Mayor’s Proposal Supported 5-0 by Council Takes Hammer to the Budget and Puts City On Path to Fiscal Stability –
Just as it appeared all hope was lost to make the kind of serious structural changes needed in this budget, Mayor Joe Krovoza pulled out a proverbial hammer and hammered the city into this decade.
The Council, which was elected precisely to deal with the structural budget deficit, for the first time in five years of my watching has not disappointed.
Mayor Krovoza’s plan is radical and bold at the same time. First, his proposal restores transportion funding to the one million dollar level which marks nearly an $800,000 increase from the current budget.
Second, the city would anticipate the lowering of PERS (Public Employees Retirement System) assumed rate of return (ARR) by funding $500,000.
Third, the city would assume Tier I and Tier II cuts, except they would restore the Ombudsman salary in full and restore the public safety cuts.
Fourth and most radically it would ask staff to come back to council by the end of the first quarter with $2.5 million in personnel savings.
Joe Krovoza told the council that this is a framework to see how these kinds of cuts would start to look and what kind of room it would give us to restore the Tier I and Tier II cuts. He said, “I don’t believe it’s unrealistic.”
It would begin either by cutting positions or setting targets for the renegotiation of the city’s Memorandums of Understanding. Mayor Krovoza told council, “I want to let our city manager and department heads be the city manager and department heads and come up with these ideas.” He wants the city manager to come back to council with those types of approaches for the council to give further direction.
The night started out with business as usual, as the City Manager laid out the same old policies of tiered cuts.
Members of the public came out to complain about cuts to their programs, whether it be the closure of the pool, de-funding the city’s portion of the I-House, or withdrawing city funds to the visitor’s bureau.
Councilmember Stephen Souza asked about the 10-percent across the board cut, as though there were some kind of notion that it would not have to be negotiated. Harriet Steiner confirmed such cuts would have to be negotiated.
Paul Navazio responded that there would be some interest in doing this, but reminded council some of these salaries are not funded through the general fund. He suggested while this was an important discussion, we needed to do it with all of the information.
There are some provisions for re-opening the MOUs in two bargaining units.
On the other hand, Joe Krovoza pointed out that they could do FTE (full time equivalent) reduction unilaterally. Harriet Steiner, the city attorney agreed, stating that they have a unilateral right to reduce the workforce, however, they cannot modify employee packages, of employee groups, unilaterally.
Councilmember Sue Greenwald argued that most cities do not have bargaining for department heads and asked why do we?
Ms. Steiner responded, avoiding the question, arguing that while most cities do not have collective bargaining, every employee has a right to bargain, however most deal individually with their department heads.
Stephen Souza argued that we cannot balance the budget and deal with unmet needs by June 30 through employee givebacks.
He said that we have to look at what is before us. We have cuts that cut into services, but we do not know what the people want. We need to understand better what is important to the public.
Just as it appeared things were lost for this year however, Joe Krovoza argued that there were larger structural issues here that we are not getting at with this budget.
Paul Navazio pointed out that if the ARR were reduced by 1/4 percent, it would cost the city $2 million from all-funds and one million from the General Fund.
Mayor Krovoza argued, to him to know that number and simply cross a finger or two that when we get there we will somehow find a way to find the money, does not sit well. He argued that we spent a lot of time in the spring on deferred maintenance, we have only built $150K in an area which will be stacking up close to $20 million in unmet needs.
Moreover, as we have pointed out, the more we don’t fund that, the swifter the degradation.
Mayor Krovoza’s ultimate proposal was not immediately accepted. Councilmember Souza argued, “If you are going to do that in a vacuum I think that’s inappropriate.” He continued, “I totally agree we have to get there, but we have to get to June 30 with a balanced budget.”
He argued that the timeline and the process was as important as the reorganization itself.
Mayor Pro Tem Rochelle Swanson pushed for a friendly amendment where the council would address the first three elements of Mayor Krovoza’s framework by June 30 and come back by the first quarter of next fiscal year with the fourth element, to be adopted in December.
Paul Navazio pointed out the $2.5 million would be about an 8 to 10 percent reduction, impacting about 30 positions out of a workforce of 400.
Sue Greenwald also pushed to see the ARR reduction fully funded. Ultimately she prevailed, with the council looking at what a $500,000 and what a $1 million hit to the budget would look like.
Stephen Souza ultimately agreed to look at the framework, he called it a theoretical motion, said that they have done it before and reminded the council they have made about $6 million worth of cuts.
But this is not something the city has done before. What this framework does is to fully fund transportation, take a realistic assessment of the budget accounting for likely hikes to PERS, and then fundamentally reorganize the city taking a look at what the most critical services are and cutting the rest.
This was not business as usual. This is something that has been needed for at least the last three budgets, if not longer. We finally have a majority in place that is taking this crisis seriously, and taking steps to put the city back on strong fiscal footing.
—David M. Greenwald reporting
“Councilmember Sue Greenwald argued that most cities do not have bargaining for department heads and asked why do we?
