Facing a large audience of concerned employees, a somber
Hollister City Council on Thursday received a recommendation for
general fund budget cuts
– a reduction of 12.5 percent – to be considered during upcoming
hearings.
Facing a large audience of concerned employees, a somber Hollister City Council on Thursday received a recommendation for general fund budget cuts – a reduction of 12.5 percent – to be considered during upcoming hearings.
The city staff presented three options for reducing the projected deficit – cuts of 5 percent, 10 percent and 12.5 percent. Speaking for the staff, City Manager Clint Quilter then recommended adopting the 12.5 percent cut plan in an attempt to rein in projected deficits that would result in $8.4 million of red ink in fiscal year 2013-14. The total general fund budget now is about $15.5 million.
Quilter said that budget cuts in excess of those recommended would result in diminishing returns. He noted how large cuts yield only a small percentage in savings because the services then would be provided through other means such as additional overtime. One issue is that the city steadily has reduced its reserves and the amount set aside for cash flow while the economic situation has severely limited income from sales and property taxes.
In addition to cuts in administration, recreation and general services, the plan would replace an animal control officer with part-time community services officers at the animal shelter, allowing shelter personnel to eliminate overtime. The police department would leave a captain and two vacant police officer positions unfilled, while laying off two people. It also would not replace a senior support services assistant scheduled to retire.
The fire department would eliminate two captains and “brown out” one truck company – when sufficient personnel are not available, replacements would not be called in just to staff units on standby. Additionally, all departments would be required to reduce overtime.
Many city union employees have “bumping rights” – in which cases they move down to authorized positions and those with the least seniority are at risk.
Quilter recommended against any early retirement plan – he stated that it often results in an imbalance of experience and skills since the city could not control who took advantage of any offer.
Scenario one, a 5 percent reduction, still would reduce the general fund reserve balance by $1.22 million to $1 million as early as early as 2010-11. The balance would be just half of the recommended 15 percent reserve of $2.2 million. Under this scenario, the fund balance would go negative by $128,000 in 2011-12, eventually resulting in $6.3 million of red ink in 2013-14.
Implementation of the recommended 12.5 percent reduction is projected to maintain a positive fund balance until 2013-14 when the Measure T sales tax expires. The fund then would have a negative balance of $2.8 million. However, even that reduction would leave only a 4 percent reserve balance in 2012-13. The council is considering adopting a target of a 15 percent reserve balance with a 10 percent mandatory floor. If that reserve floor became mandatory, additional budget cuts may be in the offering.
By department, the annual public safety budget of $10.6 million dominates at 68 percent of the overall expenses. By category, personnel salaries and benefit costs account for 72 percent of all fund expenditures – or $10.3 million. Even then, CALPERS temporarily has reduced the amount collected toward retirement benefits to aid customers with economic difficulties, but those payments are merely deferred, not forgiven. Eventually, CALPERS rates are expected to go up sharply.
The council members will study the budget details, options and recommendations and they are scheduled to reconvene the budget hearings on June 16. They have tentatively targeted a July 6 meeting for budget adoption.Â
