City employees can rest easy through June. They’ll be keeping
their jobs
– and, unless union members decide otherwise, their raises –
through June 2010.
City employees can rest easy through June. They’ll be keeping their jobs – and, unless union members decide otherwise, their raises – through June 2010.
That’s what the Morgan Hill City Council decided Friday during a goal-setting retreat at the Community and Cultural Center. Rather than make mid-year cuts in December and another round of cuts in spring of 2010 as the city hammers out its 2009/10 fiscal year budget, the council preferred to make one big, tough decision, balancing the budget for next year and leaving this one alone.
Doing nothing means spending down the reserves by $1.8 million. The city started the fiscal year July 1 with $8.7 million in reserves, and would end it with $6.9 million, or 27 percent of a year’s revenue. Two main tenets of the city’s sustainable budget strategy are that the council have a balanced budget in five years and at least 25 percent of a year’s revenue in reserves at all times.
On Sept. 23, during their regular meeting, the council will consider whether or not they want a balanced budget in three years instead of five, and whether they want to have a balanced budget sooner than five years from now, even if it means dipping into reserves to do so. The council is considering spending down reserves to 15 percent of a year’s revenue, or $4.6 million, by 2014.
There’s a $1.2 million shortfall projected for this fiscal year. To combat this, City Manager Ed Tewes enacted a hiring freeze. Vacated positions won’t be filled.
However, the city wasn’t able to negotiate canceled raises with the city’s three unions. Two percent cost-of-living raises take effect today, and a second Police Officers Association raise is scheduled for April. Combined, the raises total $150,000 this fiscal year. Next year, the raises will cost the city $270,000.
The unions gave up raises totaling about $460,000 in January. And, city management have forgone their cost-of-living increases totaling about $40,000.
The unions have also experienced reduced staffing, with the police union giving up two vacant sworn officer positions. A third, multi-service officer position remains vacant. A Community Service Officers Association-represented dispatch supervisor and public safety dispatcher, both vacant positions, were eliminated too. American Federation of State, County and Municipal Employees Local 101 was hit hardest, with eleven of its 100 city positions eliminated, including the only true layoff, an assistant planner. Given this, AFSCME representatives said its members would be unwilling to consider giving up its scheduled raise unless all bargaining groups agreed to it.
In addition to a forced loan to the state of $755,000 in property tax revenues, sales tax revenue is down $200,000 more than anticipated. This is in part due to the July closing of Alpine RV, which was once a top five city revenue generator. Hotel tax revenue is projected to be down another $120,000.
And that’s not all. In addition to a forced borrow of property tax revenues, the state will take $10.5 million from the Morgan Hill Redevelopment Agency this year, an almost 50 percent take from the RDA’s annual revenue. The state will take another $2.1 million next year as well. Twenty percent of the RDA’s $20 million revenue is set aside for low income housing. One option the city has to make up for the shortfall is borrowing from this pot of RDA money. Up to $4.3 million is available this year and another $2.1 million next year. The caveat is that the money would have to be paid back within five years. Tewes recommended borrowing the maximum allowed. He did not recommend any RDA staff changes.
Mayor Steve Tate and Councilman Larry Carr still hold out hope that the unions will relent and give up the raises they got today.
