$10.5M Shortfall
[ From: "City faces $10.5m budget shortfall," By Eric Lindberg, DAILY SOUND, April 22, 2009 ]
With a $10.5 million budget shortfall looming on the horizon, Santa Barbara city leaders had their first look yesterday at a series of proposals to close the gap that include layoffs, furloughs, spending cuts and fee hikes.
Officials said they are trying to spread the cuts fairly across city departments, with a reduced impact on police and fire services.
“It is a plan of shared pain,” City Administrator Jim Armstrong said. “We feel it’s a responsible budget and addresses the situation honestly.”
With tax revenues taking a major drubbing courtesy of a much-weakened economy, the city is asking departments to cut spending by $7.4 million, in addition to seeking $1.5 million in labor concessions from city employees.
The initial budget proposal would cut 51.5 full-time positions, 30 of which are currently vacant. It would also cut four sworn police positions if the city doesn’t receive a competitive grant, along with eliminating six non-sworn police jobs.
“There is no doubt there will be pain,” City Councilmember Iya Falcone said. “There will be pain all around.”
Other plans call for closing library branches on Mondays, closing the 1235 Teen Center on Saturdays and shutting down the Lower Westside Community Center altogether.
Job cuts would be spread across city departments, from eliminating nine positions in the Community Development Department to 13 jobs in the Parks and Recreation Department (along with 17,000 hours of seasonal staff time).
While the initial proposal is a starting point for budget discussions, city officials made it clear that they plan to listen to community members and debate priorities.
“This is not what I would describe as a fixed budget,” Councilmember Das Williams said. “It’s a balanced budget, which is a good starting point.”
Armstrong noted that the fiscal year 2010 budget process promises to be the most difficult budget situation he’s seen during his decades of experience in local government.
Unemployment is soaring, financial institutions are failing, credit markets are frozen and consumer confidence is plummeting, he said. Sharp declines in tax revenues are having a widespread impact on city coffers throughout California.
“I’m typically hearing about city budget deficits that range from 5 to 20 percent,” he said.
The city’s deficit amounts to approximately 10 percent of its operating budget expenditures, which are projected to be $104.7 million next year.
Despite the cuts being proposed, Armstrong said he is hopeful that city services won’t suffer significantly.
“There is a little pain everywhere, but I don’t think the overall quality of service provided to the community will suffer too much,” he said.
Declining tax revenues are the largest source of the city’s fiscal funk. In creating a two-year financial plan more than a year ago, officials had projected them to go up $2.5 million next year. Now they are expected to drop $7 million below that projected level, City Finance Director Robert Peirson said.
And taxes make up 61 percent of the General Fund revenue stream, which is definitely the hardest-hit area of city finances.
In the first two quarters of this year, sales taxes have been down more than 6 percent and are expected to drop a total of 7 percent by June. Bed taxes are expected to be down 5 percent this year.
To address those revenue shortfalls, the city recently rebalanced its current budget and closed a $6.4 million shortfall.
While officials hope the end is in sight — the state’s finance department expects sales taxes to bottom out and start rising by mid-2010 — they are still facing projected drops in sales tax revenue of 1.4 percent and bed tax revenue of 2.2 percent next year.
“In 25 years of [experience], I’ve never seen an environment like this,” Peirson said.
In the brief economic downturn following the attacks of Sept. 11, 2001, the city used budget reserves to address shortfalls. That’s no longer an option this time around, as the city has all but depleted those funds (the city’s disaster reserves, however, remain fully funded).
Instead, the budget plan proposes furloughing employees, eliminating vacation cash payouts and freezing benefits to pull together $1.5 million in savings. Negotiators are still in discussions with the main service workers bargaining unit, as well as police and fire associations.
“The wage concessions are really the hinge point,” Williams said. “Everyone needs to pitch in.”
If they come to an agreement that exceeds the $1.5 million figure, Peirson said the city could use the excess savings to restore some city services or prevent layoffs.
“We would like nothing better than that,” he said.
Officials also proposed cutting the city’s capital program by $800,000, which would delay replacement of its financial management system by 15 months.
Community funding would be cut by $228,000 under the initial proposal, including city support of the Conference and Visitor’s Bureau, the Downtown Organization and Santa Barbara Channels television.
City leaders will delve into each specific departmental budget in the coming weeks during a series of budget hearings. The first hearing takes place tomorrow from 2 to 5 p.m. in council chambers and will address the city administrator, city attorney, mayor and council and community development budgets.
Police and fire budgets will be discussed on May 26 from 6 to 9 p.m. The schedule for other departments can be found online at www.santabarbaraca.gov, along with a complete copy of the proposed budget.
The budget documents are also available on CD-ROM in the city clerk’s office or in hard copy at the library.
City leaders said they hope to see members of the public engage in the budget process to express their views on where cuts should take place.
“I’ll do what you want in terms of where your priorities lie, but we need to hear from you,” Falcone said.
