Recession finally catches up to city operations
| Saturday, Mar 06 2010 12:00 PM
Last Updated Saturday, Mar 06 2010 12:00 PM
For Bakersfield officials, eyes are on July -- and the view isn't pretty.
The city has so far avoided big layoffs that have plagued cities and counties throughout California in recent years.
That could change.
Leaders are gearing up for an $8.7 million deficit for the new fiscal year that starts July 1. Another $850,000 in scheduled raises could widen the budget gap if union concessions prove elusive.
It gets worse. The following year, a $14 million hole looms when coming pension cost increases take effect. Raises could, again, add another $850,000 bill.
The dollars will be snipped from the city's general fund, which this fiscal year is about $165 million.
City Manager Alan Tandy won't yet say how many jobs might be at stake. His office will do everything it can to avoid layoffs, he said -- freezing vacant positions, making do with existing computers and vehicles, cutting travel, renegotiating contracts when possible -- but layoffs could be inevitable.
"With these circumstances some may be, unfortunately, required," Tandy wrote in an e-mail. The answer won't come for another two months or so, he added.
Property and sales taxes, which provide the bulk of general fund revenue, have declined here as elsewhere after the Great Recession hit in December 2007.
The drop in sales tax revenues, in particular, has far exceeded predictions. City officials had budgeted for a 7 percent drop, but numbers plunged more than 22 percent in the second and third quarters of 2009. Fourth-quarter results aren't yet available, but Tandy said early indicators show retail sales nosed up slightly, making an estimated 20 percent drop for the year "a strange definition of 'improvement.'"
The city took in about $56.6 million in sales tax revenues during the last full fiscal year, which ended in June, financial statements show. Property taxes provided $70.8 million.
"The last few years have been very difficult for local government entities," said Eva Spiegel, communications director for the League of California Cities in Sacramento.
Residents are usually closest to their city and county governments because those entities respond to 911 calls, maintain parks and handle other close-to-home services, Spiegel said. People notice when parks become unkempt or emergency response times slow in the wake of cutbacks.
Bakersfield has let some park areas go "wild" to save money but has not yet had to lay off police officers, firefighters or other staff. Five building inspectors were previously let go when the building boom died out, but city employees have mostly been spared pink slips.
"We know the city, just like every city and county in the state, is having financial problems," said Billy Owens, president of the SEIU Local 521. The chapter represents about 660 blue- and white-collar city employees.
The 521's members are slated for a 2 percent raise in December and another 2 percent in December 2011, each costing the city about $850,000. The raises had already been postponed from a slated 4 percent increase in December 2009.
City officials want to ask for another delay. But the 521 last month said it would not reopen its contract due to an effort by City Councilman Zack Scrivner to put a pension-cutting measure on the local ballot.
That may no longer be the case, Owens said Thursday. The 521 expects to get budget numbers from the city in two or three weeks. The city has already given the union a list of potential layoffs. If union analysts determine the city figures are accurate, members will likely vote on whether to open their contract for concessions.
Neither police nor firefighters currently have contracts. The police union, which is at official "impasse" with the city, will likely have a City Council hearing on the matter March 24. Still, it's not clear when staffing issues will become clear as far as the budget is concerned.
Tandy, despite his sometimes strained relationship with the three unions representing city employees, is nevertheless loathe to let go of staff.
"Layoffs are both an inhumane and cost ineffective tool -- to be used only when other alternatives fail," he wrote. "Every effort will be made to limit that practice as much as possible."
