Despite efforts to adopt a balanced budget without slashing jobs, the City Council authorized the elimination of nine city positions Monday night in an attempt to bring spending in line with revenue.
"I will vote to support this budget with a heavy heart because it impacts people, but I think as a government we are being responsible on behalf of our residents, and that's our job," Councilmember Glen Becerra said.
The difficult move was part of a multifaceted strategy to close a more than $5-million general fund budget gap. The council also approved cutting all employees' salaries by 2 percent and borrowing $1.75 million from the workers' compensation fund.
The council also eliminated funding for 30 vacant positions.
"This budget is the most difficult we have had to deal with since probably 1975, when we were in the last significant economic downturn," City Manager Mike Sedell said. "It is not something that is taken lightly by staff."
At the end of the June 15 meeting, the council unanimously approved a $56.1-million general fund budget for fiscal year 2009-10.
The preliminary base budget proposed expenditures to total $61.1 million, but that number dropped to $56.2 million after the council's cuts Monday night.
As with many other local governments, the city is faced with significant decreases in its major revenue categories: property and sales tax. At the same time, the city's cost to pay its employees' salary, health benefits, workers' compensation and retirement plans are going up.
In April, city officials predicted having to deal with an $8.2million deficit. That initial number was reduced to about $4.9 million after a series of cuts.
However, the city faced another hurdle in balancing the budget when it found out from the state last week that its sales tax revenue receipts came in $600,000 less than the city had anticipated for that quarter.
The news confirmed to Sedell that a significant transfer of nearly $1.8 million from the workers' compensation fund into the general fund was necessary. But he stressed that it is a one-time use.
"We need to get long-term structural adjustments or we'll be back in mid-year talking about what we need to do further to get back into balance," he said, "Because once the money's gone, it doesn't come back unless we get things changed around structurally."
Employee compensation reductions, totaling $1.1 million, also played a big role in balancing the budget.
Councilmember Michelle Foster praised city employees for not only taking a 2 percent cut in pay and benefits, but also for working harder to deliver the same level of service to residents despite vacant positions going unfilled.
"The city staff has really stepped up and has contributed in a big way towards us being able to balance the budget and continue to provide services to the city," Foster said.
Earlier this year, departments were instructed to identify possible cost savings, including potential job layoffs, equivalent to 10 percent of their proposed budget.
The filled positions that were ultimately eliminated include an accounting technician in administrative services, a plumbing/mechanical inspector in environmental services and a crossing guard in community services.
In the police department, one police captain position, two parttime work experience positions and two secretary positions—one in administration and one in fiscal services—were cut.
Sedell said the police force will have the same number of officers on the street since the police captain cutback is not really a job loss. The position will be moved down to lieutenant, which will move that person down to a sergeant, which would bump that person back to an officer position—resulting in a savings of $269,000.
Due to a lack of development in the community, six months of funding was also eliminated for a senior planner in environmental services.
Sedell said the code enforcement function of the position would be moved back to community services. The position will not be cut until January 2010.
Assistant City Manager Laura Behjan added that while funding for these nine positions is being eliminated, it might not necessarily result in layoffs.
"Most of the employees will have options of moving to other vacancies in the city for which they qualify or be bumped to positions they previously held, which may relocate an employee somewhere else," she said.
As adopted, the city has a $39,700 surplus. But this fact doesn't give Mayor Paul Miller much comfort. He noted that "$40,000 isn't much of a cushion" given the state's penchant for dipping into city coffers.
"We don't know what the state's going to do yet, so we don't have much of a cushion at all, and we could be further damaged depending upon what they do," Miller said.
In theory, Sedell said the state could decide to take about $5 million from the city budget. However, if the state decides to borrow property or gas taxes from local government, the city has an agreement with the Service Employees International Union that it will not recommend more layoffs.
