The failure of the city to properly create the type of ongoing savings needed to balance its budget during the contract negotiations and the newly signed MOUs with the bargaining units, now means the wholesale elimination of departments and positions within the departments.
The city will have a budget workshop on Tuesday where it will fully discuss the options for reducing what is now being characterized as a 1.7 million dollar deficit, one million of which is on-going structure and an additional 785,000 dollars are due to the fact that the city used the reserves a month ago to close the deficit left by the failure to achieve all the savings needed in the MOU process along with the fact that the city’s budget assumptions were too rosy on the revenue side last June.
“Most public agencies, at all levels of government, continue to face unprecedented challenges in sustaining programs and service levels under current economic conditions. The budget outlook for the City of Davis – while perhaps not as dire as some other cities – nonetheless requires that significant steps be taken to reduce expenditures in the short-run, and effectively manage longterm costs within an environment of declining revenues and continued uncertainties over potential budgetary impacts from the State’s continuing fiscal crisis.
Given the duration and severity of the current economic climate, it is clear that the City can not fully address the budgetary challenges merely through cost-saving measures and budget reductions arrived at through “decremental budgeting.” While recent budget-balancing frameworks have sought to employ a combination of new revenue, cost-savings measures and program reductions, in order to develop a balanced budget that minimizes impacts on direct services to the community, the organization is required to explore options for re-structuring City operations, alternative service-delivery models, and increased co-ordination and collaboration with all public agencies at all levels.”
It continues:
“While the proposed restructuring is in some ways facilitated by the extent of current staff vacancies, the level of staffing reductions required to balance the budget will result in some staff lay-offs, and a reduction in the capacity of the organization to meet the needs and expectations of the community – at least in comparison to the levels of service and responsiveness enjoyed prior to the need to implement extensive budget reductions, beginning in FY2008/09.”
That was the bottom line that some such as Councilmember Lamar Heystek was hoping to avoid when he proposed his alternative budget last June – the need to reduce services to the community.
The Vanguard’s previous analysis showed that the city’s chief growth in expenditures over the past years was a huge increase in employee compensation. The city managed to remain solvent during that time due to the real estate bubble and revenues from property taxes along with $3 million from the city’s sales taxes. All of that revenue went to increased salary and compensation costs rather than an expansion of city services. Now that the bubble has burst, city residents will get soaked for a loss of city services while employees will retain almost all of their compensation increases.
As we mentioned previous, there were two primary problems that have led to the need for additional cuts. First, the failure of the city to address its structural deficit through reduction in obligations to the bargaining units. Second, the revision of an overly rosy forecast.
Along those lines we can see a downward revision across the board on city reviews from the adopted 2009/10 to the new estimate and now with the new FY 2010/11 budget. They had previously forecast a modest growth in revenues across the board. Now they are forecasting basically a zero percent revenue increase across all revenues.
Are we really going to go from a net loss of 14% in 2008/09 to 8% in 2009/10 to 0% in 2010/11 due to Target? That’s a key question. I know they are projecting a huge bump from the opening of Target, the question is how much of that will be offset by a continued decline in the local economy, the fact that the city relies on jobs from UC and the State which have been cutting wages and laying people off, and the fact that to some extent Target may produce its own revenue but reduce revenue to other local businesses where the dollars stay in the community and produce a multiplier effect where money circulates around the community. The dollars going to Target almost all leave the community.
The city’s big proposal is to eliminate the Parks and General Services Department. This is made possible through the retirement of the current department head Donna Silva this year.
The fleet operations would move to Public Works. Parks, urban forest and facilities would move to Community Services. Property management and sustainability would move to Community development. Information Technology, Media Services and Grants Coordination to City Manager’s Office.
All told they would eliminate 16 vacant positions and four filled positions, however only two layoffs.
These positions include the retiring Donna Silva, two administrative positions from Parks, one parks maintenance crew (four FTE), the Parks Manager, and the Building Crew Supervisor. That is a total of nine positions worth roughly $1 million.
They would also reduce six positions in public works, one public works maintenance crew, and the Associate Engineer & Senior Engineering Assistant.
The Community Services Department will see the reduction of 3 FTE positions to 75% positions and the deletion of a part-time office assistant position. The Community Development Department will see the reduction of 1.5 positions as they reduce a senior office assistant to part-time and eliminate a building inspector.
The City Manager’s office will reduce 1.5 positions eliminating both the Human Resources Specialist and Financial Assistant while upgrading the Deputy City Clerk from part-time to full-time.
How much will these eliminations impact the provision of services to the public? Could these eliminations have been avoided with better MOUs from the city’s perspective?
More importantly the city is losing crucial buffering space should the sales tax measure not be approved.
More on this later this week.
—David M. Greenwald reporting
DPD: “…and the fact that to some extent Target may produce its own revenue but reduce revenue to other local businesses where the dollars stay in the community and produce a multiplier effect which the dollars going to Target almost all leave the community.”
I’m not following this: “…produce a multiplier effect which the dollars going to Target almost all leave the community”. Please explain…
I left out a key phrase, “fail to”
DPD: “I left out a key phrase, “fail to””.
Sorry to be so dense, but for the life of me I cannot figure out where the “fail to” would fit in!
So… faced with the utter failure of the current Council Majority, Asmundson, Souza and Saylor, in managing this fiscal issue, do we really want to reward Mayor Pro Tem Saylor with a promotion to Yolo County Supervisor??
“… to some extent Target may produce its own revenue but reduce revenue to other local businesses where the dollars stay in the community and produce a multiplier effect where money circulates around the community….”
Maybe if we break up the sentence a bit:
Target will produce sales tax for the city.
Some of that revenue will be taken from other local businesses.
Dollars spent at local businesses have a “multiplier effect” as local businesses circulate their revenues to other local businesses (i.e., they bank locally, buy insurance locally, buy supplies locally, etc.).
Target doesn’t do that as much as local businesses do: dollars spent at Target tend to flow out of the community.
Thus, dollars spent at Target fail to produce a multiplier effect.
So what happens to the Measure G “Parks” tax that was passed in 2006? Is it still going to fund parks in Davis? Is there any way that taxpayers can have assurances that money is going for what it was intended?
Don,
Thanks for the clearer explantion of “multiplier effect”.