Tuesday, March 3, 2009

The Fun Begins

Last night, our City Council took the first steps toward significant the significant budget-cutting that will be required to maintain fiscal solvency over the past couple of years. These steps were tentative -- not as bold as they could have been -- and they won't be enough.

The main step we took last night was to eliminate 11 currently vacant jobs. This will save a lot of money because, even though the jobs are vacant, up to now the city has continued to do the work of those jobs by spending money in other ways -- temporary help, overtime, etc.

But we punted on a lot of tough stuff -- and, in particular, we punted on the question of whether we are going to push for straight pay cuts from our office and maintenance personnel or, instead, will accept the furlough idea put forth by their union, the Service Employees International Union.

We'll probably "have it out" at our meeting of March 23rd, when we will have no choice but to make very serious cuts. This is around the time a lot of other issues will come to a head as well, including the question of what to do about library service and whether to seriously consider placing a sales tax on the ballot.

In the current fiscal year, which ends on June 30, we are running about $6 million short of our budget projections. This is not surprising; everybody's tax revenue is way down. A couple of weeks ago, the staff brought to us a series of measures that would cut $3.6 million in the current fiscal year. These included cutting 33 positions (some vacant), encouraging employees to retire by providing severance benefits to those who choose to retire, and completing labor negotiations so that all city employees take a 5% cut.

At that time we said okay to #2 and #3, but we punted on #1, largely because we were concerned it might undermine the "Budgeting For Outcomes" process -- a series of committees at City Hall working to try to figure out how to cut NEXT year's budget (when the shortfall is estimated to be $10-12 million). We also asked our Finance, Budget, and Audit Committee (Councilmembers Andrews, Summers, and Monahan) to look over other ideas for how we might cut the budget.

Last night we discussed things some more. Some of the bargaining units have agreed in principle to take a 5% cut -- but they do it in different ways, some by giving up holidays, others by giving up overtime, etc. (I don't care how they get there; the end result is the same.) Many city employees are pondering whether to take the early retirement offer. And our Budget Committee suggested that we wait and see how that works out before we actually give the okay to lay people off.

Two things happened last night that gave us pause. The first was that the firefighters point out that even cutting the vacant positions would mean the end of our innovativfe Medic Engine 10, which is not attached to any fire station but roams around the city at peak hours. ME 10 has significantly cut our response times. Also, SEIU again argued that we should agree to furloughs -- cut their wages, but also cut their hours -- rather than simply giving them a pay cut. The tricky part about accepting this idea at this point is that we had previously authorized the City Manager to negotiate a straight pay cut, and we have successfully negotiated such a cut with other unions like police and fire.

So we punted again on a couple of things. First, we punted on eliminating the two vacant firefighter positions. Second, we punted on which way to go on SEIU's proposal.

We have the option of discussing the SEIU proposal in closed session, since it requires an actual contract negotiation. We opted to do this next Monday night on a 5-2 vote (Andrews and Monahan voting no). There are good reasons to discuss this in public. There are also good reasons to discuss this privately, since it almost inevitably involves a discussion of what contract tradeoffs we can live with. I voted, reluctantly, for the closed session; but I will try to keep the public informed as to where we are going on this.

We'll take everything else up on March 23. This is not only the night that we will have to decide whether to lay anybody off; it is also the night we will discuss the "Budgeting For Outcomes" and next year's budget. Stay tuned.

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