February 22, 2011 > Budget Task Force report
Budget Task Force report
By Abraham Cruz
Milpitas City Council held a special study session to review the Citizens Budget Task Force's report in response to the 2009-10 Santa Clara County Civil Grand Jury Report "Cities Must Rein in Unsustainable Employee Costs." The latter cites five contributory factors to financial difficulties faced by Santa Clara County's cities - increased salaries and wages costs; increased retirement and healthcare costs; reduced tax revenues from property, sales, transient occupancy and construction and less revenue from the state.
The Citizens Budget Task Force was established to identify and recommendation strategies to Council to reduce the city's anticipated General Fund structural deficit by $11M over three years. The Task Force has recommended adopting an ordinance prohibits General Fund expenditure exceeding General Fund revenue; an internal study of the allocation of Redevelopment Agency fund to the General Fund; identifying departments/tasks that might be outsourced; and employing an independent consultant to conduct a Total Compensation Study.
Salaries and benefits account for approximately 83 percent of General Fund expenditures; programs and other costs account for the remaining 17 percent. The Task Force targeted four areas for reduction - departments, programs, revenues and expenditures, and salaries and benefits.
The Task Force has recommended a hiring freeze, elimination of automatic employee salary increases, introduction of performance-related pay rises and staggering increases from four years to eight years. Other recommendations are to eliminate non-PERS pension contributions, abolish Memoranda of Understanding (MOU), eliminate supplemental pay (e.g. bilingual, longevity, certifications and holiday-in-lieu), no cash-outs for unused vacation and sick leave and no cease to offer retiree medical benefits.
The implementation process of city policies should also be reviewed, especially collective bargaining. There should be two categories of compensation negotiations - Safety and Non-Safety. About 95 percent of recommendations will require negotiation of provisions within extant individual union contracts.
General Fund expenditures have exceeded revenues by between and $9M and $14M every year since 2002. The Task Force suggested further ways to reduce costs and proposed revenue-enhancement measures. Could Milpitas Unified School District help fund some of the programs that are not cost recoverable, such as the Drug Abuse Resistance Program and Milpitas Family Literacy Project? What about the possible elimination of programs that do not pay for themselves, such as the Tidal Waves Swimming Program?
The Task Force also recommended a two percent utility tax, with a three-year term, in preference to a sales tax as the most likely and easiest way to generate revenue. The tax would be equitable for businesses and citizens and could raise $2M.
Council praised the Task Force for their effort and dedication. No action was taken. The recommendations will be revisited during budget work sessions. The first is scheduled for March 15, 2011 and residents are encouraged to attend with comments and suggestions.
Copies of the Citizens Budget Task Force and Grand Jury reports are available at www.ci.milpitas.ca.gov