City Manager Kevin Duggan presented his annual budget balancing strategy earlier than usual, as he plans to retire April 2. The council did not vote on the strategy, but was generally supportive in its comments at the Tuesday. Some expressed concern that the strategy depended too heavily on hopes for $900,000 in new city fee hikes and new city land lease revenue, especially after the city last year raised service fees considerably across the board.
"We just cannot expect to grow our revenue enough to be able to cover those costs," said council member Ronit Bryant about pension cost hikes. "Cost containment is going to have to be a really important part of this."
Without cost cuts, the city's general fund expenditures could jump by $3.5 million. Revenues are expected to increase for the first time in the recession, but only by $1.2 million from new fee revenue and modest tax revenue increases.
The jump in general fund costs are primarily due to a $3.2 million rise in compensation costs estimated for the city's 650 employees next year, including $2.5 million increase in the city's retirement pension costs, a $741,000 hike in health insurance costs, $240,000 in pay raises and $107,000 in other new compensation costs. City officials expect similar hikes in pensions costs over the next few years.
"I like the blueprint that's been laid out," said Council member Mike Kasperzak, but urged the city management to seek "alternative service delivery models" to cut costs long term. In other cities, fire departments have been combined with those of other cities and library services have been contracted out to the county. In Mountain View, talks are underway to negotiate lower costs for animal control services, either in a new contract with Palo Alto or a service further away in southern Santa Clara County.
"It's the long term things that are going to get us out of this cycle," in addition to increased sales taxes and property tax revenue, Kasperzak said.
If the city is unable to balance the budget using some variation of Duggan's strategy, Duggan has prepared three tiers of $3.7 million in additional cuts that could be made. The cuts echo possibilities discussed in previous years, including the laying off of as many as 16 city employees and eliminating as many as nine vacant full-time positions.
In tier one, which would save a total of $637,000, filled positions that could be eliminated include a stagehand at the Performing Arts Center ($72,000), the fire department's public education specialist ($121,800) and a police community services officer ($112,000.). It also includes the elimination of a vacant position dedicated to weed abatement in city parks and medians ($105,000).
Tier two (total savings of $1 million) includes the elimination of two filled community service officer positions ($212,000) a vacant police records specialist ($111,000) and a vacant deputy fire marshal position ($217,000), the elimination of a filled code enforcement officer position ($42,000), a filled accounting technician job in the finance department ($39,600) and a filled parks maintenance worker position ($97,400), among other cuts.
Tier three cuts deeper to save $2.1 million, including the elimination of five filled police community service officer positions ($564,000), the elimination of a filled police records specialist position ($121,000) and lowering union-contracted minimum staffing levels in the fire department to save overtime costs ($600,000) and a reduction in library hours, its materials budget and the elimination of one vacant librarian position to save a total of $272,000 from the library.
City Council members hope not to have to make those cuts.
"Every time we ratchet down services, nobody feels good about it," said council member Laura Macias.