The council has given city unions a choice: compromise or
layoffs. City staff and officials, faced with a bleak economic
outlook and a dwindling reserve fund, said more layoffs could come
soon at City Hall if the city’s four unions do not waive raises,
take salary cuts or come up with other cost-cutting ideas.
The council has given city unions a choice: compromise or layoffs.
City staff and officials, faced with a bleak economic outlook and a dwindling reserve fund, said more layoffs could come soon at City Hall if the city’s four unions do not waive raises, take salary cuts or come up with other cost-cutting ideas. Council members have said they are no longer willing to draw money from Gilroy’s rainy day fund, which lost $4.7 million last year and is expected to lose an additional $8.4 million by June 30 – the end of the fiscal year. At that point, the fund will hold about $13.6 million and will have to absorb any future shortfalls.
Without the once-robust fund to draw on, the choices are few, Mayor Al Pinheiro said, and it’s more responsible to save the rainy day money and have employees earning less than to have fewer employees on the payroll.
“What I think will happen is a working-together of all the unions and the council to balance this budget,” Pinheiro said. “If it cannot come to that, then we only have one alternative, and that’s more layoffs.”
Union representatives see things differently. After 48 layoffs last January left City Hall with 227 full-time employees, they said they are reluctant to accept more pink slips, especially since the city’s general fund reserve will still hold more than 36 percent of next year’s planned expenditures. They also said the council should consider furloughs and other cost-cutting measures instead of wage cuts.
Council members and City Administrator Tom Haglund have not been able to escape plummeting property values and sinking sales tax revenues. These spiraling costs have brought next year’s expected general fund deficit to $4.7 million, obliterating the nearly $900,000 surplus council members penciled out when they approved layoffs last winter.
“That was like blowing in the wind,” Pinheiro said.
Now, instead of a cash cushion when the 2009-10 fiscal year begins July 1, Haglund expects more cuts and more compromise.
“Certainly no one, including myself, wants to have another layoff, but all the options are still on the table,” Haglund said Monday, three days after he sent a memo to all city employees – but not the council – saying, “We will have no choice but to cut millions more.”
Haglund – who has cut more than $8 million in general fund expenses since he came on board in May 2008 – has already slashed discretionary and non-essential spending to the bone. He and council members have also directed the city’s four unions to cut 16 percent from their respective personnel costs, union representatives said. For the American Federation of State, County and Municipal Employees Local 101, that means about $1 million in cuts spread across its 100 members – or 13 layoffs – said AFSCME Business Agent Tina Acree, who represents various Gilroy employees ranging from engineers to emergency dispatchers.
For the police union, a 16-percent reduction means a $1.4 million reduction of salaries and benefits – or eliminating 10 of the union’s 58 sworn officers, none of whom were laid off in January – Police Officer Association President Mitch Madruga said.
“Pink slips are going to go out if some sort of agreement is not met,” Madruga said, adding that 10 lost officers would spell extinction for the city’s gang task force, the department’s only school liaison, and officers who combat graffiti and educate children about drugs.
City officials and council members declined to talk about ongoing negotiations and specific proposals, but Acree said they “just want employees to take 16 percent off the top and call it a day” rather than consider furloughs. A 16 percent cut means annual salary reductions and possibly higher healthcare contributions, but only if union members agree to reductions instead of standing firm and risking additional layoffs at the behest of the council. Either way, Acree said Gilroy was not the place to be.
“Everyone who works there should be looking for other jobs,” Acree said. “Who wants to work for an employer full time and not have medical benefits? Yes, it can happen, but all those employees will go somewhere else, and nobody will want to work with you.”
Representatives of AFSCME along with the 23-member Gilroy Management Association, the Gilroy POA and Local 2805 IAFF Fire Unit representing Gilroy firefighters have each met with city officials at least once since Jan. 31, but Acree and Fire Representative Jim Buessing, who represents 33 fire employees, said getting answers has been hard as city officials struggle to evaluate mercurial revenue projections and other financial uncertainties.
“We will discuss options with the city, but all those options will require use of the general fund reserves,” Buessing said. The fund’s balance still exceeds 15 percent of Gilroy’s expenses, which most cities use as their savings benchmarks, Haglund said. But $13.6 million in reserves “can go so quickly,” Pinheiro said, and he encouraged the council to avoid drawing on the fund to pay salaries as it has in the past.
“Let’s not depend on that,” Pinheiro said. “We don’t have the ability to bring in additional sources of revenue.”
Still, a cushy reserve fund makes talks of further layoffs “difficult to swallow,” Buessing said, adding that the fire department already went from three engine companies to two and lost six full-time firefighters during layoffs. In March, the council also imposed a merit-based wage freeze for all city employees through June 2010 after the body learned 31 workers had received more than $130,000 in merit-based pay hikes since layoff talks began in September. While the city and unions discuss merit pay and larger personnel issues, Haglund said Gilroy will keep serving its residents.
“We are facing the same issues other communities are facing,” Haglund said. “I want to assure residents that we have the financial resources to continue with our services and are certain that we can reach a mutually agreeable solution with the unions.”
