combined with city council salaries) and further strain on a struggling pension system among them – there will also be broader effects. Elected officials across the country will undoubtedly point to Quincy’s mayor as a comparable salary benchmark. Relating this back to my initial point, in a country already suffering from inflation, corporate anti-trust behavior, and general income inequality, various versions of "Salarygate" occurring across the nation will exacerbate these issues.
While we face increased costs for core expenses like food, insurance, utilities, and higher interest rates, we need our elected officials to act in the manner in which the voters of Quincy expect and deserve – to represent the best interests of our city and its residents. To propose and affirm such an increase for their own salaries right after they took the oath of office may not be a financial crime according to the letter of the law, but it feels like one. It also has the same effect: Quincy taxpayer money is being taken and given to our elected leaders. Objections, clearly and loudly raised by Quincy’s residents, have fallen on deaf ears.
The mayor and city council’s getaway plan is to wait the outrage out. This move has worked for them in the past when our hospital closed, when property taxes went up, or when sweetheart deals for developers were struck. It is up to the people of Quincy to decide if it will work again.
* The Dorminson report, commissioned by the Quincy Office of Finance, artificially created conditions to justify an exorbitant raise. The report misleadingly compared the mayor's salary to those of town managers instead of his peer mayors. See other AJQ articles for more information. Information — A Just Quincy and Patriot Ledger article — A Just Quincy
