Tuesday, April 27, 2010

Living Within Our Means, 2010 Style

Last night, we on the City Council got our first glimpse of what the 2010-2011 city budget is likely to look like. It's pretty grim, and for the first time in this long recession we are likely to see some serious cuts in service no matter what we do. But in a certain way, oddly enough, I'm optimistic.

For one thing, we're beginning to see a lot of hard work pay off. While we're likely to wind up with deep cuts in some areas, in other areas we are beginning to do more with less -- successfully. We really are beginning to reinvent our city government to make it more efficient.

For another, I think it's possible that this is as bad as it's going to get. Our revenue may go down a little more, but it's likely that the worst revenue drops are behind us. What does that mean? It means we will have made it through the hard times more or less intact, and we can begin to build for the future again.

Before I talk about the grim part of this year's budget, let me quickly review what's been doing on and where we are:

-- The City's General Fund revenue has dropped from about $95 million to about $81 million in two years. That's a decrease of around 15%. We're likely to see a levelling off at about $81 million in 2010-11.

-- We've already made some pretty severe cuts. Last year, we were the first city in the state -- so far as I know -- that successfully negotiated a pay cut (not a furlough) from our employee unions.

-- We've eliminated 40 jobs (out of about 650) and we're currently holding about 40 more jobs open to save money.

-- We've had an open and public pension reform dialogue for a year now, and two weeks ago the City Council committed itself unanimously to the philosophy of "sustainable pension reform" by pursuing such ideas as a two-tiered pension system and getting employees to increase their own pension contributions.

-- And I'm most proud of the fact that we've had a very public and straight-up discussion about what to do about the budget. From the beginning, we've laid out our budget issues in public, early on, and invited widespread public debate. We're not always rewarded for this (a lot of people seem to think that we're in worse shape than other cities, which isn't true, just because we talk about our budget issues more). But it's a great improvement over the days before I was elected, when our city -- like so many others -- resorted to gimmickry, band-aids, and stop-gap measures to avoid dealing with the real issues.

So, what does the proposed budget look like -- and how is it likely to change between now and June 21, when we're scheduled to adopt it. Here's a summary of critical issues, drawn from the City Manager's budget transmittal letter:

Among the steps to actually reduce service are the following: possibly closing the downtown senior recreation center (more about that later), leaving Fire Station #4 at Telephone and Clinton empty, and reducing the number of sworn police officers but maintaining the same number of beat cops).

Among the steps to reduce cost are a permanent elimination of those 40 vacant jobs and seeking an extension of wage concessions from our unions. (The latter has not been negotiated yet and so is not reflected in the draft budget).

Among the steps being taken to reinvent city government and deliver services more efficiently are moving Building & Safety to the Community Development Department, reorganizing the parks crews (and reducing their size from four to two workers each), and contracting out much more work -- for example, all of the landscaping maintenance and web site management.

In his budget message, the City Manager did lay out one possible big-ticket item to cut: the Aquatics Center at the Community Park, the shutdown of which would save more than a half-million dollars. But he didn't actually propose this cut, suggesting other cuts instead.

Since the budget proposal came out last week, we've heard from a lot of senior citizens who don't want us to close the downtown senior center and also from some folks who are supporters of the Aquatics Center, asking us not to close it. As I stated, the Aquatics Center is not on the chopping block at the moment -- though it could be if the council decides that, for example, staffing Fire Station #4 is more important. And the way we're approaching the senior center is a good example of how we're reinventing government.

The senior center costs $100,000 a year in overhead and is located less than a mile from a second senior center on Ventura Avenue. Worst case scenario is that all the senior programs get moved to the Avenue (none would be cut). But the city's goal is not to shutter the downtown center; it's to save $100,000 in overhead. So the city is negotiating with various private organizations who might lease the building and still make it available for some senior programs.It's also possible that some programs might be moved to the Topping Room at Foster Library, which is lightly used during the day. Oddly, this one could wind up being a win-win -- the senior programs stay downtown, many of them at the senior center, but the city no longer has to foot the overhead bill.

The big unknown -- the big thing that could change -- is the employee union contracts. All of these contracts expire between July and January, so we will be renegotiating all of them soon. If we could obtain wage concessions similar to last year, lower employee compensation would provide us with more than $2 million in savings -- enough to reopen the fire station and restore a whole lot more besides. We don't know yet how the negotiations will turn out, but as I mentioned before the council voted 7-0 just a couple of weeks ago to pursue more employee pension contributions and reform in pension costs.

