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Lathrop bracing for lean times ahead

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POSTED February 2, 2009 3:53 a.m.
LATHROP – Dwindling revenues due to the widespread economic downtown is prompting Lathrop city officials to sit down and crunch the numbers for the coming fiscal year 2009-10.
And the picture is not pretty, just as it is getting ugly in every level of government from the federal to the state and down to small cities like Lathrop. Like all the other agencies, Lathrop is gearing up to tighten its financial belt as best it can.
Explained Interim City Manager Cary Keaten, “Our budget last year used some reserves in order to maintain the budget at the level of service that the council desired. This year, we are expecting less property tax revenues so it’s likely that the deficit we experienced last year would be bigger because we have less revenues this year.”
He said they were already notified by the San Joaquin County  Assessor’s Office that property tax revenues for this year will be less than what was projected last year.
“They didn’t give us any exact figures (but) it’s going to be less than the number they gave us last year that our budget is based on,” Keaten said.
Finance Director Terri Vigna and her staff have already been crunching the numbers for several months looking at a variety of ways to deal with the anticipated budget deficit, he said.
But right now, said Keaten, “we have two things under way,” three including what the finance department has been doing, and continues to do.
“One, we have a management committee looking at different cost reduction options, and two, we have a meeting with the SEIU union to discuss those issues with them as well.”
City officials’ meeting with SEIU (Service Employees International Union) representatives scheduled next week are likely to include discussions that focus on union employees’ pay raises. Currently, union employees are in the second year of a contracted three-year annual pay raises.
“We need to meet and talk about that with them because we are experiencing some loss of revenue and we can’t afford to keep doing the same things we’ve been doing the last few years,” Keaten said.
All together, the  three groups – management, union, and the finance office – are “looking at different ideas, different ways to cut things, to cut costs while still delivering services,” he added.
However, he reminded that ultimately it will be City Council that will make the final decision as to where the cuts will be implemented.
“We’re pretty well aware of the pain that’s been inflicted on pretty much all government services because revenues are drastically down. It’s a fact, you can’t services without the money,” Keaten said.
The largest single contributor to the city’s general fund is property taxes. Money from the general fund is used for such services as police and fire protection and, to a certain degree, city employee salaries.
Lathrop has been significantly hard-hit by the mortgage meltdown and the widespread economic downturn as shown by the number of homes around the city that have gone into foreclosures. The hardest-hit area is west of Interstate 5 where the city experienced its biggest residential growth in the years immediately prior to the real estate downturn. McMansion homes that were valued at $650,000 and even upwards of $750,000 are now languishing in the foreclosure market at half, and in some cases, less than half of their original prices.
The silver lining for the city at this point in time is that “we have not had any budget cuts to date,” Keaten said.
The only significant action taken in this regard was the council’s decision in December to fill only two of the 13 vacant city positions and to hold off on filling the remaining 11 job slots. Among those that will not be filled is one position in the city’s police department.
Keaten said that as far as he knows, the council has “no desire to change the level of police services.”
All these early discussions about where to cut expenses and secure savings are in anticipation of preparing the 2009-10 budget, with the preliminary spending plan expected to be ready sometime in April. The public will have opportunity to provide input into the spending plan during budget reviews that will be held after staff has submitted the preliminary budget.
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