Taking it back to black

The Chico City Council, after listening to an avalanche of information dispensed by city staff during an all-day meeting on Tuesday (June 15), adopted a proposed operating budget designed to keep the city solvent in these times of declining revenue.

Finance Director Jennifer Hennessy said that, while the nation’s economy is showing signs of recovery, locally tax revenues are “still very volatile.”

“We really haven’t seen a sign of recovery yet in the major tax revenues,” Hennessy said. “And the big unknown is still the state budget, which is facing a $19 billion deficit.”

And with that less-than-uplifting introduction the council listened to Hennessy, City Manager Dave Burkland, Fire Chief Jim Beery, other city staffers and a host of public comments, including input from union reps and city employees.

Staff presented the council with recommendations on how to cut spending and erase a $4.5 million deficit projected for the coming fiscal year. Burkland said the plan as presented should keep the budget in the black for the next two years, via a $5 million reduction in spending this fiscal year and another $1 million slash for 2011-2012.

Beery talked about the best way to keep the city’s emergency-response ability adequate with a $900,000 slash in overtime pay to firefighters. Overtime kicks in after a fighter has worked a 52-hour week. The Chico Police Department, meanwhile, is taking a $190,000 cut in overtime pay. Their overtime comes after 42 hours of weekly work.

These and other spending cuts are based on the expected continued decline in sales-tax revenue as well as an ongoing uncertainty of just how the state will tame its projected large and looming deficit.

Eighty percent of the city’s spending pays the city’s 423 employees’ salaries. As such, vacant job positions will not be filled and 15 employees have agreed to take early retirement, which altogether means the elimination of 53 jobs. The city is also asking concessions from its employees, including a 5 percent pay cut as well as having the employees pay a greater percentage of their health insurance. Currently they pay 25 percent but are being asked to pony up 40 percent. If the employees, through their unions, don’t agree, layoffs may be unavoidable, the council was told.

Employee concessions and job cuts would save the city about $2 million.

Nicholas Peraino, a representative of the Service Employees International Union, suggested the city was acting in haste and that the economy was showing signs of recovery.

“I want to speak out against the proposed 5 percent wage reductions and the health-care changes for the city employees,” he said.

There are other options the city should consider, he suggested, including using redevelopment funds rather the general funds to pay for services performed in redevelopment areas, which are those parts of town that have been deemed blighted. In Oakland, he said, police officers working in such areas are paid with redevelopment money.

City Attorney Lori Barker said that while this is true, it’s not clear if such a practice would stand up in court should it be challenged. Redevelopment laws, she said, are very specific about how redevelopment funds may be used.

Scott Armstrong, a city employee and union rep for the clerical workers, said it was tough for him to address the council and his bosses on the matter, but that he had to speak out.

“To balance [the budget] at the expense of the people I represent is going to be way too painful,” he said.

He spoke of a co-worker, a single mother of two, who, with the wage reduction and shift on health insurance, would lose $630 a month in take-home pay.

Vice Mayor Tom Nickell said the council members, as a sign of solidarity with city employees, should also pay 40 percent of their health-insurance coverage. They currently pay 2 percent. Council members are paid only about $600 a month. Nickell, as a further sign of support, said he would be willing to give up 10 percent of his pay and later suggested he’d give up as much as half of it.

The council also heard from Assistant City Manager John Rucker, who detailed plans to expand the police station and the city’s animal shelter. While those projects are still a ways off, planning for them should begin now, Rucker said.

“If we keep waiting until the time is perfect, it doesn’t get done,” he said.

The city’s emergency reserve fund balance was brought up a couple of times. Councilman Andy Holcombe asked, rhetorically, what constitutes an emergency? That reserve, by the way, currently stands at $6.5 million.

In the end, the council voted 6 to 1 to tentatively adopt the budget. Councilman Larry Wahl was the lone no vote, saying the picture of anticipated revenue over the next few years was “much too rosy.” The council will make a final vote on the proposed budget at its July 6 meeting.