”
Bad choices
”
– that’s all the city’s elected officials will have when the
time comes to balance next year’s budget, according to at least one
council member.
“Bad choices” – that’s all the city’s elected officials will have when the time comes to balance next year’s budget, according to at least one council member.
“The residents are going to really start feeling the loss of services (starting in July),” Morgan Hill City Councilman Larry Carr said. “If we’re forced to cut millions of dollars, it can only be reflected in direct services, people and programs.”
The city faces a budget deficit of $1.7 million for next year, due to drastically declining sales and hotel tax revenues.
Layoffs are almost a given, unless the city’s three bargaining units agree to wage reductions. The council cut about $2 million last year by trimming administrative expenses, eliminating 16 unfilled staff positions, and laying off one employee. That leaves almost no more stones to turn except salaries and benefits, which comprise about 55 percent of the city’s $28 million general fund.
“One of two things has to happen – either the per unit labor costs have to go down, or the number of units, or people, has to go down,” Carr said, reluctantly accepting the options. “I don’t want to have to vote for layoffs. I don’t want to have to ask for reductions in employee contracts. We have bad choices before us.”
But the city has to abide by a contractual schedule of raises for employees represented by the Morgan Hill Police Officers’ Association, Community Service Officers’ Association, and the American Federation of State, County and Municipal Employees Local 101. Over the next five years, starting with a 4 percent raise for the POA in April, those cost-of-living raises will cost $1.23 million in the city’s general fund by 2014. About $550,000 worth of raises are scheduled for fiscal year 2010-2011, which starts July 1.
For the past several months, the city has attempted to renegotiate these contracts with union representatives. But with a $1.7 million single-year deficit, simple math shows that even if the unions agreed to forego these raises, a lot more cuts or savings still have to be found.
The AFSCME group, of which about 100 city employees are members, agreed last week to re-open their contract and enter further negotiations with the city, according to City Manager Ed Tewes. Those negotiations have not had time to bear fruit. Representatives from the CSOA and AFSCME did not return phone calls by press time.
Mayor Steve Tate hopes all the unions will sit down for negotiations.
“It’s kind of obvious that if we don’t pay our employees as much then we have more money to keep more of them,” Tate said. “But we are contractually obligated to honor the contracts. If they won’t talk, we have to look at layoffs as an alternative.”
The city and the three bargaining units renegotiated their contracts last March, saving about $400,000, when city staff didn’t think the next year’s deficit projection would grow to its current size. Those agreements stretched the schedule of raises over a longer period of time, deferring or delaying the pay increases. City department managers, who are not organized into a union, have declined raises the past two years, saving about $240,000.
The POA agreed last year to defer a raise scheduled for Sept. 2009 until April of this year, when they will get a 4 percent raise.
POA president Detective Ken Howard said it “wouldn’t be appropriate” to comment on what would be preferable between layoffs or pay cuts in the police department, because the staff’s budget analysis has only just started. He said the POA has a track record of working with the city to save money, citing the organization’s concession of any raise at all in 2003 and last year’s negotiations as examples.
“We don’t know what we’ll end up doing this time, but you have to be aware the POA has always worked with the city to help out when they asked for it,” Howard said.
The council has until June 30 to determine which employees and how many will go. City staff are currently in the process of compiling budgets for each department, and the city manager’s recommendation will be presented to the council May 15.
In the meantime, everything that staff recommended to cut last year, even items the council rejected such as turning out street lights, will be back on the chopping block.
Carr noted the city has invested money in areas that will eventually realize a savings, but not all those savings have materialized yet. One example is a contract with PG&E approved at Wednesday’s council meeting, to convert up to 220 street light bulbs to high-efficiency LED fixtures. That will save the city about half its annual costs on street illumination, or about $10,600, but the savings won’t start until next year. The $157,000 agreement is funded by a grant from the U.S. Department of Energy.
But that kind of savings is a pittance compared to the overall deficit.
“So much of our budget goes to salaries that you can’t just cut light bulbs,” Tate said.
The city “squeezed out” everything it could in fire services savings, by reducing its contract with the South Santa Clara County Fire District by about $50,000, Tate added.
In his State of the City address Monday night, the mayor noted that by hiring an assistant in the city attorney’s office, the city saved some money by reducing the need to farm out legal services as often as they used to.
Even the management and service delivery methods that led the city’s parks and recreation department to impressively recover about 84 percent of its expenses this year have been adopted in other city departments.