Which brings me to the last item from Monday night -- the seemingly odd "reaffirmation" of the 2008 contract agreement with our firefighters that increased the pensions of current firefighters. We made this concession in 2008 (as part of a contract negotiation in which the firefighters agreed, among other things, not to take a raise). The firefighters agreed to postpone the pension for a year last year (that saved us more than a half-million dollars). But because they have not agreed to bump it another year, we had to comply with a new state law requiring a public hearing with a state pension actuarial present. (We had to do it last night in order to set the paperwork in motion for a July implementation date.) Our City Attorney had advised us that there was, basically, no legal way to deny the firefighters the pension increase at this point, and all we would do if we voted against it would invite a lawsuit from the firefighters that we would lose.

The actual vote on Monday was something of an anti-climax. Three representatives from the Ventura County Taxpayers Association spoke. But they were low-key, reasonable, and thoughtful in their approach. They suggested we "slow down" rather than reaffirm the pension increase now, apparently on the theory that if we withhold approving the pension increase, the firefighters will be more likely to negotiate with us on other things. I don't disagree with their goal -- get back more from the firefighters than you give -- but I didn't agree with their strategy.

In the end, I couldn't buy the argument that by setting ourselves up for a lawsuit we were sure to lose, we would somehow or other increase our negotiating leverage with the firefighters. Nor did I think that political grandstanding -- voting against something knowing it's going to go through anyway -- was either honest or useful. I voted for it.

But I voted for it recognizing that this vote is part of a much longer, larger, and painful transition in our approach to pension reform. We will go to the negotiating table later this year and bargain hard. In the case of the firefighters, we will bargain hard to get back the value of the increased pension and then some. They may be legally entitled to the higher pension, but we owe it to our constituents to make sure that our employees share the sacrifice required to get us through these difficult times.


  1. Thank you for your blog.
    As a Senior I would regret closing a center, but I agree that the Aquatic Center and the Fire Station need a priority
    As a voter, I appreciate the job you are performing.

  2. Voting against something knowing it's going to go through anyway isn't always grandstanding, Bill. Often it's the right thing to do if you don't agree with it.

  3. At this time it would seem wrong to eliminate a source of revenue (the Aquatics Center), there are other overhead items that would make more sense. I don't know if the Center is self-sustaining, but it does bring in revenue to the City. I think the solution there would be to find more ways to maximize that revene. Peronally, being a board member of a local youth sports chapter, I would like to see part of the park set aside for fee-based use for practices and games.

    I would like to commend the Council for accepting the mandate of the people and working within their means. The recent no vote on the tax increase was a message that the people wanted the Council to make do with what they have, and the Council has made some important, if not popular, decisions.

  4. Thanks for the vote of confidence. On the Aquatics Center, I think the $571,000 is the NET cost. I believe it costs far more to run it than that, but that some of the cost is offset by revenue, yet it still costs us $571,000 a year in tax money. That's not counting the bond repayments from the general fund, which are also over a half-million a year.

  5. Aquatics - It costs us $571,000 OVER reveues to have the pool open and another $500,000 in debt service? Yikes, it looses $1.0MM annually know matter how many swimmers pay to swim?

    Sports organizations usually can pay their way for a facility, unless there is not the public participation that was originally sold. Check the free lunch or under used facility.

  6. Have we considered talking to the YMCA about "Partnership" in running the Aquatic Center and what the cost implications / savings might be?

    I, too, appreciate your thoughtful position and blog to lay it out. Thanks for your service to the city and many hours you give in a sometimes thankless job.

    That being said, I like it that you keep agenda items moving, but think you could be a little less rushed or "short" with folks (except I think your handling of Brian Lee Rencher is spot on)and cut some of the wisecracks.

  7. What nice downtown area does not have parking meters or an expense to park in parking lot? Install parking meters in downtown to collect some revenue there and install parking attendent in parking structures (first two hours free or whatever...like they do in downtown SB). People who get to park right in front of stores along Main Street/downtown streets should expect to pay something (nomimal coinage) for getting the sweet spot. The meters will force the business owners/employees to not park in front of their stores if meters are installed. This will allow more parking for people that actually shop in the stores. Why does the City collect money in the parking structure at end of C Street, but not in the downtown parking lot?

    Parks - charge nomimal usage fee for them as well. I have young kids and i use the parks and i have no problem to pay a little fee to use and enjoy them and in return, they should be maintained. Marina Park comes to mind as one such park that gets intensive use, but has no fees. I know parks are expensive to maintain and if you use and enjoy them, you should not mind paying for that benefit.

    The aquatic center would also be another spot to charge for parking and meters might be an easy way to do there. Again if you use the resource, expect to pay for it.


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