Eliminating a dozen jobs, cutting back services and asking employees to work for less are the choices that will go before the San Luis Obispo City Council on Tuesday as they debate how to slash millions of dollars from the city’s upcoming two-year budget.
Tuesday’s discussion is the first time the council will have the chance to review the more than $4 million in cuts being suggested by city staff.
Employees will likely be asked to make concessions to account for about half of the anticipated shortfall by paying more toward their retirement, health insurance and working for less pay.
The city is also considering the creation of a two-tier pension system for new employees. The Board of Supervisors approved a so-called two-tier pension plan in March for all county employees hired after April 17.
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The city must negotiate all of those options with employee groups before any changes are made.
“It’s not only about what we can afford but what we can justify,” Councilman Andrew Carter said.
“And to me, even if we could afford it, some things that are built in now, they just can’t be justified.”
The city faces a $4.4 million shortfall in its $54 million annual general fund for the fiscal year 2011-12 that begins July 1.
That shortfall will grow to $5 million in 2013-14 and is projected to be $4.7 million annually for each of the next five years.
City staff is recommending that $2 million be saved by cutting operating programs and jobs and $2.1 million be saved by negotiating with employee groups for lower salary and compensation.
Employee costs account for 79 percent of the city’s general fund. A recent study found that San Luis Obispo has about the same number of employees today as 10 years ago, but it is paying double for their salary and benefit costs mainly because of the increased costs of pensions.
“We have always been willing to help the city out in these situations, and we look forward to sitting down with the city and trying to find solutions to make sure we all get through this fiscal crisis,” said Erik Baskin, president of the San Luis Obispo City Firefighters Association. “We want to be a part of the solution.”
Recently, nearly all the groups representing city employees have agreed to freeze their pay for a year — many of them also forgoing increases to their health insurance premiums. Those actions are cutting the city’s total 2011 labor costs by an estimated $858,000.
The City Council must decide if it will cut 13 positions to save $1 million in 2011-12 and $1.1 million in 2012-13. All of these jobs are either vacant or will be vacant because of retirement or a shift to another position.
Since 2009, 17.2 jobs have been eliminated to save $1.4 million.
Staffing levels will be at the lowest they have been in the past 10 years if the 13 positions are cut, City Manager Katie Lichtig said.
She asked each department to prioritize the services offered to help correlate the proposed cuts. Of those cuts, the largest savings are estimated to come from the police department at $467,100 in 2011-12 and $578,100 in 2012-13. The greatest savings would come from cutting four positions: the elementary and middle school DARE officer, a field service technician, a communication technician and a police officer.
Recommended cuts to the public works department will save $469,200 in 2011-12 and $475,300 in 2012-13 by eliminating a parks maintenance supervisor and shifting the cost of other positions to other funds.
A likely impact of the proposed cuts would be longer waits, up to three weeks, for community members wanting staff to review plans for development.
The third largest share of the $2 million proposed cuts from city services and staff would come from administration. Proposed cuts there include eliminating an administrative assistant, printing fewer agenda packets for staff members and giving less grant money to cultural events designed to attract visitors.
Suggested sources of new revenue will contribute $416,300 in 2011-12 toward the shortfall and $551,300 in 2012-13.
Increased revenues are suggested to come from several sources, including cracking down on code enforcement and business licensing, charging residents for street sweeping and partnering with local organizations to help fund programs.
The San Luis Coastal School District has agreed to pay to keep a school resource officer on its high school campuses, for example, and the San Luis Obispo Downtown Association has offered to help offset the costs of Thursday’s Farmer’s Market.
The City Council will hold four more public hearings before adopting the final budget on June 21.