City employees were going to see a new minimum wage and other pay increases in fiscal year 2021, in light of a compensation study that showed disparities between Chattanooga and comparable markets, but will instead be placed on a pay freeze as the COVID-19 pandemic strains the city budget.

"When the coronavirus crisis hit, we were actually finalizing our employee compensation study and had every intention of implementing its recommendations in this next budget year," Chief Operating Officer Maura Sullivan said by email.

"Our first step was going to be bringing all city employees up to a $15 minimum wage. Unfortunately, revenue shortfalls mean we have to make some incredibly difficult choices. The decision to hold all city personnel salaries at their current levels is one of those choices."

In a presentation to the City Council on Tuesday, human resources director Beverly Moultrie said that the highly anticipated study confirmed what some city employees and council members had feared: Chattanooga underpays many employees, by the comparisons used.

"The city is out of alignment with what market practices are indicating and by reference market practices, I'm referencing both public and private market practices," Moultrie said.

"As a result of this misalignment, what has occurred is that we've had some internal inconsistencies and those inconsistencies have resulted in internal inequities and market competitive issues for us. It's very important that we have a system in place that is able to attract and be able to maintain the employees that we have and keep them motivated."

The study showed that the city was overall lagging with compensation compared to similar markets, with the biggest pay disparities among skilled trade workers like mechanics and electricians, technicians like building inspectors and crime scene analysts, and professionals like engineers and recreation managers.

In the beginning of its $14 million plan to iron out existing pay disparities and create a structure to help keep compensation on track in the future, the city planned to implement a minimum wage of $15 for its employees, raising pay for many full-time employees by as much as $3 per hour, or roughly 25 percent.

Then, an estimated $8.4 million decrease in revenue and additional expenditures for the city due to the coronavirus halted the wage increase, stalling hard-fought progress for many employees.

"The study was long overdue. I think the last time the city really looked into this was, like, 2008," said Brad Rayson, president of Chattanooga's Service Employees International Union chapter. "We obviously endorse and have been asking for this liveable wage for a while but we appreciate the fact that the city didn't conduct any layoffs and continues to keep people employed through a difficult, difficult time."

SEIU, which has advocated for a $15 minimum wage and represents many of the city employees most affected by the disparity, does see the study as a step in the right direction, even if the raises won't be realized in the short term.

"Half of it is getting agreement on what the plan needs to look like. And then the second question is when can you fund the plan that you adopt," Rayson said, adding that the council should set something in place for the incoming mayor, who will be elected in March.

"It's easy to administer, and that will stand the test of time, so, that the next mayor, and the next city council, will see the value of a plan that was adopted now."

Mayor Andy Berke's office agrees.

"Part of having a high-performing government means making sure that our workforce is compensated professionally and fairly. Salaries currently account for 62% of our yearly general operating fund — our largest expenditure category by far," Sullivan wrote. "In ordinary years, we are typically able to invest in cost-of-living adjustments and additional compensation for our longest-tenured employees. Of course, this turned out to be far from an ordinary year."

While raises are on hold due to the crisis, the city has budgeted to prevent layoffs, furloughs or pay increases in FY 2021 by maintaining more than 200 vacancies and will pay for pension and insurance increases to prevent employees from experiencing a net loss in compensation.

Additionally, officials are looking to take action on compensation in the future.

"If and when additional funds become available later this year, either through federal assistance or a windfall in tax revenue, we will make this one of our very first actions to amend the budget," Sullivan wrote. "There is no good time for a deadly infectious disease pandemic, but the damage it has done to our anticipated revenues came at the worst possible time. People need city government now more than ever. Our entire country is in for many more very difficult months, and right now Chattanoogans are counting on us to keep them safe, protect their neighborhood, look after their families and provide many more services."

Contact Sarah Grace Taylor at or 423-757-6416. Follow her on Twitter @_sarahgtaylor.