Ten Morgan Hill employees received pink slips this week, as the
city prepares to adopt an annual budget that has to trim $2.3
million from general fund expenses for the fiscal year that begins
July 1.
Ten Morgan Hill employees received pink slips this week, as the city prepares to adopt an annual budget that has to trim $2.3 million from general fund expenses for the fiscal year that begins July 1.
The city manager’s recommended budget, which was released to the public Friday afternoon, calls for eliminating the equivalent of almost 16 full-time positions in order to close the funding gap, and does not foresee adding any money to the city’s reserves until at least 2015.
The recommended budget advises laying off two police officers, but a proposal submitted to the city this week by the officers’ union could save those jobs. If the city council accepts that proposal at Wednesday’s meeting, the recommended budget would call for eliminating one full-time position that was vacated when an officer retired less than one month ago, according to Assistant to the City Manager Brian Stott.
About six of the total positions on the chopping block are currently vacant.
Other occupied positions slated for elimination, if they don’t survive upcoming council workshops, public hearings and ultimate council approval, are the city’s animal control officer, a recreation coordinator, an office assistant and a senior project manager.
Full-time positions that would be reduced to part-time include a public works inspector, the community development director, environmental services coordinator, the manager and coordinator for the business and housing services division, and the program administrator.
The total budget for fiscal year 2010-2011, including the general fund, capital improvement program and the redevelopment agency, is about $141.2 million. That’s about $12.5 million less than the current year’s expenditures.
The city’s general fund, which includes most of the city employees’ salaries and benefits, is proposed to be $25.1 million next year – down from about $27.4 million for fiscal year 2009-2010.
The budget also recommends drawing the city’s reserves down by about $600,000, bringing the fund balance to about 22 percent of the total general fund expenditures. As the budget assumes a slow recovery from the current recession, city staff anticipate milking the reserves down to about 15 percent of the general fund by fiscal year 2014-2015.
The proposed layoffs reflect the city council’s previously stated top priority to reduce labor costs as part of its sustainable budget strategy, city budget Manager Jimmy Forbis said. Combined with last year’s elimination of about 12 city positions, the recommended cuts would amount to a 16 percent reduction of the city’s workforce in two years, Stott noted. If the currently proposed cuts go into effect, the city will employ a total workforce of about 171 full-time employees.
This is the second year in a row city coffers have been plagued by plunging sales tax, property tax, and hotel tax revenues.
The proposed layoffs make up the bulk of the $2.3 million in cuts. Other cuts come from delaying the replacement of capital equipment such as vehicles, City Manager Ed Tewes said.
The recommended budget does not include potential amendments to the city’s contracts with two unions – the Police Officers’ Association and the Community Service Officers Association. Earlier this week the two groups presented changes to their current contracts that the council will consider at its regular meeting Wednesday. Combined, those two agreements would save the city more than $700,000 over the next five years, Stott said.
About 56 percent of the general fund is spent on city salaries, and Forbis said since the city began cutting more luxurious and less necessary expenses when the financial crisis started in 2008, labor costs are the only place left to turn.
“Now we’re to the point we don’t have the money to pay the personnel costs we have,” Forbis said.
