Facing at least a $4.8 million shortfall in the 2010-2011 General Fund budget, the City of Turlock set about the hard work of identifying possible cuts during a budget subcommittee meeting Tuesday afternoon.
With a two-year budgetary cycle, the subcommittee members — Mayor John Lazar and Councilman Ted Howze — will look to eliminate at least half of that deficit this year.
That $2.5 million cut will reduce 12.4 percent of a projected $31.6 million budget.
“That involves layoffs,” City Manager Roy Wasden said. “That’s the only way we’ll reach the reductions that we need.”
The City of Turlock currently has a healthy General Fund reserve of $12 million, but relying entirely on reserves would leave the city with just $7.2 million in its coffers. With 90 days of operating capital — a bare minimum reserve level for the city — at a projected $6.5 million cost, the subcommittee needs to cut heavily in order for any reserves to be available for next year.
Some of the savings could come from negotiations with city unions, which are ongoing. Those discussions are currently confidential, but last year employees agreed to an effective 5 percent pay cut by helping to fund their own benefits.
While Wasden said he considered it “very likely” that the city would receive significant concessions from labor groups, Howze hammered home that any savings not realized in concessions would likely result in layoffs.
“We want the employees to know what we’re talking about so you guys know,” Howze said. “Talk to your union.
“We’re working to keep everyone employed here, but it’s only going to happen one way. “
After several years of budget cuts, there’s little left to eliminate but employees, said Development Services Director Mike Pitcock. He presented to the subcommittee on Tuesday, suggesting that as many as eight employees could have to be cut from his departments alone.
“There is no fluff in this (Development Services) budget because we’ve been taking away the expenses other than staffing for the last three or four years,” Pitcock said.
The cost of employees is increasing, as well, driven by continually rising benefit charges. This year Turlock projects it will be required to spend an additional $1.2 million from a year ago, mainly due to a 15 percent medical cost increase and a minor increase in retirement costs.
Those expensive benefits prompted Howze to suggest numerous possible staff reductions, including the use of a single front desk employee to be shared between building, planning and development services. Howze also requested that Pitcock investigate the positives and negatives of outsourcing nearly all planning and building department work.
“The biggest cost increase in our expenditures is benefits,” Howze said. “It’s cheaper to go outside.”
While farming out those departments is just a budgetary option at this point, Pitcock cautioned against the move. He said that the level of service would likely drop off sharply if the city opted to outsource departments.
Developers would likely have to schedule appointments with the outside consultants for any task whatsoever, ranging from predevelopment meetings to zoning questions and applications for business licenses. The move would be less efficient, Pitcock said, and would impact the customer service that has drawn new development to Turlock in the past.
“It could be that we just can’t afford to have that (outstanding level of customer service) anymore, but what I’m hearing right now is we need to provide it,” Pitcock said.
Pitcock also argued that the hourly rate for outsourcing would likely be close to the city’s existing costs.
In order to meet the city’s requested 12.4 percent cut, assuming no concessions from labor groups, Pitcock said that he would have to cut one assistant planner, two building department employees — from a department that was “decimated” by the loss of nine employees a year ago — and four or five development services employees.
The development services cuts could hit the hardest in Pitcock’s division, pulling most of the inspectors and secretaries in charge of private development.
“It’s going to be very difficult to make cuts in this area that do not devastate the development side, because you don’t have that many people in development,” Pitcock said.
With four or five employees to cut — and only four or five positions in the department — the move could leave Turlock ill-equipped to deal with any renewed interest in building in the city. Given that the city’s economic future could rely on new development, Pitcock hoped to keep the department at a level that could accommodate future growth.
“At the end of the day I want to give you a game plan where that goal’s still achievable,” Pitcock said.
The assistant planner position on the chopping block could be saved, Pitcock said, by funding the employee with grant funds rather than General Fund dollars, for example. The Turlock Downtown Property Owners Association wants to redo the downtown design guidelines, Pitcock said, and devoting the employee to that outside-funded task could preserve the department for better times.
But while that position may be retained, the City of Turlock still faces myriad challenges, including sourcing $600,000 to fund traffic signal maintenance and streetlight operation. That cost is not included in the $4.8 million deficit the city faces.
Lazar has asked to formally meet with the Turlock Irrigation District to ask for assistance with that particular fund, but otherwise the city may be forced to enact citywide landscape lighting districts, charging residents to keep the streetlights on.
There was one sliver of good news on Tuesday — the housing department will require no cuts.
Federal stimulus money has focused in large part on housing needs, and numerous grants will allow the city to retain all staff members while offering new housing services and developing a 149 unit affordable housing project on Linwood Avenue.
“I have money to spend and we get to do it,” Pitcock said, “and do something good.”
The subcommittee will meet next at 2 p.m. on Thursday in the Yosemite Room of Turlock City Hall, 156 S. Broadway, where Municipal Services will be discussed. At 2 p.m. on May 11 the subcommittee will reconvene to discuss budgets for Council, Administration, City Attorney, Personnel, Finance, Information Technology and Economic Development/Redevelopment. The final currently scheduled subcommittee meeting is set for 2 p.m. on May 13, when public safety will be discussed.
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