Richmond’s adopted budget for 2012-2013 is more of a work in progress than a fait accompli. It is a starting point for changes that must be made in a trend that is otherwise unsustainable. We will find out today if the California legislature puts a pension reform measure on the November ballot that will affect all cities and provide some breathing room for Richmond. If not, we will have to go it alone like many other cities that have attacked pension reform with everything from ballot measures to bankruptcy.
Richmond was fortunate, with the cooperation of its public employee unions, to have embraced painful cuts in 2004. That and relatively steady revenues from an unusually diverse base gave us eight years of breathing room and good relations with our public employee bargaining units.
But the salad days have ended, and crunch time is here again. We are starting to see infighting between upper management and line employees and even among bargaining units as groups fight to save themselves at the expense of someone else. The ultimate losers will be the residents of Richmond.
I just hope that we can all work together, take the politics out of a solution, and end up with a trimmer and more sustainable budget that will avoid layoffs and service cuts.
Richmond OKs budget that's in the red, further cuts in salaries and services likely
By Robert Rogers
Contra Costa Times
Posted: 06/27/2012 11:47:42 AM PDT
Updated: 06/27/2012 01:33:03 PM PDT
Richmond's City Council passed a budget that is $2.9 million in the red but vowed to wring out additional savings in coming months.
"Obviously, staff has a lot of work to do," said James Goins, the city's finance director.
The city must dip into its reserve funds to cover the shortfall in the $136.2 million fiscal year 2012/13 General Fund budget.
But drawing down the reserves jeopardizes the city's A+ bond rating, Goins said. Under the council's direction, Goins and his staff will look to shave about $1.4 million off the deficit with a combination of public employee salary and benefit reductions and phasing out the practice of providing city cars to nonpublic safety staff. The city has already agreed to cut in half its annual contributions to a host of popular annual ethnic festivals.
After years of layoffs and chaotic city finances in the late 1990s and early 2000s, the city has enjoyed relative fiscal calm in recent years, amassing a $10.3 million reserve fund.
If no new savings are achieved, the reserve would shrink to about $7.4 million by next summer, according to staff reports, which would fall below the city's minimum reserve fund target of 7 percent of the General Fund budget.
"Rather than a balanced budget, we are saying come back with a targeted reserve level," City Manager Bill Lindsay said.
Pay cuts for the city's 900-person workforce are key to reducing the deficit but are only one part of an across-the-board downsizing. City departments' proposed budgets are on average 10 percent smaller than they were a year ago, according to staff reports. Sluggish revenues and increasing employee benefits costs are driving the budget imbalance.
The city will likely achieve some savings by discontinuing the practice of providing take-home vehicles to a dozen high-ranking staff members.
Cuts to employee pay would require negotiations with local unions. Human Resources Director Leslie Knight said earlier this month that the city must negotiate with six unions, and that at least two had already volunteered to concede sick leave buyback perks.
But pay cuts will be harder to come by. Mayor Gayle McLaughlin's proposal to cut 1.5 percent from the pay of nonexecutives who earn more than $100,000 annually has received a cool reception. The head of the police managers union has already said his workers would not concede a cut in pay.
All council members expressed a commitment to avoid layoffs if possible.
Layoffs "should not be a consideration if upper management isn't willing to cut their salaries first," Councilwoman Jovanka Beckles said.