He didn’t mention the dreaded “L” word but City Manager Steve Pinkerton left no doubt Thursday that barring a major financial miracle municipal layoffs loom on the horizon.
“At some point we’ve got to reduce positions,” Pinkerton told the 15-member City Council-appointed citizen budget advisory committee.
In what currently is the best case scenario, Manteca is perhaps as much as $5 million short in its goal to come up with ways to close the $11.3million anticipated budget deficit expected to materialize as the next fiscal year unfolds starting July 1.
Cost savings through reorganization, leaving 13 police and two fire positions vacant and retrieving revenue by having city crews instead of contractors to maintain landscape districts are expected to reach $4.5 million. Toss in $2 million that the city managed to set aside through austere moves during the last fiscal year and that brings the deficit reduction tally to $6.5 million. The $2 million, though if it is applied to the deficit would be a one-time fix unlike leaving the positions vacant as those savings would keep occurring year after year.
Committee member Steve Keegan, while emphasizing that he had nothing against city employees, said it seemed to him the best course of action was to ask them to take deeper pay cuts to try and bridge the remaining $5 million plus that needs to be cut from the general fund budget starting July 1.
Manteca municipal employees are all taking a 3.8 percent pay cut next fiscal year through non-paid furlough days. Most employees received a 4 percent pay increase this past Jan. 1 – police officers slightly more – that was negotiated several years ago. No future pay cuts or suspension of negotiated cost of living increases have been discussed.
Pinkerton said further pay cuts ultimately won’t do the trick. He noted the general fund savings is $100,000 per one percent in pay cut as only half of the municipal government’s 400 workers are in jobs paid through the general fund. The others are primarily enterprise operations jobs where users’ fees pay for the cost of services. None of those accounts are expected to go into deficit spending.
The city would have to cut pay 10 percent to realize $1 million in savings. To cover the remaining $5 million through pay cuts the city would need to slash everyone’s pay by 50 percent.
Pinkerton noted the true savings would be in laying off workers. Pay cuts don’t reduce benefits. It costs an average of $100,000 per employee once all benefits, salary and other employee cost are factored into the equation. Eliminating 10 jobs would save $1 million.
Pinkerton emphasized that the city will probably end up using a combination of strategies to cover the remaining gap.
Several committee members noted that they could cut “nickels and dimes” from the budget but with 85 percent of the general fund budget tied up in salaries reducing personnel costs was the only practical answer.
While the city could generate upwards of $3.7 million a year by going through the hoops needed to recover 100 percent of costs related to building and development services, the earliest any type of tax increase could be put before the voters is June 2010. That would do nothing to help the 2009-10 deficit that starts accumulating in less than four months.
Ideally, part of the anticipated cost recover revenue could start materializing in the next fiscal year but it would not initially be anywhere close to the projected $3.7 million due to it being only in place for a partial year if it is implemented.
Cutting personnel ultimately means cutting the level of services.
Pinkerton said he favors a survey of 1,000 plus city residents to provide guidance for establishing priorities based on what the community wants and is willing to pay for when cuts are made.
He emphasized that with police and fire accounting for 70 percent of the general fund you’d have to virtually lay every employee off besides police and firefighters to keep them at public safety staffing at their current levels if the remaining gap was covered by eliminating general fund positions.
The city is constantly updating revenue information plus monitoring spending trends. Pinkerton noted the cash flow picture for the next five years is monitored “on a daily basis.”
“At some point we’ve got to reduce positions,” Pinkerton told the 15-member City Council-appointed citizen budget advisory committee.
In what currently is the best case scenario, Manteca is perhaps as much as $5 million short in its goal to come up with ways to close the $11.3million anticipated budget deficit expected to materialize as the next fiscal year unfolds starting July 1.
Cost savings through reorganization, leaving 13 police and two fire positions vacant and retrieving revenue by having city crews instead of contractors to maintain landscape districts are expected to reach $4.5 million. Toss in $2 million that the city managed to set aside through austere moves during the last fiscal year and that brings the deficit reduction tally to $6.5 million. The $2 million, though if it is applied to the deficit would be a one-time fix unlike leaving the positions vacant as those savings would keep occurring year after year.
Committee member Steve Keegan, while emphasizing that he had nothing against city employees, said it seemed to him the best course of action was to ask them to take deeper pay cuts to try and bridge the remaining $5 million plus that needs to be cut from the general fund budget starting July 1.
Manteca municipal employees are all taking a 3.8 percent pay cut next fiscal year through non-paid furlough days. Most employees received a 4 percent pay increase this past Jan. 1 – police officers slightly more – that was negotiated several years ago. No future pay cuts or suspension of negotiated cost of living increases have been discussed.
Pinkerton said further pay cuts ultimately won’t do the trick. He noted the general fund savings is $100,000 per one percent in pay cut as only half of the municipal government’s 400 workers are in jobs paid through the general fund. The others are primarily enterprise operations jobs where users’ fees pay for the cost of services. None of those accounts are expected to go into deficit spending.
The city would have to cut pay 10 percent to realize $1 million in savings. To cover the remaining $5 million through pay cuts the city would need to slash everyone’s pay by 50 percent.
Pinkerton noted the true savings would be in laying off workers. Pay cuts don’t reduce benefits. It costs an average of $100,000 per employee once all benefits, salary and other employee cost are factored into the equation. Eliminating 10 jobs would save $1 million.
Pinkerton emphasized that the city will probably end up using a combination of strategies to cover the remaining gap.
Several committee members noted that they could cut “nickels and dimes” from the budget but with 85 percent of the general fund budget tied up in salaries reducing personnel costs was the only practical answer.
While the city could generate upwards of $3.7 million a year by going through the hoops needed to recover 100 percent of costs related to building and development services, the earliest any type of tax increase could be put before the voters is June 2010. That would do nothing to help the 2009-10 deficit that starts accumulating in less than four months.
Ideally, part of the anticipated cost recover revenue could start materializing in the next fiscal year but it would not initially be anywhere close to the projected $3.7 million due to it being only in place for a partial year if it is implemented.
Cutting personnel ultimately means cutting the level of services.
Pinkerton said he favors a survey of 1,000 plus city residents to provide guidance for establishing priorities based on what the community wants and is willing to pay for when cuts are made.
He emphasized that with police and fire accounting for 70 percent of the general fund you’d have to virtually lay every employee off besides police and firefighters to keep them at public safety staffing at their current levels if the remaining gap was covered by eliminating general fund positions.
The city is constantly updating revenue information plus monitoring spending trends. Pinkerton noted the cash flow picture for the next five years is monitored “on a daily basis.”
