Economic woes hit City Hall; more layoffs coming

<p>A second wave of grim budget cuts swept over Petaluma City Hall this week, during which the City Council reluctantly authorized 16 layoffs — effective Oct. 31 — as part of a package of reductions aimed at closing a $2.1 million hole in the city budget.</p><p>The layoffs — including a police lieutenant, dispatch manager and fire inspector — will go forward if other arrangements, including buyouts for early retirees and delayed pay increases for various employee unions, can’t be reached.</p><p>“I think this has been one of the most difficult assignments I’ve had to tackle in my professional career,” City Manager John Brown said at Monday’s budget hearing.</p><p>“It hasn’t been easy, none of it’s good, but I think we’ve done the best job we can, given the situation,” Brown told the council.</p><p>He presented a balanced General Fund budget of $36.8 million, about $2.4 million less than originally estimated during the council’s first budget review in June.</p><p>The council delayed its traditional adoption of the General Fund budget that month because of uncertainty over how final revenue numbers from the 2007-2008 fiscal year would affect the current year’s spending plan.</p><p>When the final numbers came in, they showed that City Hall had overestimated revenues and underestimated expenses — leaving a $5.5 million General Fund gap that had to be closed mostly by dipping into reserves, reducing the reserve level from $8.4 million to $3.2 million for the current year.</p><p>The reduction of reserves by more than $5 million leaves “about as thin a reserve as I’ve seen in many years,” Brown said.</p><p>However, the council could boost its General Fund reserves by as much as $1.6 million if more money is brought in from insurance reserves and if a handful of city-owned properties, still to be determined, are able to be sold off.</p><p>Brown took the reins at City Hall in April and dismissed the previous finance director, brought in former city manager Gene Beatty to oversee a new round of budget estimates and urged the council to delay its General Fund adoption three months while revised estimates were crafted.</p><p>The new budget — which is $6.4 million less than was spent the previous fiscal year — reflects “the probable continued slowdown of the economy for the remainder of this fiscal year, including lower tax revenue and lowered expectations regarding local development,” Brown said in his report to the council.</p><p>Revenue from sales taxes, property taxes and property transfer tax collected on the sale of homes is down $809,000 from last year, according to Monday’s figures. Revenue from permits and fees has fallen to $580,000 from $3.1 million.</p><p>Those estimates reflect a significant drop-off in revenue during the first half of 2008, Brown said.</p><p>“We’re generally projecting that things are going to stay flat, given the state of the economy,” he told the council.</p><p>At the same time that revenues were falling, expenses for salaries and benefits in departments such as police, fire and maintenance workers were increasing, budget data shows.</p><p>In the 2001-2002 fiscal year, salary and benefits costs in the General Fund totaled $21.3 million.</p><p>In the 2007-2008 fiscal year, those costs had ballooned to $31.4 million.</p><p>This year, personnel costs have been scaled back to $29.4 million, but represent a larger share — 80 percent — of the shrunken General Fund.</p><p>That reflects the expected layoffs, although some jobs may be saved if enough employees accept the buyout offers and retire early.</p><p>Seven of the 16 targeted employees, including a police lieutenant, traffic engineer and dispatch manager, are eligible for the buyouts.</p><p>But other employees slated for layoffs may not know until January whether enough early retirements have taken place to offset the cost of restoring their jobs, since the buyout offers will be on the table for three months, officials said.</p><p>It will be up to the council to decide how to spend money saved through early retirements, and in what order laid-off employees might be hired back, Brown said.</p><p>The Oct. 31 layoffs will come 30 days after 12 employees in the Community Development Department were let go due to a lack of building revenue that supported their salaries.</p><p>In addition to the early retirement buyouts, other options are on the table that might reduce personnel costs and avoid some of the layoffs, council members learned Monday. Four janitors slated for layoffs said they want to talk with the city about taking on additional maintenance at buildings now served by contract janitors.</p><p>The savings from canceling the janitorial contract could go toward keeping the in-house janitors on board, and although they would be performing fewer services while cleaning twice the number of buildings as now, the switch would allow dedicated city employees to stay in their jobs, they said.</p><p>“We have 75 years of combined service to the city,” said Michael Lowe, one of the janitors slated to be cut. “This is real hard on us.”</p><p>The Petaluma firefighters union has agreed to re-open negotiations on salary increases in the hopes of finding enough money to save the job of the fire inspector scheduled to be laid off.</p><p>The union is willing to meet with city management “and possibly consider some concessions in salary and benefits,” said firefighter Richard King.</p><p>Brown said city management is committed to working with the fire union to find a way to save the job.</p><p>“We’re not committed to laying off positions — we’re committed to getting to the bottom line here,” he said.</p><p>Brown broached the subject of re-opening negotiations with other city employee unions for changes such as a 36-hour work week, but was turned down, he said.</p><p>But council members said they hoped more employee unions might come forward with alternatives to laying off some of their members.</p><p>“I hope people will follow the lead of the firefighters’ union,” Councilmember Teresa Barrett said. “If people consider themselves a family here, we all need to share the pain.”</p><p>In addition to the 16 employees slated to be let go, other vacant positions are being frozen in order to avoid the need to set aside funds for a future hire.</p><p>Those include six vacant police officer slots and two vacant firefighter/paramedic positions.</p><p>Councilmember Mike O’Brien said he was opposed to freezing public safety positions, saying it sends the wrong message to potential high-quality job seekers who might want to work for the city police and fire departments.</p><p>The council agreed not to list the public safety positions as “frozen,” although no one will be hired in those departments unless the council signs off and determines where the money will come from to fund that hire.</p><p>Other changes likely to be implemented over the course of the fiscal year are a four-day work week for non-public safety employees, allowing the city to close City Hall and other non-essential buildings.</p><p>The council could cancel its afternoon sessions and start its evening meetings at 6 p.m. to avoid paying for two appearances by the city attorney, and the Petaluma swim center season will be shortened to 17 weeks, beginning in June instead of May.</p><p>However, the layoffs appeared to cause the most heartburn for council members.</p><p>“People are our most important asset in the city of Petaluma,” Councilmember Karen Nau said. “The public is going to be expecting services that we can’t provide and the employees who are left behind are going to have to pick up the slack. This is a tough time.”</p><p>(Contact Corey Young at corey.young@arguscourier.com)</p>