Some Walnut Creek employees receive sad news of possible layoffs as city readies its budget

As the city gets ready to unveil its proposed budget for the next year, I've received word that some Walnut Creek employees have had some difficult private meetings with supervisors this past week to learn that they may receive layoff notices and not have jobs in the near future.


City Manager Gary Pokorny confirmed in an e-mail that these private meetings have been taking place, and provided some background on what city staff have been doing to deal with a serious drop in revenues from the recession-driven decline in retails sales and auto sales taxes.


UPDATE: According to a city report released Friday afternoon, the city needs to cut $20 million to balance its $116 million 2010-12 budget. Sales tax revenue, hit the hardest,  is expected to drop 11 percent during the current fiscal year and then  another 3 percent during the 2010-11 fiscal year. Parking meter and garage revenue also dropped 9 percent this fiscal year, and property tax revenue declined 6 percent. 

"What we have done is give a 'heads up' to a number of folks who might be facing a layoff," he said.  The city will release its proposed budget late next week and the City Council will discuss it at its May 4 meeting. These layoffs will take place, Pokorny said, if the recommended budget is approved. "We have shared this information with [employees] in advance of an actual layoff notice to give them the longest advance warning of where we are proposing to make cuts in our programs and expenditures."

Any layoff notices would not be issued until after the council adopts a budget. Until that happens, the city won't know how many people will face layoffs and in which departments.

"We will know where we will actually be making changes and then we would give written layoff notices if we need to," he said. "I say "need to" because there is yet another caveat."

The city will try to save jobs by giving employees the option of retiring by July 30, Pokorny said. The incentive is that eligible employees (50 years and older and with five or more years of service) would be eligible to receive a medical spending account to help them pay for medical insurance and medical expenses for up to three years.

With Walnut Creek facing revenue drops that take the city back to go back to 1999 levels, and the city caught in the same economic downturn that affects the rest of the country, Pokorny said the city is having to make "significant and ongoing structural change in our organization."

In attempting to draft a balanced budget, city staff were very mindful of programs that residents put high on their list  to save during a series of Community Conversations the city hosted back in the fall. Residents were asked to come up with their list of priorities, by designating how they would spend a theoretical amount of money on different programs. 

In his column in the May/June issue of In the Nutshell, Pokorney said that programs that promote "Culture, Recreation and Learning Opportunties" received 24 percent of the virtual dollars, followed by programs that serve "A Safe Community." "Economic Vitality" programs would receive 18 percent. Coming up behind were programs that support "Strong Neighborhoods," and "Transportation." One hundred seventy residents participated. 

"The budget that we are offering is a balanced approach in both senses of the word," Pokorny said. "That is, it is balanced between resources and expenditures, and we have used a mix of program cuts, restructuring, service reductions as necessary, some one-time money to ease the transition, and fee increases for services. All employees have also been asked to contribute through increased contributions to various benefits out of their paychecks, and most have seen a significant reduction in their take-home pay. And a few have been laid-off or had their jobs reduced to half-time this past year."

Pokorny added: "This process is difficult for everyone involved, it is not something taken lightly. It affects the lives and services of people living in this community, it affects the lives and jobs and income of the employees delivering the services."

Making it through? Highlights of Walnut Creek’s budget reflects economic challenges, successes

The City Council is expected to adopt its Comprehensive Annual Financial Report for the 2009 fiscal year (which ended June 30) at itsTuesday night meeting.

The 188-page document highlights the challenges the city faced last year, and will continue to face this year. It also notes ideas for tackling those challenges, as well as some successes that might surprise some residents, particularly on the question of that “damn library” and whether investing in arts and recreation is good for the city.

I tried to pick through all its pages, but since I’m not a budget and finance person I may have missed some interesting little details. Feel free to pore through this document yourself and add or dispute what I found to be highlights. Basically:

THE BOTTOM LINE:
The reports says:

Almost all City revenues have declined substantially since the adoption of the 2008-10 operating Budget in June 2008. Sales tax revenue in fiscal year 2008-2009 was $18.5 million, a decrease of 8 percent over the amount received in the prior year primarily due to the slowdown in auto and retail markets. Together with declines in property tax revenue and fees and charges collected by the city for services, total revenues were approximately $4 million below initial projections for 2008-09 and are expected to finish $9 million below initial projections for 2009-10.

Total Revenues: "$82 million, of which $27 million were derived from Governmental Activities, $2 million were derived from Business-type Activities and $53 million from General Revenues Existing reserves were used to cover an additional $1 million of expenditures."

Total Expenses: "$83 million, of which Governmental Activities incurred $81 million and Business-type Activities incurred $2 million (see tables 2 and 5 for additional information)."

SOME SURPRISING, OR NOT SO SURPRISING, HIGHLIGHTS

That “Damn Library.” Sorry, library supporters, I’m not taking any position on the library when I refer to it this way. I’m just honoring readers, for whom referring to it this way, has become something of a Crazy inside joke.

Anyway, the news about this budgeted $42 million project. Despite concerns, controversies, etc., the city expects to complete its new library on time and within budget. The city has so far spent around $23 million, and has $17 million left to spend.

Surprise No. 2: Arts and recreation are good, very good, for Walnut Creek: In a year when revenues declined in most areas (sales, property tax, state revenues, including vehicle license fees, and city license and permit fees), one sector proved to be a money-maker: Arts and recreation.

