Santa Rosa's City Council is primed Tuesday to take the first major step to overcome a projected $16.2million deficit by reducing jobs, programs and services.
The proposed $6.9 million in cuts, initially set for July 1, now are planned to take effect May 1 to reduce the deficit by an additional $1 million.
Councilman John Sawyer, a member of the council's budget committee, said 38 city workers originally slated to be laid off by July 1 "will now lose their jobs two months sooner."
"We have people who will be losing their jobs who have been with the city for at least 20 years. That's how bad it's gotten," Sawyer said.
Added Mayor Susan Gorin: "Not only will we be making cuts to personnel, but we will be making cuts to services delivered by those employees."
Interim City Manager Wayne Goldberg said implementing the full array of cuts two months earlier will save the city $500,000 a month by the time the new budget year begins.
The city's list of 95 proposed cuts remains largely unchanged from that presented to the council in mid-January.
For the past two months, council members have been debating ways to deal with the looming deficit, a task made harder because they cut more than 100 jobs, eliminated programs and reduced widespread city services just a year ago to offset a $26 million deficit.
The new strategies include consolidating city departments, a move that would cut workers, and making a mid-year decision on whether to put one or more revenue-raising tax measures before voters in November.
"Someone's got to stick around to turn off the lights, but we have to reorganize," Councilman Gary Wysocky said. "Fewer departments means less management."
Gorin said the council also is awaiting results of a half-cent sales tax measure that will go before Cotati voters next month. They view that vote as a test case.
Goldberg, however, is suggesting the council might pursue a longer-term strategy that would take two to three years to offset the projected deficit rather than doing it all next year.
"To do it all in one year might impact the services to the level we don't want to live with," he said.
Instead of offsetting the entire $16.2 million through immediate cuts, Goldberg said the council could choose to make $10.3million in cuts by July 1, the amount needed to balance next year's general fund budget.
That is the portion of the budget that finances the bulk of city services, including police, fire, public works, planning, finance and parks and recreation.
The balance of the deficit, $5.9million, would be in the city's reserve fund, which by city policy must be no less than 15 percent of the total general fund.
Finance Director David Heath said the reserve fund should be at an estimated $17million by July 1, but projections are it will only be $11.1million.
Goldberg said stretching repayment of the deficit over two to three years would reduce the immediate need for even deeper personnel and service cuts, but he admitted doing so carries some risk.
The reserve fund helps offset sporadic cash-flow problems; is to help the city in case of an emergency, such as an earthquake; and ensures that those buying bonds that fund construction of city projects have sufficient cash to protect their investments.
Heath said dropping below the 15 percent requirement "could cause our credit rating to be downgraded because you're considered less credit worthy."
And it would raise the interest rates the city must pay on those bonds.
City leaders reiterated that any additional cost savings likely will have to come from the city's 1,300-member work force that Gorin acknowledged "is already fraught with stress and tension."
"It's already very ugly," she said.
Still, with a budget largely comprised of salaries and benefits, Gorin said there is little room to turn, particularly with most departments, excluding police and fire, ordered to cut their budgets by 23 percent.
Wysocky and Sawyer agreed with Gorin that employee unions have "been stepping up to the plate," mostly through pay freezes, to bail the city out.
"But that's not enough anymore," Gorin said, noting city revenues continue to drop in the face of the recession.
Unless more voluntary employee concessions are forthcoming, Gorin said, "the impact of the budget is so severe that will have have to impose concessions or negotiate aggressively for concessions."
"We have to lower our compensation costs," Wysocky said. It is important to do it collaboratively with the unions, he said, noting "they have as much to gain in weathering the storm."
The council has the power to force concessions, including pay cuts, upon employees without contracts. More than half the city's unions will be without contracts when they expire June 30.
Gorin said for unions whose contracts don't expire until next year, "we might have to go a step further and look at cuts a year away." The only contracts up next year involve the police and firefighter unions.
Sawyer said he would be reluctant to take unilateral action, but would do so if that's the only recourse.
"If, after all the negotiation, we have not come up with a reasonable solution on both sides, only then would I take the final step of imposing something. At that point we would have no other option," he said.
Gorin said unions have been talking among themselves about what concessions they might be willing to give.
She said the council is on the verge of asking the unions "to come forward with concessions totaling a certain percentage."
"I can't speculate where employees are going, but some groups are talking about furloughs," she said.
Gorin said while furloughs would reduce salary costs for a year, they are not a long-range solution for a city in which expenses annually outstrip revenues.
The financial crisis the city is facing "is not a one-year scenario," she said.
Even with concessions, Goldberg said the city might face even more draconian cuts if state legislators again take money away from cities to balance the state's $20 billion deficit.
"Right now we're dealing with what we know," he said, "but we may have to deal with yet more cuts."
You can reach Staff Writer Mike McCoy at 521-5276 or mike.mccoy@pressdemocrat.com.
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