Petaluma budget woes spark debate and a proposal

<p>Amid the intrigue of a shopping center developer’s offer to prepay taxes and police on the way to deal with a recalcitrant ex-city councilman, Petaluma City Council members on Monday night got a taste of how thorny this next round of budget cuts will be.</p><p>Over more than two hours of discussion, council members discussed alternatives to City Manager John Brown’s recommendations on how to cut another $2.2 million to balance the city’s $35.5 million budget and rebuild the reserves.</p><p>Without significant concessions from the city’s 11 bargaining units, more layoffs will come, Brown said.</p><p>Councilman Mike Healy dropped a bomb midway through the budget discussion, reading a letter dated Monday from Merlone Geier Management, a company proposing a shopping center on North McDowell Boulevard.</p><p>In it, the company proposes to prepay up to $1 million of its forecast sales tax “in an effort to help the city avoid taking these drastic budget cut measures.”</p><p>Later, as council members were discussing other cost-saving ideas, former councilman Bryant Moynihan approached the public speaker’s microphone and began speaking despite Mayor Pam Torliatt’s request to cease. Moynihan has been an outspoken critic of the council since he stepped down in 2004.</p><p>Torliatt pounded her gavel as she and Moynihan spoke over each other in raised voices. Torliatt eventually recessed the meeting and several council members exited the dais.</p><p>Moynihan left the building as police were on their way.</p><p>No arrests were made and Torliatt called the meeting back into session several minutes later – after most in the audience had left. She said she was just about to ask the council whether to reopen public comment when Moynihan interrupted. </p><p>“There needs to be council chamber decorum and who knows that better than a former councilmember,” Torliatt said later. </p><p>The tax prepayment idea was characterized by Brown as premature and shot down as “wholly inappropriate” by Healy’s political adversary David Glass. But it gained some traction from two other council members, Mike Harris and David Rabbitt, who often side with Healy on development issues.</p><p>Brown said the offer by Merlone Geier – and apparently another offer from at least one more developer – could have the appearance of them paying for approval of their project.</p><p>“The prepayment of the sales tax revenue would effectively take the form of a short-term load to the city and would be conditioned and paid upon city approval of the project prior to April 2, 2010,” the letter states. “We view this as an opportunity to ease the city’s financial struggles while directly assisting the city staff members who would be most impacted by budget cuts.”</p><p>City Attorney Eric Danly said the offer should only be used as an example of a possible revenue source and not be discussed in detail because the public hadn’t been notified of its existence before the meeting.</p><p>Faced with a deficit of at least $561,000 and as much as $2.3 million, including rebuilding the reserve fund, Brown sought authority to begin negotiating with the city’s 11 bargaining units to freeze raises, reduce salaries, increase employees’ health care contribution and consider unpaid furloughs.</p><p>Without those cost-cutting measures, Brown said, layoffs would be next. The city has already laid off, eliminated or frozen 52 positions of the approximately 300 employees paid for by the general fund. Sales taxes make up the vast majority of city’s general fund revenues.</p><p>Like many cities, Petaluma has begun reevaluating current budget projections for the remaining fiscal year as sales tax and property tax revenues continue to decline.</p><p>Brown also suggested raising the city’s hotel tax and instituting a tax on event tickets sold in the city as other revenue raising ideas.</p><p>Council members asked Brown to return in two weeks with more specific figures on various cost-cutting and revenue-generating ideas. </p><p>Several council members seemed interested in unpaid furloughs at the end of the year, although those would need to be negotiated with the employees’ unions.</p><p>In June, the council approved its $35.5 million current budget, which was 10 percent smaller than previous year’s and included 10 layoffs. That followed two rounds of mid-year reductions to keep spending more in-line with tax revenue.</p><p>You can reach Staff Writer Lori A. Carter at 762-7297 or e-mail at lori.carter@pressdemocrat.com.</p>