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February 26, 2008
Bargaining Hunters
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| Image: Fashionable consultants like those
shown above may be needed to hunt bargaining solutions to Chico's budget rigmarole. As I write this I'm still wondering if I'll be able to make the Finance Committee meeting Tuesday morning. As you read this I'll either be there or be getting my kids to school. These are the dramatic decisions that face a self-employed blogger. Even if I can't make it to the meeting the staff report for tomorrow's (today for you) Finance Committee has some interesting information. Recently I mentioned that some of the annual savings the Council approved at its 12/18/07 meeting (see post here). The cumulative savings over the previous 10-year budget forecast is in the neighborhood of $15.8 million. This would bring the deficit down from its estimated $50+ million. The Council approved the amount of the various cuts/changes but not the methodology. City staffers will make those decisions. Of the $15.8 million in estimated savings 60% require negotiations with bargaining units (unions). There is no guarantee that those savings will occur. In fact the $15.8 million could probably be described as a best case scenario. Additional savings are related to changes in negotiated MOUs (union contracts), staffing levels, and salaries for existing employees. These changes are estimated to save $6.1 million over the 10-year forecast. On the opposite side of the income statement are a couple of additional expenses that hadn't been previously accounted for. A reduction in tax income (sales and property) to the city is expected to increase the deficit by $7.2 million. An increase in the Public Employee Retirement System (PERS) rates, and an expected upward trend in those rates, have caused the city's Finance Department to increase the deficit by an additional $3.4 million. The Finance Committee will see a reduced 10-year projected deficit of $39.9 million which is down from $51.1 million. Everyone should see that as a positive development for Chico. However, there are a number of issues to keep in mind as this deficit reduction is discussed. 1. The 10-year budget still does not include costs associated with a growing local government. It assumes the status quo remains and no new personnel are added. 2. A structural deficit growing by $1 million annually still exists. 3. More than half of the $15.8 million in savings must be negotiated with unions before the savings can occur. 4. Any 10-year projection is very loose as far as accuracy goes. 5. A reduced deficit projection is a step in the right direction, but a best case scenario probably won't materialize. You can see the staff report here. |
| Update: Jenn Klein covers this story in today's E-R (see story here). The numbers look a little different than what was in the staff report, but generally it tells the same tale. Some of the spending cuts are being offset by unexpected increased costs, and some of the cuts require bargaining that hasn't happened and may not happen. Finance Director Jennifer Hennessy is quoted raising the spectre of Vallejo, which should be an eye opener for decision makers(see Vallejo post here). |
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CI Challenge: Can you guess what it is? Einner: The master of paint, dye, and stain, the very color conscious Gregg Payne. See comments below for the answer. |
Posted by Lon at February 26, 2008 06:30 AM
Comments
CIC is the "green" the city doesn't have. Or it's Ann Schwabb's green envy.
Posted by: Anthony at February 26, 2008 07:21 AM
One of many shades of the color "hunter green".
Posted by: Gregg Payne at February 26, 2008 08:12 AM