If Hollister officials thought this year’s budget planning
evoked anxiety, they’ll be devastated come next July.
City Manager Dale Shaddox recently began the planning process
for next year’s fiscal puzzle, and early projections show
significant service cuts and personnel layoffs. Compared to the
current year budget, Shaddox said, the city next year will have an
estimated $1 million to $5 million less at its disposal.
If Hollister officials thought this year’s budget planning evoked anxiety, they’ll be devastated come next July.
City Manager Dale Shaddox recently began the planning process for next year’s fiscal puzzle, and early projections show significant service cuts and personnel layoffs. Compared to the current year budget, Shaddox said, the city next year will have an estimated $1 million to $5 million less at its disposal.
The city manager will meet with all department heads during the next two weeks to discuss potential money-saving strategies.
At this point, it seems likely there will be a “substantial reduction” in the workforce, according to Shaddox and others. While every city position, including those held by 71 union employees who agreed to a new contract last week, will be evaluated between now and January.
“For every hundred thousand dollars of a problem, that roughly translates into salaries and benefits of one position in the city,” Shaddox said. “If it’s a $2 million problem, we’re talking roughly 20 positions in the city being unfilled.”
The budget process for 2002-03, which wrapped up in July, presented an array of dilemmas for the City Council. But officials maintained service levels without cutting jobs.
For 2002-03, Hollister’s budget, including the Redevelopment Agency, was projected at about $35 million. While the General Fund reserve – the city’s savings account – will take a hit of about $700,000.
The city, however, used what Shaddox called “one-time strategies” worth about $2 million, which won’t be at officials’ disposal next time around. Next year, officials are not only looking at laying off employees, but also at dipping further into a draining reserve fund.
It is not yet clear what city positions are most vulnerable. But officials have begun to consider re-assigning many of the employees who make the cut, which would be done to increase worker efficiency levels and minimize the amount of slashed services.
“We’re not going to have the same opportunities for a balanced budget we had this year, and the pressures are getting more severe,” Shaddox said.
The city’s expenses continue to climb, while its revenues remain flat. Fixed costs – such as those for benefits and insurance to employees – could increase nearly $2 million, Shaddox said. While the building moratorium will once again prevent the city from generating money from impact fees and permits.
Moreover, the state’s barrage of cuts from local agencies may continue wreaking havoc on Hollister; talk has surfaced about cities potentially losing vehicle license fee money, which would equate to an immediate $2 million drop in revenues for Hollister.
“We’ve got some tough decisions ahead,” said City Councilman Robert Scattini. “I don’t even like to think about them because I get a headache.”
If early projections come to fruition and employees who remain are asked to change duties or compensate for absent positions, the city may be dealing with some unhappy employees, officials concede.
“Unfortunately, in my opinion, it’s going to be a given,” said Clay Lee, management services director, “that there are going to be some morale issues.”
The department he oversees was already been hit by attrition. Vacant full-time positions in the Recreation Division and Animal Control were not filled in the most recent budget.
Lee was also around in the early 1990s, the last time Hollister experienced major budget problems and ensuing employee cuts. In 1991, the city cut 21 percent of its approximately 100-person workforce. Hollister currently employs 175 people.
New Police Chief Jeff Miller is quickly becoming acclimated with the local budgeting process. The department may consider pursuing long-neglected fees that “fell through the cracks,” he said. He mentioned charging anyone ticketed for driving drunk the cost for the officer to enforce the crime.
Whatever changes the Council makes with the police department, he emphasized maintaining at least the current level of personnel. As a partial solution, he plans to emphasize a more extensive volunteer program for the department.
“It opens up our department to more members of the community,” he said.
Decision makers entrenched in the current budget problems must plan conservatively for the next three or four years, Shaddox said, because that’s how long it will take the dreary economic climate to turn around.
After this year, the reserve fund will have dipped from a high of $15 million four years ago to about $8.6 million. That leaves little breathing room because the Council has set a policy to keep the reserve above $4.5 million.
To this point, services have not considerably dropped. But that will change, and soon, officials said. Of highest priority, Shaddox said, the city “wants and needs” to maintain basic city services.
“I don’t have a list of stuff set down on paper yet,” Shaddox said. “My view on it is that we’re going to have to lower service levels in a number of areas.”
