Academic journal article Stanford Law Review

Compensating City Councils

Academic journal article Stanford Law Review

Compensating City Councils

Article excerpt

Table of Contents  Introduction I.   City Council Compensation      A. City Council: Forms and Functions      B. The Question of How Much: Compensation Amounts      C. The Question of How: Compensation Procedures         1. Procedural mechanisms: city council compensation            a. Threshold issue: state or local control            b. Compensation-setting procedures         2. Procedural mechanisms: state and federal legislatures II.  How Process Affects Outcomes      A. Theories of Legislative Compensation         1. The problem of overcompensation            a. The civic republican ideal            b. Fiscal effects            c. Nonpecuniary benefits         2. The problem of undercompensation            a. Limiting office to those who can afford to serve            b. Good governance            c. Conflicts of interest and corruption      B. The Distorting Effects of City Council Compensation Procedures         1. City council control         2. Referenda         3. Benchmarking and other formulas         4. Independent commissions. III. Improving the Institutional Design of City Council      Compensation Procedures      A. First-Order Institutional Design: Structural Tools      B. Second-Order Institutional Design: State vs. Local Control Conclusion 

INTRODUCTION

If you could set your own salary, how much would you pay yourself? Would you give yourself a raise? Would you care what other people thought if you did? What if your pay hadn't increased in over a decade? Would you consider whether increasing your salary would lead to pay cuts for other people in your workplace?

These questions may seem like the daydreams of Office Space employees, (1) but they are the very real concerns that city councils (2) across the United States must grapple with. While some city councilmembers' salaries are fixed by state law or subject to voter approval, in vast numbers of cities-particularly large and midsize cities-city councils have the authority to decide their members' compensation. (3) Like members of Congress and state legislators, (4) city councilmembers are placed in the uncomfortable position of determining how much of other people's money they should pay themselves. And when put in this position, lawmakers face an inherent conflict of interest.

Most obviously, when in control of their own compensation, city councilmembers can engage in financial self-dealing by increasing their own pay when doing so would not be in the public interest. As James Madison recognized in the context of congressional compensation, "[T]here is a seeming impropriety in leaving any set of men without control to put their hand into the public coffers, to take out money to put in their pockets...." (5)

But another form of self-dealing can occur when councilmembers opt not to increase their own compensation when doing so would be in the public interest. (6) This type of self-dealing is best understood as a form of reelection rent-seeking. (7) As Adrian Vermeule has observed in his scholarship on congressional compensation, "[T]he political benefits of conspicuous self-denial may dominate purely financial losses." (8) That is, although a salary increase would boost councilmembers' welfare in terms of monetary gain, if they think that increasing their own salaries is likely to hurt their chances of reelection, then they may opt not to increase their own pay.

At first blush, it might appear that this variant of self-dealing is not particularly harmful. After all, the city council is saving public money by denying itself increased compensation. But there are a number of reasons to be concerned about the systemic effects of reelection rent-seeking. While pay should not become the incentive for government service, most would agree that lawmakers' compensation should be set at a "rate that fairly compensates [lawmakers] for their work and attracts highly qualified candidates." (9) While few go into government work to get rich, common sense, as well as the political science research on the issue, tells us that pay is a consideration for at least some people in making the decision to enter-or continue with--government service. …

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