City of Sacramento intensifies budget talks on gaping $39 million deficit
Published: Monday, May. 9, 2011 - 12:00 am | Page 1A
The city of Sacramento is facing a $39 million deficit in its general fund for the 2011-12 fiscal year that begins July 1. It's the fifth straight year of cuts to the general fund, which pays for most city services, including police, fire and parks.
City officials say this year's budget is the worst they've faced. The cuts proposed amount to 10 percent of the city's discretionary spending.
Budget talks have begun and will intensify in the coming weeks with City Council sessions devoted to the parks, police and fire budgets. With that in mind, here are the answers to some key questions.
How did we get here?
Several factors have conspired against City Hall. First, the two key revenue sources the city relies upon to pay its bills – sales and property taxes – have plummeted to 2005 levels, driven down by the housing slump and broader recession. At the same time, attempts to raise certain fees – including a business operations fee and a "crash tax" – have faltered.
Second, the cost of the workforce is outpacing revenue. Hundreds of positions have been cut, but large groups of employees – including police, firefighters and auto mechanics – are scheduled to get raises during the 2011-12 fiscal year.
In addition, the city will have to increase its contribution into the CalPERS system this year to make up for investment losses sustained by the retirement fund. And with so many city employees retiring, City Hall's contribution to retiree medical benefits will rise by $500,000.
We've been through this before. Does the city have other options besides cut, cut, cut?
Budget officials say no.
To reduce the $39 million deficit, interim City Manager Bill Edgar has proposed eliminating 297 employees, most of them through layoffs. In total, the city will make $27 million in cuts to its workforce and another $4.8 million in cuts to services and supplies.
The City Council has used its "rainy-day" reserve and other one-time money to help ease the blow in past years. And this year, Edgar proposes using some interest earnings and selling a piece of city-owned land in the downtown railyard to help fill the deficit.
But the city's reserve is down to about $14 million. That's enough to cover a single two-week pay period for the city workforce. The mayor and council have said they want to preserve – and even increase – the rainy-day fund.
The city will seek salary concessions from the unions, but has said it's more interested in long-term solutions – such as increases to employee contributions toward pensions – than it is in fixes that only address this year's problem.
Is the city really going to lay off 80 cops?
That's the proposal for now. But it's not a done deal.
For one, the mayor and City Council have said public safety is their top priority. The Sacramento Police Department is already one of the most understaffed in the nation, with about 1.5 cops per 1,000 residents.
Plus, there's an election next year that will involve four City Council seats and the mayor. And no candidate wants to be seen as soft on crime.
The council likely will seek salary concessions to save jobs. And there is reasonable hope that 35 of the officers slated to be laid off could be saved. Those cops were hired through a federal grant in 2009. That grant stipulates that if the city lays off any officers, it surrenders the funding.
The city likely will argue economic hardship and ask the feds to allow it to keep the grant money, thus saving the 35 positions.
So what happens if there are no cuts to public safety?
Public safety makes up such a big chunk of the general fund budget that it would be impossible to leave it alone without decimating other services.
Edgar has proposed cutting a combined $21.3 million from the police and fire budgets. Those cutbacks – which could be reduced in negotiations – would be the most significant to date for the city's public safety departments.
But consider this: the proposed general fund contribution to the Parks and Recreation Department, Economic Development Department, Convention, Culture & Leisure Department, and the mayor and City Council offices is a combined $21.8 million.
In other words, city services not associated with public safety would be decimated – and in some cases, would disappear altogether – if the police and fire budgets were untouched.
Is this the end of the problem?
Not even close.
The city faces a cumulative deficit of $67 million over the next five years. The deepest cuts are expected over the next three years.
What can you do?
Let your voice be heard. On Thursday, the City Council will focus on proposed cuts to the parks department at its 6 p.m. meeting at City Hall.
A hearing on the police budget is scheduled for May 17, fire cuts will be discussed May 24 and the budget is expected to be approved on June 21.
City officials say this year's budget is the worst they've faced. The cuts proposed amount to 10 percent of the city's discretionary spending.
Budget talks have begun and will intensify in the coming weeks with City Council sessions devoted to the parks, police and fire budgets. With that in mind, here are the answers to some key questions.
How did we get here?
Several factors have conspired against City Hall. First, the two key revenue sources the city relies upon to pay its bills – sales and property taxes – have plummeted to 2005 levels, driven down by the housing slump and broader recession. At the same time, attempts to raise certain fees – including a business operations fee and a "crash tax" – have faltered.
Second, the cost of the workforce is outpacing revenue. Hundreds of positions have been cut, but large groups of employees – including police, firefighters and auto mechanics – are scheduled to get raises during the 2011-12 fiscal year.
In addition, the city will have to increase its contribution into the CalPERS system this year to make up for investment losses sustained by the retirement fund. And with so many city employees retiring, City Hall's contribution to retiree medical benefits will rise by $500,000.
We've been through this before. Does the city have other options besides cut, cut, cut?
Budget officials say no.
To reduce the $39 million deficit, interim City Manager Bill Edgar has proposed eliminating 297 employees, most of them through layoffs. In total, the city will make $27 million in cuts to its workforce and another $4.8 million in cuts to services and supplies.
The City Council has used its "rainy-day" reserve and other one-time money to help ease the blow in past years. And this year, Edgar proposes using some interest earnings and selling a piece of city-owned land in the downtown railyard to help fill the deficit.
But the city's reserve is down to about $14 million. That's enough to cover a single two-week pay period for the city workforce. The mayor and council have said they want to preserve – and even increase – the rainy-day fund.
The city will seek salary concessions from the unions, but has said it's more interested in long-term solutions – such as increases to employee contributions toward pensions – than it is in fixes that only address this year's problem.
Is the city really going to lay off 80 cops?
That's the proposal for now. But it's not a done deal.
For one, the mayor and City Council have said public safety is their top priority. The Sacramento Police Department is already one of the most understaffed in the nation, with about 1.5 cops per 1,000 residents.
Plus, there's an election next year that will involve four City Council seats and the mayor. And no candidate wants to be seen as soft on crime.
The council likely will seek salary concessions to save jobs. And there is reasonable hope that 35 of the officers slated to be laid off could be saved. Those cops were hired through a federal grant in 2009. That grant stipulates that if the city lays off any officers, it surrenders the funding.
The city likely will argue economic hardship and ask the feds to allow it to keep the grant money, thus saving the 35 positions.
So what happens if there are no cuts to public safety?
Public safety makes up such a big chunk of the general fund budget that it would be impossible to leave it alone without decimating other services.
Edgar has proposed cutting a combined $21.3 million from the police and fire budgets. Those cutbacks – which could be reduced in negotiations – would be the most significant to date for the city's public safety departments.
But consider this: the proposed general fund contribution to the Parks and Recreation Department, Economic Development Department, Convention, Culture & Leisure Department, and the mayor and City Council offices is a combined $21.8 million.
In other words, city services not associated with public safety would be decimated – and in some cases, would disappear altogether – if the police and fire budgets were untouched.
Is this the end of the problem?
Not even close.
The city faces a cumulative deficit of $67 million over the next five years. The deepest cuts are expected over the next three years.
What can you do?
Let your voice be heard. On Thursday, the City Council will focus on proposed cuts to the parks department at its 6 p.m. meeting at City Hall.
A hearing on the police budget is scheduled for May 17, fire cuts will be discussed May 24 and the budget is expected to be approved on June 21.
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