Sure, the city’s spending on arts and recreation increased $324,000, or 2 percent, from the previous year. This was due to increased salaries and benefit and other costs. And the city had to pour money into arts and recreation because more people were taking Civic Arts and recreation classes and going to see shows at the Lesher Center.

Notably, ticket sales at the Lesher Center, which celebrates its 20th anniversary this year, continued strong, bucking the trend of other performing arts organizations hurting in tough economic Times. Charges for tickets and fees for classes and other programs increased $249,000 from the prior year.

Not such a surprise: The other money maker. Increased parking rates at meters also helped bring in an additional $233,000 (5%) from the previous year.

GOING FORWARD

In 2010 and beyond, the goals include:

• Continuing to enhance the vitality of downtown
• Oversee a comprehensive cost allocation, fees and charges study
• Adopt the Locust Street / Mount Diablo Boulevard Area Specific Plan
• Complete review of the BART Transit Center Village and Neiman Marcus projects
•  Implement parking pay stations in the downtown
• Finishing that new library and parking garage.
• Do reconstruction on Geary Road.
• Work on a retaining wall for Rudgear Road Retaining Wall
• Conduct a needs assessment for Heather Farm Swim Center

Walnut Creek’s plan to tackle its budget woes in the midst of the Great Recession

City executive staff volunteering to take pay cuts ... The city asking police and other unionized employees to reduce their compensation packages ... Hiring freezes ... A few lay-offs ... Leaving some rooms in the new library unfinished.

These are some of the measures the city is looking at to cut costs as it faces a pretty challenging economic situation. And which the City Council will discuss at its Tuesday night meeting.

After the city adopted a two-year $136 million budget for 2008-10, the global economy plunged into the crapper (as the great economist John McCain said), and the city wound up looking at a $7.3 million shortfall. That includes the $1.7 million the state might take away, but which the city would cover with its emergency reserve fund. Speaking of the reserve fund, the city still has $6.9 million in emergency reserves.

Here are some highlights from the budget balancing plan, which you can read here at the city's website:

MAJOR REVENUE SOURCES SEE BIGGER-THAN-EXPECTED DROPS

--Property taxes: For 10 years prior to 2008-09, property tax revenues increased 8 percent a year. Last spring, expecting the economic slowdown, the increase was projected to only be 4 percent for 2008-09. Bottom Line: Increases only 2 percent; further 4 percent decrease expected for 2009-10.

--Sales tax: Conservative budget estimates in June 2008 held that revenue would essentially be flat through 2009-10; that the decline for 2008-09 would be 2 percent, then a 2 percent increase for 2009-10. In fact: Consumer confidence dipped so dramatically that auto sales (35 percent of city’s sales tax base) and retail sales significantly, estimated at more than $6 million through 2009-10.

--Some sorta good news, coming from arts and recreation programs: Drops in development fees, with the slowdown in construction, and in parking revenues as a result of fewer visitors to downtown were offset partially by earnings increases from recreation and arts programs, including productions at the Lesher Center, where the in-house theater company, Center Repertory Company, has,despite the recession, enjoyed healthy ticket sales.

Note to self/city: Hmm, people are stilll willing to spend on entertainment during tough times. Hey, movies theaters nationally and locally are apparently thriving, as they did during the Great Depression. As for that decline in parking revenues: a sign to the city that they need to not be so, forgive my French, hard-ass in their meter ticketing practices, to make the city more inviting?

EXPENSES GREW

Employee benefits: As with all businesses and public agencies, the city saw medical insurance premium costs grow by double digits each year, and pension costs increased, as the stock market investments—needed to pay retirees—suffered one of the most severe drops since the Great Depression.

Highlights of The Plan for balancing the budget:

--Salary cuts for City Council, 24 percent. Savings: $17,500--Salary cuts for executive staff—City manager, city attorney, personnel director and department directors—of 6.5 in 2009-10 and 8.75 in 2010-11. Savings: $200,000
--Proposed compensation reductions for police and other employee groups. Savings: $3 million
--Staff cuts, changes: Freeze 22 vacant staff positions, convert three full-time positions to half time, accepting retirements of several employees, four staff lay-offs. Savings: $1.35 million


THE LIBRARY

Construction of the library is “proceeding very well.” Projects remains on schedule to open by mid-2010 and to finish within the $42 million budget. In fact, the financial crisis meant that the construction bid came in around $5 million below cost.

However, the city plans to reduce the library project budget by $500,000 by:
--Leaving the conference room, technology center, and business center unfinished and ask the Walnut Creek Library Foundation to raise funds above their $5 million pledge to cover these costs.
--Cutting funds for the Opening Day Collection—that is new books and other materials purchased for new, bigger library. The Friends of the Library have already raised $100,000
--Reduce the public art budget by $30,000, and the remaining budget by $90,000

CROSSING GUARDS:

UPDATE: According to Tuesday's Contra Costa Times, a subcommittee of parents, school leaders, city staff, and City Council members are urging the City Council to agree to cover the entire $110,000 cost for 2009-10 for crossing guards at 10 intersections near Walnut Acres, Bancroft Elementary, Buena Vista, and Walnut Heights elementaries, and at Foothill and Walnut Creek intermediates. But the city and school districts may have to find other ways to fund the crossing guard program in the future.

Note to city/school districts: Aren’t there parent volunteers who could handle the crossing guard duties. That was the case at my son’s Walnut Creek elementary.