Budget fix ignores city’s pending fiscal collapse

Following recent years of ongoing budget, staff and service
cuts, Healdsburg’s City Council this week initiated a new year’s
budget formula to avoid new rounds of severe police and fire job
cuts — at least for one more year.
The budget solution would be supported by a 6.8 percent
“concession” from the city’s five labor unions and the one-time
infusion of just over $2 million from an internal water utility
loan repayment.
The council also resolved to avoid another $100,000 in proposed
cuts to various marketing partnership programs with the chamber of
commerce, lodging association and auto dealers group by not funding
other redevelopment agency funds originally proposed for
underground utility and private sewer hookup rebates.
These latest budget maneuvers would produce a “balanced” General
Fund of $7.1 million for 2010-11, representing a five percent
decrease over the current year’s budget at a time when local sales
tax totals remain at 15 percent below previous years and property
and bed tax receipts are only “flat” at best.
However, none of the number crunching answers a fast-approaching
“fiscal crisis” now being faced by all local governments in Sonoma
County and across California.
City Finance Director Heather Ippoliti showed the council a
multi-year budget chart with a plunging red line of deficits that
falls off the chart entirely by the year 2013.
“Our expenses are increasing at a rate much faster than our
revenues. Benefits (employee health and retirement) are increasing
at 17 percent every year,” said Ippoliti. “Basically, we have a
financial structural deficit.”
Mayor Jim Wood responded: “This is not sustainable. It’s why
we’ve had to ask our employees for concessions. But right now, it’s
pretty hard to lay off people and eliminate positions when we have
found these extra funds.”
An earlier draft budget proposed eliminating two police officer
positions, a sergeant position and only funding a half-time police
chief. Also on the block was the fire chief’s job, a fire marshall
and an engineer.
With the infusion of the $2 million loan payback, all the fire
and police positions are being retained, based on labor agreements
to take a 6.85 percent payroll and benefit cut next year.
“We can’t look at this year and last as accomplishments. We’re
looking at an unbelieveable black hole. We need some really
aggressive moves — right now,” said council member Eric Ziedrich.
“We’ve been going back and forth to get compromises and such, but
we haven’t curbed our spending appetite.”
Ziedrich called for more public outreach to address the looming
fiscal crisis. “The level of services the community wants and is
willing to pay for is not our (council) decision,” he said. “It
should be the community’s decision. Do they want to keep the level
of services the way they are or can we do less? Are they willing to
pay more to keep them?” he also asked.
With a very slow recovery predicted for California’s economy,
Ippoliti projected the city’s revenues will decline by nine percent
over the next five years. Expenses for the same period will rise by
eight percent, causing a $5.7 million budget shortfall by 2015. All
city reserves would be depleted two years prior in 2013.
“We need to begin on next year right away,” council member Tom
Chambers said. “We need to find out what the community thinks is
important and set a budget to support it. We need to be ready to
make some real tough choices.”
Chambers and his fellow council members and city department
managers have had a lot of budget cutting practice lately.
Last year, after the state “borrowed” $2.7 million from the
local Community Redevelopment Agency, City Manager Marjie Pettus
and the council were forced to make mid-year budget cuts after
already making a five percent cut from the 2008-09 budget
level.
“We’ve made a lot of difficult cuts and decisions over the last
year-and-a-half,” Chambers said. “So far we’ve been fortunate to
find funds we can use but it’s not going to be easy from now on. So
far, we haven’t asked for more money (increased taxes or fees) like
other cities have.”
The council was unanimous Monday about seeking “fiscal
structural reforms” which would very likely include reduced funding
for city workers medical insurance and retirement plans.
Next year’s cost of benefits ($3.44 million) represents almost
half (49 percent) of the city’s entire General Fund. Without
adjustments that total would be $4.68 million in five years.
Council member and former police officer Gary Plass said the
current budget compromise is “a good start.”
“We bit the bullet and now we have some breathing room. We’re
getting concessions (from the unions) and we’re winning more buy-in
as well. I agree some fiscal reforms are needed, but what kind?
We’ve already reduced staff over the last two years. We couldn’t
lay off enough people to get out of this (multi-year deficit).”
There are five different labor unions at the City of Healdsburg.
So far only the Healdsburg Police Officers Association (HPOA) and
the firefighters (IAFF) have opened contract bargaining and given
tentative approval to the 6.85 percent concession package.
The three other unions (mid-managers, miscellaneous employees
and IBEW electrical workers) all have contracts that expire this
summer.
Current budget drafts assume all employee units will agree to
the same concession package. No employee pay raises are included
over the next five years as well.
The Council is scheduled to consider adopting a 2010-11
operating budget on June 7.