Council members discuss cutting the city budget by $700,000 – likely with more to follow.

By Dave Roberts 

What a difference an election makes.

After Antioch voters rejected Measure P, a half-cent sales tax that promised to put an additional $4 million/year in city coffers, on Tuesday night the City Council with two new members firmly wielded the budget-cutting axe, unanimously authorizing $700,000 in immediate cuts to the General Fund. Council members said they did not want to kick the can down the road in dealing with the city’s ongoing budget crisis.

The city needs to cut spending by nearly $700,000 in the current fiscal year in order to not be spending more than it’s taking in, according to City Finance Director Dawn Merchant. An additional $2.2 million in budget cuts will need to be made in the fiscal year beginning next July to keep the city afloat financially and avoid bankruptcy.

As bad as that looks, those numbers might be optimistic because they are based upon city employee unions agreeing to continue deferring or reducing salary and benefit increases that had been previously agreed to. Many of those deferred-compensation agreements have expired or are due to expire at the end of the year.

“Reinstatement of the concessions agreed upon thus far would be devastating to the City budget,” wrote Merchant. The $2.9 million in cuts needed in the next 18 months was also based on revenue projections that there will not be a decrease in property taxes in the coming year, but there will be a 1.6 percent increase in sales tax revenue, along with other projections, assumptions and revisions.

That was all too iffy for several council members, who said they want to know exactly what kind of fiscal shape the city is in without making assumptions on employee wage and benefit concessions and possibly unrealistic revenue projections. Guessing wrong could lead the city into bankruptcy, warned Councilman Brian Kalinowski.

“I would like to see a document that reflects the actual cut that we need to make in ’11, and the cut we need to make before there are any contemplated concessions or revisions,” said Kalinowski. “I think a dangerous area we are in is we’re $2.87 (million) in the hole next year, but we’re assuming concessions from employee groups that we don’t yet have. I think we need to be real about what that number is for next year and we need to be real about what we are doing in the last six months of this fiscal year, in light of the fact that Measure P didn’t pass, to make sure that we don’t create a situation where bankruptcy isn’t our only option.

“I know collectively some of the answers will be found through concessions, I’m sure, but not exclusively. And answers will be found in continuing to revise the business model. I would like to see numbers that take out salary deferrals or whatever they are and get to what the real number is. If the real (deficit) number is $4.2 million next year, then that’s the real number.

“And if we gain agreements and we ink deals that change that number through concessions, grants, new revenue, through actual monies received, then we’ll draw down off of that deficit number. But I’m a little concerned that some of what I’ve read here does some public bargaining that I don’t feel comfortable with. I don’t like to project deals that we don’t yet have. Then it gets dangerous.”

Kalinowski said it’s optimistic to project that property tax revenue will not decrease in the coming year after the city has suffered double-digit drops in property taxes in recent years due to declining property values in the city.

“I think we need to be real about that,” he said. “Then we need to start talking about what the dollar number is that we need to be at. I honestly do not think $700,000 in additional cuts for this next six months gets the deal done to address next fiscal year. I think it kicks the can. Then I think it makes things worse next year. It’s horrible now. It is horrible, but it is what it is.”

Mayor Jim Davis and both of the council’s newest members sworn in Tuesday, Gary Agopian and Wade Harper, echoed Kalinowski’s call for not putting off the the tough budget choices and getting more accurate budget information on which to base their decisions.

It remains to be seen whether police officers will be laid off – $500,000 of the cuts must come from employee costs, with the rest from cuts in supplies, equipment and maintenance. Thus far, despite $13 million in budget cuts in recent years, police officer positions have been spared. However, there are currently 48 unfilled vacancies in the 174-member Police Department, including 16 police officers, the chief, a lieutenant and two sergeants – in addition to the laying off last year of all 20 community service officers.

The council members left the specifics of which positions to cut to City Manager Jim Jakel. Earlier in the meeting Jakel described the skeletal staffing situation at City Hall. A 46 percent vacancy rate in non-police General Fund positions has resulted in some departments being reduced to just one employee. One consequence is that the phones often go unanswered at City Hall, according to Mayor Jim Davis.

“We are operating very, very thin in every unit,” said Jakel. “I’ve reviewed the staffing list. To even attempt to reduce the labor force is to potentially eliminate the entire operation – essentially at this point we stop doing things.

“The one that we get the most calls about at City Hall is code enforcement, which just doesn’t exist at this point. Only in the most dire circumstances do we even have code enforcement. It’s a part of a person (Ryan Graham). It’s not an operating unit – previously it had been eight people. It’s a vital need, no one can deny. There’s code enforcement issues throughout the community that need to be enforced. But there simply is no staffing to do that. Today we have a Community Development Director and one planner in the entire city of 100,000 people. The planner was sick today.

“I take with tremendous weight further reductions of staffing. I’ve said it, we’re way past bone right now (in the depth of the cuts). We are into core operations and just functioning at this point.”

Because the Police Department comprises nearly two-thirds of the General Fund budget, it’s possible that the brunt of the $500,000 in personnel cuts could fall in that direction. Asked on Wednesday where the cuts will be coming from, Jakel said via e-mail, “On the personnel side we will re-examine the attrition assumptions and current staffing levels for cost savings, look at further concession values, and then as a last resort move to additional layoffs. All departments are on the table, but it is too early to tell which if any layoffs will be triggered by the reductions.”

Several residents provided suggestions to the council on budget savings. Former Councilman Ralph Hernandez even provided a four-page list of 35 items totaling a possible $2-4 million in savings. Much of which can be achieved by having the employee unions agree to give back the generous salary and benefit increases they received when times were good, he said.

About $2 million could be saved if all city employees contributed 8-9 percent to their pensions, according to Jakel. Currently the city picks up most of that up for the police officers.

Former City Councilman Allen Payton, who is also the publisher of the Antioch Herald, asked for more information on transfers in and out of various city funds and on the cost and financing for the new city boat ramp. He said that City Hall should remain open seven hours a day, five days a week instead of closing on Fridays, advocated closing the water park to save about $200,000/year and suggested contracting out city plan check services to save money and expedite the development process.

The budget report’s cost-saving assumptions include the city’s cancellation of earthquake insurance covering the buildings at City Hall and the Police Department. Davis expressed concern about how the city would cover the repairs in the event of a quake, but Jakel said the Federal Emergency Management Agency would probably pick up the tab as it had in Martinez when he managed that city.

So the council may have to consider whether to risk a fiscal earthquake now in order to better financially risk an actual one in the future. Agopian may have summed it up best when he said, “It’s bloody, there’s no doubt about that.”

The mood was much lighter earlier in the evening when outgoing Councilmembers Reggie Moore and Martha Parsons made thank-you speeches before stepping down from the dais to receive their City Hall portraits. That was followed by the administration of the Oath of Office to Agopian and Harper and their thank-you speeches and dedication to work together to get Antioch back on track.

The next council meeting is December 14.

This entry was posted on Wednesday, December 1st, 2010 at 7:31 pm and is filed under News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.