I worked in the City of Los Angeles for a couple of years and did a couple of salary surveys.
The results showed that the average pay was decently high - $90,000 per year inclusive of various bonuses and overtime. Overtime represented a significant portion of total payroll, with Fire and Police racking up the biggest.
The problem with respect to local government payroll results from a myriad of factors:
1. People expect the government to do a good job. But if you want quality workers, you'll need to attract them with good pay. "My dream job is to work for the City" - said no one ever. But pay a decent wage, and the public will hang you by the neck. Those government slugs are making HOW much?!
2. Most government employees are covered by unions. The debate about unions is another topic, but I'll throw this bit out: the #1 goal of the union is to protect the interest of its members, more specifically, the interest of its older longstanding members. Meaning, those who are about to retire and get into pension. Which leads to problem #3
3. Pensions. These are a bit antiquated due to the assumptions they rely upon - economic growth (historical models are generous), average life span, and healthcare costs. I don't need to get into any details about these drivers of pensions costs, basically we all know pensions can't keep up.
4. Politics. Real life politics. The mayor of a City needs to be a pro at politics - he needs to make sure his constituents are happy, his allies are happy, and that he can achieve his agenda and demonstrate real results to get re-elected or to move up to the next step (governor, senate, president). A large portion of his constituents are the very people that work for him - any disparaging remarks or tough negotiations with the unions will lead to the unions saying not to vote for the guy. Plus, the mayor may have put in a couple of former staff, or other individuals within the City connected to him into executive leadership positions at various departments.
You add these factors up, and you have to ask yourself - what is the real solution to this problem? No politician will get elected if they run on a campaign of complete overhaul of the pension system - the City employees will vote enmass and sink his campaign. So politicians have no choice but to toe the line and work gradual concessions with the unions. There is no effective way to tear down the status quo, even if we all know the system is doomed to fail in the long run.
I left the City and am no longer an employee. I don't know what the solution to the problem is, but I do know that the general public underestimates by a long shot the complexities and issues faced by their City leaders.