Prospects are slim that state employees will get pay raise next year

Thursday’s revelations came in a report by the state Department of Administration, which normally provides a pay raise recommendation in September for lawmakers to consider while drafting the next year’s state budget in the spring.

But the department is holding off on pay raise proposals for now, citing “the realities of the current economic situation of the state’s budget.”

Department Director William Bell says he’ll work with executive branch and legislative budget offices to develop proposals as more information becomes available on the fiscal situation.

But the prospects aren’t promising.

Gov. Janet Napolitano last week announced that tax collections slumping below anticipated levels would produce a projected $600 million shortfall in the current $10.6 percent budget.

She proposed to erase the shortfall by borrowing $300 million for school construction, spending $200 million from the rainy day reserve and having agencies trim their spending by $100 million through hiring freezes, travel cuts and other belt-tightening steps.

The governor will present her proposed 2008-2009 budget to the Legislature in January, when the tax collection picture will be even more clear.

Thursday’s report to a legislative advisory committee said state pay raises in recent years have narrowed the pay gap between non-university state workers and those in the larger worker force from 21.7 percent in 2005 to 7.1 percent.

Meanwhile, turnover resulting at least partly from low pay has been reduced from 21.7 percent to 17.3 percent, said Kathy Peckard, DOA human resources director.

The current state budget provided with a 3 percent raise to base salaries and also allowed performance pay raises up to 2.75 percent. The previous budget provided a flat $1,650 base-salary raise and also instituted performance pay.

The state adopted a plan in 2005 to bring employee salaries to within 5 percent of the prevailing job market within six years.