March 31, 2010 > Revenue/Expenditure Task Force taken to task
Revenue/Expenditure Task Force taken to task
By Steve Wyant
Like most other cities in California, Milpitas is struggling to make ends meet. To address its chronic budget shortfalls, Mayor Robert Livengood and the City Council appointed a nine-member task force in April 2009 to develop a plan to balance the City's General Fund budget by Fiscal Year 2012-13. The Revenue/Expenditure Task Force presented its plan to Council on March 16, with less-than-enthusiastic support from the Council.
The task at hand was to find a way to mitigate an expected $11M annual deficit within each of the next five years. The task force has held seven formal meetings since its formation and looked at issues ranging from proposing new taxes to cuts in employee wages, benefits and city programs to the potential for an economic recovery. In the report presented to Council by City Manager and task force member Tom Williams, the plan embraces all of them in its "three-pronged approach."
"This document is not a plan, nor is it a roadmap on how to get there. It's rather ambiguous," stated the Mayor in dismay. His sentiment, echoed by his fellow Council members, is that all three prongs were wishes more than plans.
Prong One is to consider placing either a three percent utility user tax or a 25-cent sales tax on a countywide special election ballot in 2011. This would generate about $4M annually, if approved by voters.
Prong Two is a host of employee concessions and the elimination of programs that do not provide 100 percent cost recovery. Employee concessions include 12 furlough days per year, an additional 2.5 percent employee contribution to the Public Employees' Retirement System (PERS) and reduced benefits to newly-hired employees. It is expected to generate approximately $3.6M in annual savings. Implementation of these proposals would require successful negotiation with the respective employee unions.
Prong Three is an economic forecast. According to the staff report, "The Task Force believes that with continued economic development success and the recent location of auto dealerships, corporate headquarters and the use tax program, City revenues will regain some of the losses suffered during the economic downturn. The Task Force believes that it is not unreasonable to forecast a $2.3M to $2.5M increase in local revenue over the next two years."
The fact that all three prongs require the cooperation of voters, unions, and the economy drew reticence by the Council.
"My concern with the plan is that much of it is built on hope. Hope that we will pass the sales tax, hope that the economy will turn around, and I don't think you can assume any of that," remarked Councilmember Gomez.
"Prong one is a voter-approved tax measure, which is not a likely thing, and number three is the economy will improve . . . that's likely but we don't know when," added Livengood.
The Mayor also responded that one course of action at Council's disposal that does not need approval by voters or unions, but was missing from the task force's recommendations, was a reduction in work force. According to Williams, furloughs would provide the needed staff expenditure reductions without the need for layoffs. As noted in the staff report to Council, feedback from represented city employees indicated that job security was the top priority.
The task force was comprised of Councilmember Debbie Giordano, City Manager Tom Williams, Finance Director Emma Karlen and representatives from the Police Officer Association, the International Association of Fire Fighters, the Milpitas Supervisors Association, the Milpitas Employees Association, the Mid-Management and Confidential Employees, and the Professional and Technical Group.
Councilmember Giordano mentioned that the task force had considered staff cuts but decided that steady staff reductions had already occurred over the last decade. According to Williams, the city had employed 570 workers at its high point but staffing currently stands at 385.
"In my opinion, current employees are already stretched," Giordano said.
The Council adjourned the meeting without taking action on the task force plan. It voted unanimously to continue the discussion at the April 6 Council meeting during an early session budget meeting.
"I shan't vote to receive, approve, condone or put my favorable mark on it because it does not meet what I asked for. End of story," concluded Mayor Livengood as he clarified his position.