Some laid off city employees may keep their jobs after results
of a new budget study released this week showed local finances
aren’t as gloomy as previously projected.
Some laid off city employees may keep their jobs after results of a new budget study released this week showed local finances aren’t as gloomy as previously projected.
The analysis conducted by the Harvey Rose Accountancy Corp. was recently completed and released by the city. Its $14,000 price tag was split by the city and its largest union, Service Employees International Union.
The firm found that the General Fund reserve – which the firm estimated at close to $8 million – is not as depleted as the $6.5 million previously projected. The firm also stated the Council’s policy to stay above a $4.5 million reserve is too rigorous for a financial crisis, and that former City Manager Dale Shaddox’s projections in many areas were overly conservative. The city also should tighten capital construction expenses, according to the study.
The study takes into account the governor’s recent deal with cities and counties, which includes a $311,000 transfer to the state – rather than the rough range of $750,000 to $1.5 million estimated previously.
On the other hand, the firm acknowledged the city is “facing serious financial difficulties” in 2004-05. And the report recommended the city stop funneling interest earned from all its rainy day accounts into one – the General Fund reserve. That would put an additional annual dent into a funding source that pays for most workers’ salaries.
Overall, the firm’s five-year projection shows that if the city does not change its spending habits, it would have an $11.8 million debt by 2009 – compared with Shaddox’s worst projection of $17.8 million in debt by that time.
Union leaders say the study from the respected firm should prompt the Council to save the 16 employees slated to be laid off who are still working at the city. Originally, 36 employees were put on the layoff list and 20 of those have left the city.
SEIU Local 817 Executive Director John Vellardita called Shaddox’s direction on the Reduction in Force plan a “can’t do attitude.”
“We think that’s totally off the table now,” Vellardita said of the RIF. “We’re saying nobody should be laid off.”
But Mayor Tony Bruscia, who acknowledged the layoff list likely will be adjusted, said he is still skeptical of some findings and recommendations in the study. For one, he’s “not completely comfortable” allowing the General Fund reserve to dip too far below $4.5 million.
Bruscia said the Council’s first priority is the well-being of Hollister’s citizenry. Saving jobs comes second, he said.
“Job protection has to come second. It’s important, but we need to be conservative,” Bruscia said.
Bruscia also mentioned comments in the report about the Finance Department’s inability, in some instances, to provide documents or explain policies to the firm.
“Our Finance Department isn’t doing what they need to be doing,” Bruscia said.
SEIU Local 817 requested the study after Shaddox spelled out a spiraling General Fund reserve and a severe debt, within a few years, without major cuts. The Council approved the layoffs, which take effect June 30, in January.
Shaddox had estimated the 22 percent reduction in the workforce would save between $2.8 million to $3.2 million a year.
The new study has renewed workforce morale that has been soured since Shaddox indicated in late 2003 that layoffs were imminent, Vellardita said.
Though Hollister SEIU President Luis Aguilar said morale is still poor. And he wasn’t quite as demanding – he was more hopeful – that the Council spare all 16 jobs.
“It’s a good start for us to negotiate with the city as part of the meet and confer process,” Aguilar said. “We want to save them all.”
Interim City Manager Clint Quilter said the report shows a “significant structural problem” remains regarding city finances. He pointed out, however, suggestions made in the report to better handle the inherent shortfalls.
Beyond that, he declined to comment on details of the study because he had not “provided any evaluation” to the Council. Vellardita, though, said SEIU had “gotten good messages” from Quilter.
City officials helped the Harvey Rose Accountancy Corp., upon request, compiling documents and answering policy questions. And Vellardita said SEIU had no involvement with the outside firm’s work.
“We think that this is an objective, professional view from the outside,” he said. “It kind of gives a road map for the City Council.”
A copy of the study conducted by the Harvey Rose Accountancy Corp. can be viewed at City Hall, 375 Fifth Street.
