Revenues will inch upward next year, but not enough to avert
potentially significant public service cuts
– in the form of layoffs – at city hall, and double-digit water
and sewer rate hikes, according to the city manager’s recommended
budget for fiscal year 2011-2012.
Revenues will inch upward next year, but not enough to avert potentially significant public service cuts – in the form of layoffs – at city hall, and double-digit water and sewer rate hikes, according to the city manager’s recommended budget for fiscal year 2011-2012.
The budget proposal released Friday recommends the elimination of 18 city staff positions including the animal control officer, plus the addition of seven new ones due to an extensive reorganization of some of the city’s busiest departments.
Six of the employees recommended for layoffs work in the utility departments, as city manager Ed Tewes’ budget message warns the water and wastewater funds have become so cash-depleted that cuts and rate hikes are the most effective way to close their growing funding shortfall.
Water and wastewater rates for city customers are proposed to go up by at least 10 percent as of January 2012. City staff are awaiting a rate study conducted by an independent consultant, the results of which are due in the coming weeks.
“Either the council will need to consider a series of subsequent rate increases or a higher initial increase,” the budget message reads.
Three factors contributed to the water and wastewater funds’ ailments – the recent economic recession, weather-related cutbacks, and voluntary conservation, the budget says.
The six employees recommended to be laid off in the utility departments are a management analyst, four utility workers and a water quality specialist.
Despite the recommended staffing level changes that could affect a total of 11 current city employees, the total projected general fund expenditures are up next year. Recommended for 2011-2012 is a $26.5 million general fund, which is slightly higher than the $26.3 million budgeted for this year.
The overall increase is due to growing costs.
“We had significant increases in costs with salary and retirement cost increases,” Tewes said.
Those costs hit the police department most vividly, where retirement costs for safety personnel are projected to go up 5 percent since July 1, 2010, and the police officers’ association’s contract with the city calls for a 3 percent cost of living raise.
But local revenues from sales and hotel taxes are projected to start moving upward next year too. In the sales tax column, even the expected revenues for the year are now likely to be about $5.2 million, which is up from the $4.7 million projected July 1, 2010, according to the budget proposal.
And for fiscal year 2011-2012, sales tax revenues are predicted to be about $5.4 million.
Although city staff estimate sales tax revenues to jump about 4 percent each of the next five years, the city’s general fund will still suffer from a lag in revenues compared to their peak in 2007.
That’s one reason why the proposed budget suggests spending another $1 million in reserves, bringing the city’s total deficit spending to more than $5 million since 2006-2007, the budget message says.
“The effects of the recession will linger for years, yet the current costs, especially labor costs continue to increase,” Tewes’ budget message reads. “We must shrink city government to a level that can be sustained. This budget does that, if the clearly identifies assumptions in the forecast come close to fruition.”
The recommended budget will be the subject of a series of upcoming public meetings and council workshops, starting with an open house for concerned or curious residents May 26 at the Community and Cultural Center. The council is expected to adopt a budget for the year by June 15.
Reorganization to economic development services
Most of the other dozen layoffs recommended for next year are in planning, housing, development and engineering services.
A recommended reorganization and consolidation of the gamut of development- and planning-related services will require the elimination of 11 jobs, but the creation of seven new ones, according to the recommended budget. Laid-off employees would be eligible to apply for the new positions, or to use complicated “bumping” rights to take existing jobs that are occupied by less senior employees.
City departments long known as business assistance and housing services, public works and community development will be “streamlined and combined” into a new “community and economic development” department. The new department will be managed by assistant city manager for community development Leslie Little.
“The reorganization will focus accountability for development services, for delivering capital projects, and for ensuring Morgan Hill’s interests are served in regional planning and economic development efforts,” Tewes’ budget message says.
The proposal calls for the elimination of an administrative secretary, assistant to the city manager for downtown revitalization, redevelopment manager, business assistance and housing services director, housing program coordinator, housing rehabilitation coordinator, management analyst, municipal services assistant, office assistant II, planning manager and senior project manager.
Some services and programs will be delayed or eliminated as a result, the budget says. The current responsibilities of the assistant to the city manager for downtown redevelopment, for example, would eventually be assumed by a part-time, outside contractor.
In BAHS, it could take a while for the new staff levels to resume existing programs, including some related to business retention and attraction, which could be eliminated or delayed.
Commercial rehab loans could be suspended “until the program can be evaluated, redesigned and strategically focused to meet the city’s overall needs,” the budget says.
Furthermore, “transitional delays” would take place in assistance administration, including the processing of down payment assistance loans, city website and brochure content, below-market-rate housing programs, and data analysis. The city could temporarily shift these services to outside developers or nonprofit agencies.
“General economic activity at the staff level should increase,” the report says. Economic development will remain a “top priority” in the city.
The proposal also assumes that the city’s redevelopment agency will remain fully intact, though it warns that the state budget could change that and potentially open up another $3 million hole in the general fund. Some of those positions proposed for elimination are funded by local redevelopment tax increment revenues.
Governor Jerry Brown’s revised budget, released Monday, maintains a proposal to eliminate RDAs statewide and divert their revenues to other basic services such as education and social services.
A separate reorganization proposed in the city’s recommended budget is a new “administrative services department,” which would combine the departments of finance, council services and records management and human resources into one office, according to the budget.
Animal control cut, state
slashes police funding
With the city’s animal control officer position on the chopping block, an existing community service officer would have to assume responsibilities for responding to dangerous, at-large or neglected animals in the city limits.
“As a result, patrol officers will be required to perform activities such as transporting prisoners to county jail, taking collision and property damage reports, which removes them from active patrol,” according to the budget document.
Because of this and other staffing cuts in the last three years, police will continue to reduce service in response to lower-priority in order to maintain adequate service in other areas, the budget says. For example, vehicle abatement, traffic accidents with no injuries, and vehicle break-ins will continue to take a back seat to more serious or life-threatening calls.
Another challenge in the police department, besides rising personnel costs, will be the state’s expected discontinued reimbursement – starting July 1 – for some expenses, including training costs, jail booking fees, and about $100,000 in reimbursement for municipal and community service officers, the budget book says.
As a result, the city will likely have to cover these costs with local revenues.