Ms. Steiner responded avoiding the question, arguing that while most cities do not have collective bargain, every employee has a right to bargain, however most deal individually with their department heads.”
With no malice intended by anybody, I’m sure, the above is sorta right and sorta wrong. Labor law requires employers to “meet and confer” with employees regarding wages, benefits, and working conditions. In a broad sense this legal dictate could be be called negotiating and employers must do it, at least superficially.
Sue used the word, “bargain,” which in the context used can be interpreted as something a bit more binding on the employer than just sitting down and talking.
Harriet Steiner was not avoiding the question, in my view, she was attempting to clarify. Instead of repeating Sue’s word (bargain), Harriet might have been better off saying, “Meet and confer.”
Bravo to the “new kids on the block” for leading the way to true budget reform:
Dan Wolk started the ball rolling by asking Interim City Mgr Paul Navazio why the City Council/City had to push discussion of the MOUs with city employees off until too far in the future, when it was clear the fiscal budget crisis requires the issue to be on the table for discussion sooner than later.
Joe Krovoza was magnificent, by sticking to his guns and insisting city staff come back with ideas for budget cuts in light of much more realistic projections. Let city staff decide if they want to risk laying off 30 employees, take pay cuts, or some combination thereof. But it cannot be business as usual, with rosy assumptions that are not realistic, putting off discussions with the bargaining units until a year from now. Bravo.
Rochelle Swanson popped out with the observation that everyone is trying to protect particular cuts to pet services, in the hopes of preserving them. But the reality is that a cut here, a cut there, adds up to $$$, as she so wisely noted. It is not realistic to assume we can keep all city services intact in these tough fiscal times.
I advised giving this newly constituted City Council a chance at being fiscally responsible – and they have admirably stepped up to the plate and did what was necessary and fiscally prudent. Nicely done!
Just as an aside, what happened last night was ground-breaking. It got away from the old method of micro-managing from the dais. This has needed to happen for a long time…
This is exactly what I was hoping for. The council sets goals, the staff is to implement those. A much preferred way of managing.
This site needs emoticons. For now: 🙂
In my opinion, the primary, long-term budget problems are to be found in the labor contracts and in the 4/3 overstaffing of the fire department.
I realize that the labor contracts can be opened up before they expire (June 30, 2012), but I doubt that will happen. Both sides would have to agree to do it. I cannot imagine the labor groups opting in.
However, we can free up a million dollars and more this coming fiscal year and every year thereafter if the council would decide to return to the status quo ante of 3 men on a truck in fire crews.
When I originally suggested that the city go in this direction–I did so in a column about 4 years ago–my preference was that we don’t lay off any firefighters, but rather transition into the 3-on-a-truck staffing mode by attrition, as our firefighters retire of their own volition.
I no longer think that is possible. We cannot afford to wait. We need all that wasted money now, and year after year, in order to maintain city infrastructure, most notably our deteriorating roads.
I have been led to beleive that a shift from 4-3 could be in the works as soon as August at least in terms of the policy direction.
I agree with both Elaine and Don that council went about this the right way, setting the policy and allowing the city manager to develop the policy.
One of the concerns is that council I think did not want to hire a city manager and then take away their discretion as to how to craft policy.
[i]”… with Paul Navazio talking in long sentences about how the city cannot make structural cuts midway through a budget …”[/i]
Paul is a good guy to talk with one-on-one. He is engaging and personable. However, in his presentations of staff reports he tends to drone on and on as he goes through slide after slide. It was boring and time-wasting. Your nephew was about to die after 20 minutes of a whole lot of waaah …. blaaahh …. waaaah … C.I.P. …. blaaah …. blaaah … waaaah …. R.D.A. … waaah …. blaaahh …. waaaah …
Even Joe Krovoza seemed to tire of Paul’s presentation. Between yawns the mayor piped up: “When are we going to get to the general fund, the reason we are all here?” Paul told the drugery was nearly over. All five members of the council yawned, took a swig off of their caffeinated sodas, and went back to sleep.
Good point Rich. I was really thinking last night he was going to talk the council to the point where they did nothing. I was impressed with the proposal from Joe and the fact that he remained resolute.
[i]”Your nephew was about to die after 20 minutes …”[/i]
Watching him reminded me of myself at that age, going to Jewish services, where almost everything was in Hebrew and the English parts were just as boring. I kept thinking at that time, “Why can’t we be Holy Rollers?”
[img]http://www.american-buddha.com/blackpentacostalism.jpg[/img]
Yeah!!! About time the city started pulling out of the dive! Good job to Joe and Rochelle for getting the ball rolling!
[quote]This is exactly what I was hoping for. The council sets goals, the staff is to implement those. A much preferred way of managing.
This site needs emoticons. For now: :-)[/quote]
Amen Don!
Just read where RDAs have been eliminated in the state legislature… now there is going to be a wrinkle for the city to wrestle with if what I read was correct…