On the chopping block

Look for more heads to roll at City Hall in coming months, as the city’s operating deficit continues to grow.

That was the message City Manager Brian Nakamura gave council members during a budget update at their Tuesday (Sept. 17) meeting. The update followed closure of the financial books for fiscal year 2012-13 showing a greater-than-anticipated deficit, particularly in the fund for capital projects, known as Fund 400 and one of several so-called “enterprise funds,” as distinct from the operational general fund.

“As we close the books, it is clear to me that further non-safety reductions will be needed to address current and future shortfalls,” Nakamura had written earlier that day in a memo to the council members.

In developing the FY 2013-14 budget, city staff had estimated that Fund 400 would end the year with a $2.5 million budget deficit, Administrative Services Director Chris Constantin wrote in a report to the council. Final reckoning increased that figure to $3.2 million.

The problem, he said, was that while the amount actually spent on capital projects—such as the city’s sewer upgrade—decreased greatly between 2008 and 2012, its expenses did not. Or, as Vice Mayor Mark Sorensen put it in business terms, “It’s as if sales went down by two-thirds, but we allowed our operating costs to increase simultaneously.”

That, added to the loss of redevelopment funds, led to the deficit. Constantin estimated that an additional $1.2 million in cuts would be needed to begin to right the city’s structural imbalances.

Although city staff and the council members profess not to want to cast blame for this dire state of affairs, saying they prefer to look ahead, in past meetings they have blamed former Finance Director Jennifer Hennessy and former City Manager Dave Burkland, among others.

Sorensen pointedly asked Frank Fields, the city’s accounting manager, who was responsible for the deficit. “The [previous] budget team,” Fields replied.

And Nakamura’s memo to the council, mentioned above, included a copy of a Jan. 25 memo sent to him by then-Building and Development Services Director Fritz McKinley that Nakamura said suggested that the existence of $2.34 million in expenses may have been kept from the council.

Saying he too wanted to move forward, Nakamura noted nevertheless that the council’s policy decisions “are only as effective as the information available when making such decisions,” and that it was sometimes important for the council to “step back and see the big picture”—which in this case meant which city staffers screwed up.

Speaking to this issue were three former longtime city employees laid off earlier this year who have been waging a campaign against Nakamura and his administrative team as well as, lately, Mayor Scott Gruendl, attempting to posit a contrary view of past budget actions. They’ve created a blog, “Truth Matters, Chico” (www.truthmatterschico.com), and regularly speak at council meetings during the “Business from the Floor” segment.

One of them, Quené Hansen, who formerly worked in the Capital Project Services department, challenged Constantin’s reading of Fund 400 expenses, noting that “2009 was not a good reference year” because that’s when the city had two very large projects, including a $45 million sewer-plant upgrade and sewer-line expansion as part of the Nitrate Action Plan.

Ultimately, the council voted unanimously to refer the budget issue to the Finance Committee for a more detailed analysis and discussion.

Later, during the Business from the Floor segment, Hansen and Mary Fitch, along with the third member of their group, Alicia Meyer, chided Gruendl for something he’d written in a post on his “Mayor Scott Gruendl” Facebook page. He’d called them “disgruntled employees,” said they’d “hijacked Business from the Floor,” and suggested their activism was encouraging “hateful individuals among us to act, and this includes personal attacks on family members, vandalism of property and hospitalization of city officials.”

We’re just exercising our right to speak in the manner provided by the city, the women insisted.

Interviewed after the meeting, the mayor was unapologetic, though he acknowledged he may have been “a little over the top.” Obviously frustrated by what he called a “cover your ass” effort on the women’s part, he said they’d waived their right to employee confidentiality and threatened to reveal embarrassing things from their personnel files.

Wednesday morning, in a voicemail message left at the CN&R office, Gruendl said all three of the women, as employees, had played direct roles in creating the budget mess the city is in. In particular, he cited emails, referred to in Nakamura’s memo, indicating that Hansen had wrongly given copies of a draft user-fee study to developers, an act that ultimately cost the city millions of dollars.