-------------------------
For more information and details on the budget, please visit the city website's Budget and Finance
With a $10.5 million budget shortfall looming on the horizon, Santa Barbara city leaders had their first look yesterday at a series of proposals to close the gap that include layoffs, furloughs, spending cuts and fee hikes.
Officials said they are trying to spread the cuts fairly across city departments, with a reduced impact on police and fire services.
“It is a plan of shared pain,” City Administrator Jim Armstrong said. “We feel it’s a responsible budget and addresses the situation honestly.”
With tax revenues taking a major drubbing courtesy of a much-weakened economy, the city is asking departments to cut spending by $7.4 million, in addition to seeking $1.5 million in labor concessions from city employees.
The initial budget proposal would cut 51.5 full-time positions, 30 of which are currently vacant. It would also cut four sworn police positions if the city doesn’t receive a competitive grant, along with eliminating six non-sworn police jobs.
“There is no doubt there will be pain,” City Councilmember Iya Falcone said. “There will be pain all around.”
Other plans call for closing library branches on Mondays, closing the 1235 Teen Center on Saturdays and shutting down the Lower Westside Community Center altogether.
Job cuts would be spread across city departments, from eliminating nine positions in the Community Development Department to 13 jobs in the Parks and Recreation Department (along with 17,000 hours of seasonal staff time).
While the initial proposal is a starting point for budget discussions, city officials made it clear that they plan to listen to community members and debate priorities.
“This is not what I would describe as a fixed budget,” Councilmember Das Williams said. “It’s a balanced budget, which is a good starting point.”
Armstrong noted that the fiscal year 2010 budget process promises to be the most difficult budget situation he’s seen during his decades of experience in local government.
Unemployment is soaring, financial institutions are failing, credit markets are frozen and consumer confidence is plummeting, he said. Sharp declines in tax revenues are having a widespread impact on city coffers throughout California.
“I’m typically hearing about city budget deficits that range from 5 to 20 percent,” he said.
The city’s deficit amounts to approximately 10 percent of its operating budget expenditures, which are projected to be $104.7 million next year.
Despite the cuts being proposed, Armstrong said he is hopeful that city services won’t suffer significantly.
“There is a little pain everywhere, but I don’t think the overall quality of service provided to the community will suffer too much,” he said.
Declining tax revenues are the largest source of the city’s fiscal funk. In creating a two-year financial plan more than a year ago, officials had projected them to go up $2.5 million next year. Now they are expected to drop $7 million below that projected level, City Finance Director Robert Peirson said.
And taxes make up 61 percent of the General Fund revenue stream, which is definitely the hardest-hit area of city finances.
In the first two quarters of this year, sales taxes have been down more than 6 percent and are expected to drop a total of 7 percent by June. Bed taxes are expected to be down 5 percent this year.
To address those revenue shortfalls, the city recently rebalanced its current budget and closed a $6.4 million shortfall.
While officials hope the end is in sight — the state’s finance department expects sales taxes to bottom out and start rising by mid-2010 — they are still facing projected drops in sales tax revenue of 1.4 percent and bed tax revenue of 2.2 percent next year.
“In 25 years of [experience], I’ve never seen an environment like this,” Peirson said.
In the brief economic downturn following the attacks of Sept. 11, 2001, the city used budget reserves to address shortfalls. That’s no longer an option this time around, as the city has all but depleted those funds (the city’s disaster reserves, however, remain fully funded).
Instead, the budget plan proposes furloughing employees, eliminating vacation cash payouts and freezing benefits to pull together $1.5 million in savings. Negotiators are still in discussions with the main service workers bargaining unit, as well as police and fire associations.
“The wage concessions are really the hinge point,” Williams said. “Everyone needs to pitch in.”
If they come to an agreement that exceeds the $1.5 million figure, Peirson said the city could use the excess savings to restore some city services or prevent layoffs.
“We would like nothing better than that,” he said.
Officials also proposed cutting the city’s capital program by $800,000, which would delay replacement of its financial management system by 15 months.
Community funding would be cut by $228,000 under the initial proposal, including city support of the Conference and Visitor’s Bureau, the Downtown Organization and Santa Barbara Channels television.
City leaders will delve into each specific departmental budget in the coming weeks during a series of budget hearings. The first hearing takes place tomorrow from 2 to 5 p.m. in council chambers and will address the city administrator, city attorney, mayor and council and community development budgets.
Police and fire budgets will be discussed on May 26 from 6 to 9 p.m. The schedule for other departments can be found online at www.santabarbaraca.gov, along with a complete copy of the proposed budget.
The budget documents are also available on CD-ROM in the city clerk’s office or in hard copy at the library.
City leaders said they hope to see members of the public engage in the budget process to express their views on where cuts should take place.
“I’ll do what you want in terms of where your priorities lie, but we need to hear from you,” Falcone said.
-------------------------
For more information and details on the budget, please visit the city website's Budget and Finance
posted by Malcolm
at
4/23/2009
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