City-County Consolidation in North Carolina

Seven of the eight consolidation efforts, all but Charlotte-Mecklenburg II, made some sort of explicit provision about the treatment of or protections for existing employees of the county and city after consolidation.  Any charter commission decisions on these topics can undermine support for consolidation.  If the charter says nothing about existing employees, the resulting uncertainty can easily cause those employees, and their families, to vote against consolidation.  Even if the charter provides some protections, those protections might not be sufficient to override employee uncertainty.  On the other hand, many citizens will expect consolidation to provide cost savings over the current arrangements.  With personnel costs by far the largest part of local government budgets, strong employee protections will make any cost savings hard to accomplish and hard to promise.  Without cost savings, though, many citizens may see no reason to support consolidation.

There is no legally-required pattern for these sorts of provisions, and the proposals that emerged from the eight consolidation efforts in North Carolina ranged from saying nothing, in Charlotte-Mecklenburg II, to fairly detailed guarantees of continued employment, in the joint committee’s proposed charter in Wilmington-New Hanover II.  But each of those extremes was unique.  The more common pattern has been to guarantee that consolidation will not lead to any loss of retirement or pension benefits and, less often, to provide that no employee will suffer a reduction in salary because of consolidation.  None of the efforts, except Wilmington-New Hanover II, has guaranteed continued employment.

Two points should be made about the more common provisions – those protecting existing retirement or pension benefits, and those protecting existing salary levels.

Provisions that guarantee that consolidation will not reduce or eliminate an employee’s existing retirement or pension benefits may be nothing more than a legislative expression of what is constitutionally required in any event.  The retirement or pension benefits that are vested with a public employee are considered legally to be deferred compensation for work that has already been done.  The government has a contractual obligation to provide the benefits as promised at the time the work was done.  To repudiate that obligation would probably violate the federal constitutional provision prohibiting state or local governments from impairing the obligation of existing contracts.

The point about guaranteeing no loss in salary is practical, not legal.  It is not uncommon for a county and city to have somewhat different salary levels.  County finance department employees may earn more than their counterparts in the city finance department, or police officers may earn more than sheriff’s deputies.  Although there is no legal requirement that, upon consolidation, pay be immediately equalized, it would be extremely difficult politically for any new government to resist the pressure to equalize pay for persons doing the same sort of work.  If the government is barred from reducing any employee’s salary because of consolidation, the only way to equalize would be to increase the salaries of the lower-paid employees.  In that way, consolidation might actually lead to higher personnel costs rather than savings.