Marty: City cuts – clear as mud

The Hollister City Council recently approved a series of employee contract changes designed to reduce personnel costs. The new contracts sailed through the process even though the staff reports lacked the basic information required for any logical decision – the value and timing of any proposed savings versus the same for any estimated added expenses. Without a financial analysis, it is impossible for the public to determine if the new contracts made significant strides towards solvency or were just smoke and mirrors.
Some council members appear to have been briefed on the financial impact of the new contracts; if so, they were not sharing those details. The changes, negotiated over many months, were supposed to mitigate the city’s financial difficulties centered on an annual $3.3 million structural deficit. Instead of financial data, the council and public were given an indecipherable hodgepodge of “things” hanging in space, usually percentages – you can’t pay the bills with percentages. Hollister’s General Fund has a financial problem measured in dollars per fiscal year; personnel contract costs should be presented the same way.
One example is the employee furlough program. Some employee groups agreed to take a take an added furlough day increasing their annual total from 12 to 13, or 5 percent of their work hours. It is not reasonable that the city, negotiating for many months, does not know the savings of the added furlough day for each bargaining unit. The same applies to the welcome modifications in the retirement system that would change the formula to 2 percent times the final year’s pay times years of service at age 60. However, those changes only apply to new hires. Since the city is carrying a 5 percent cushion in furloughed employees who will go back to work before new personnel are hired, any projected savings will be a very long time in coming. Yet, it’s important to have an estimate of how much and when for long-term planning.
At least one agreement allows the union to reopen negotiations in only a year to address possibility of a gaining a Cost of Living Allowance or a reduction to the employee’s “pick up” of the CalPERS contribution based “upon an improvement of the city’s financial situation and its ability to sustain increases.”  In other words, as soon as things get better all those future savings may go out the window.
The city has been surviving on the 1 percent Measure T sales tax and that expires at the end of March 2013. The tax measure was originally sold as funding extra services, but it currently provides more than 23 percent, $3.3 million, of the $14 million General Fund budget.
The city, or a front group, will soon be sponsoring legislation to extend or replace the extra sales tax, but it’s going to be a hard sell because the state is also considering sales tax increases and housing values in the region have fallen by over one-third since the market peak in 2005. A bigger problem is trust; the city pulled a fast one last time when it claimed dire financial difficulties and then approved a three-phase salary increase shortly after the tax was voted in.
The first step in the come back process should be a move towards authentic openness and increased professionalism. Approving wholesale changes to employee contracts without the benefit of meaningful financial impact analyses does not bode well for the future. While it may satisfy the letter of the law, it appears to be another creative way to hide the truth from the taxpayers.
Marty Richman is a Hollister resident.