Gilroy
 – The night sky over Gilroy High School could remain dark this
Fourth of July if gas prices continue to spiral. Dust could collect
on exhibits at the Gilroy Museum if firefighters retire at age 50.
And the wait to get city assistance to repair your uprooted
sidewalk could stretch out for years
if the state helps itself to more local tax revenues.
Gilroy – The night sky over Gilroy High School could remain dark this Fourth of July if gas prices continue to spiral. Dust could collect on exhibits at the Gilroy Museum if firefighters retire at age 50. And the wait to get city assistance to repair your uprooted sidewalk could stretch out for years if the state helps itself to more local tax revenues.
Any number of forces outside the city’s control could hasten Gilroy’s swirl toward economic malaise, according to city leaders who for the third year in a row have compiled a list of potential cuts in anticipation of a budgetary crisis.
“It’s not looking too good,” said Councilman Craig Gartman, who predicts the state will take more local tax revenues as part of its upcoming budget. “The city administrator and council will be facing some extremely tough decisions in the next six months to a year.”
As part of a three-hour session last week, City Administrator Jay Baksa presented councilmen with an extensive list of potential cuts and associated “triggers.”
The list of cuts involve four tiers of increasingly drastic reductions:
• Tier 1 – eliminate playground program, eliminate July 4 fireworks, reduce museum hours;
• Tier 2 – cut back visitor’s bureau funding, eliminate pest control, eliminate museum custodian;
• Tier 3 – eliminate new funds for sidewalk repair program, reduce hours at youth center, close museum;
• Tier 4 – eliminate crime analysis, close third fire station, close youth and senior centers.
On the revenue side, a key ‘trigger” includes more state raiding of local sales tax revenues, the source of roughly $12 million of the city’s $34 million in discretionary money.
Even if the state does not touch those funds, councilmen agree that the exponential growth in sales tax revenues, which have doubled since 1996, cannot continue at its current pace.
Worse, a serious downturn could be in the offing, Baksa predicted, if rising gas prices deter regional shoppers from traveling to Gilroy.
Yet it has not been all bad news.
“Things have somewhat improved because we’ve been able to do a lot of things that reduce expenses or increase revenues,” Baksa said. “That has kept us in a position that has prevented us from having to do really draconian (cuts) like a lot of other cities have had to do.”
The passage of Proposition 1A, which prevents the state from taking a bigger share of property taxes, has eased some concerns about losing local revenues. The city also has more than $20 million in reserves, although officials say that money will vanish in three years at the current pace of spending.
For the moment, city officials’ concerns have shifted to the spending side of the budget, especially contractual obligations to city employees.
“This is the first year we’ve had contracts come into play that could have an affect on the city’s general fund,” Baksa said.
City officials and the fire union reached impasse in February, sending labor negotiations to binding arbitration for the second time in five years. According to city estimates, the union’s combined requests would amount to a 26 percent increase in the fire department’s $5.6-million payroll. The city has only budgeted for a three-percent increase.
“If the binding arbitrator decides to give them everything that makes up this 26 percent, that could trigger these cuts,” Baksa said.
The city last week began negotiations with the union representing general employees (those not in the fire or police union).
“That could potentially be a trigger,” Baksa said. He also pointed to the rising cost of medical benefits as another challenge. In the late ’90s, the city paid $2.5 million annually for employee’s health benefits; for the upcoming fiscal year, the city expects to pay $7.2 million.
Councilmen have floated the idea of a ballot measure to rescind binding arbitration, in hopes that the city can regain control over the spiralling public safety budget. An investigation by the Dispatch revealed last week that at all firefighters earned more than $100,000 in 2004, when counting overtime and benefits.
The city is especially concerned about benefit requirements, which now have the city spending an amount equal to half of each firefighter’s base pay on retirement, medical and other fringe benefits. The fire union refused to a city request to cap medical benefits as part of the labor negotiation process.
“We’re trying to not layoff people, yet we have these unreasonable requests,” Mayor Al Pinheiro said. “We want the community to know that when they ask ‘Why aren’t you doing this?’ we have a reason – there’s no money.”
Councilman Gartman, who has not committed to the idea of a ballot measure but said city employees are “very well paid, said firefighters are just one piece of a bigger budgetary problem.
“It’s not only the unions and salaries,” he said. “It’s (about whether) we want to take on a new program that’s going to cost additional money if we don’t know where those funds are going to come from. We only have so many dollars in our bank account, and I’m not willing to bank the future of the city on a promise of future income. I want to base my decision solely on what we know.”
In anticipation of harder times, the city began putting the brakes on spending in 2003, when certain “non-core” services were scaled back or frozen. The cuts included eliminating the city’s annual contribution of $50,000 to $100,000 for the sidewalk-repair program, eliminating all part-time positions and freezing all new hiring. The current five-year budget allows for no new positions through 2010.
Baksa last week presented councilmen with two budget scenarios, one that involves increasing staff in step with the population and another more conservative approach that slowly reduces the ratio of public employees to residents.
“In every one the cases,” Baksa said, “the city’s general fund just explodes.”
Officials say that even if the state keeps its hands out of city coffers, if binding arbitration restricts the firefighter payroll to the budgeted three-percent increase, and generally all things favorable occur with respect to the city budget, Gilroyans still face cutbacks in the services they have come to expect.
In his budget letter to officials last year, Baksa warned of “an incremental degradation” of services.
“For example, you call for police emergency services and currently, on average, you get a police officer response in less than three minutes,” he wrote. “Next year you make the call and you get an officer in 3:10, the following year (in) 3:20 and so on.
“It will not happen all at once, as one is seeing in many cities,” Baksa concluded, “but it will be slow and gradual, and many of our residents may not even see or feel it until it is too late.”
