Port Hueneme making PAINFUL budget cuts- but Lifeguards saved?

By George Miller

The City of Port Hueneme Council had the hard, unenviable task of weighing which painful cuts to make to keep the  City solvent. Although still solvent, the City has a deficit, city reserves are dropping alarmingly-$6 million left, vs. a $17 million general fund budget. Nearly $2MM in proposed cuts were on the chopping block, but some prized things like the $176 thousand lifeguard program may have been saved (actually put on hold pending further study, as near as we can tell), in part due to support  by the public and 4 of 5 Council members.

PHLifeguards

A measure to approve most cuts and put the Lifeguard program on hold pending further study squeaked through on a 3-2 vote with the Council, with Hensley and Figg dissenting, otherwise approving the recommendations of new Interim City Manager John Baker. 

You can read Councilman Tom Figg’s version of the meeting here: Coalition Newsletter (CC Page 3-22-16)

KADYTV2

 

Meeting video by kadytv.com

Councilmen Figg and Hensley supported a new parcel tax to help improve the city’s fiscal situation, in addition to the cuts. It went over like a lead balloon, when nobody would second Hensley’s motion on it.  Mayor Doug Breeze blamed the deficits, in part, on the defeat of the Measure M business tax. This initiative helped lead to the loss of his allies on the Council and the election of insurgents Jim Hensley and Tom Figg, who now propose new taxes levied on property owners.

 

Here are the cuts proposed by the Interim City Mgr.:

PHCuts3-22-16

Added 3-22-16 6:20 P.M.- from Jim Hensley:

Tom Dunn  [805-477-8752]  just recalls that Sharkey’s motion was very confusing and convoluted it seemed to call for halting most of the cuts in personnel and the lifeguard program until the City staff could examine what services could the city outsource to save money…

My memory tells me John Baker, interrupted stating the staff doesn’t have the time to check and compare out sourcing all departments, such as the police, public works,  etc. [et. Al.] So I believe Sharkey motion was modified to put the life guards, Jr Lifeguard  programs as well as the other cuts [14 cuts in personnel mostly in public works  and landscaping.]

Here is Agenda Item #9 A from last night… As I stated and substantiated by Tom Dunn, we’re not quite sure what the full ingredients of Councilman Jon Sharkey’s motion was; as much as I could deduce it was holding on making a decision on all the below items listed in Item  9 -A

 

COUNCIL AGENDA STAFF REPORT  

TO: City Council 

FROM: John Baker, Interim City Manager 

SUBJECT: FY 2016-17 BUDGET REPORT 

DATE: March 21, 2016  

 

RECOMMENDATION

It is recommended the City Council consider the proposed actions for achieving budget reductions in Fiscal Year 2016-17 to result in a structural balance between revenues and expenditures for two fiscal years and direct staff to proceed with the next steps in the budget process. 

 

BACKGROUND/ANALYSIS 

The City Council adopted the Fiscal Year (FY) 2015-16 budget on November 9, 2105. That budget essentially required $1,440,895 to be taken from General Fund (GF) reserves to achieve a balance. Upon assuming the position as our Interim City Manager on December 21st and after talking with each Council Member, I set a goal to reduce the take from GF reserves in the current year and develop a budget for FY 2016-17 that would not only be balanced for the coming year but would return the undesignated GF reserve to its previous balance at the end of the FY 2014-15, i.e., $6 million. Achieving this goal would still leave the City short of its stated policy of maintaining a minimum undesignated reserve of $8.5 million and the targeted reserve of $11.2 million. In other words, our budget on June 30, 2017 will be $2.5 million short of the minimum undesignated reserve and $5.2 million short of the desired target for reserves. Beginning this process it was actually my hope to provide the City Council with some cushion at the end of the FY 2016-17 budget that could be applied to FY 2017-18 budget. It is anticipated there will be some one-time savings in FY 2017-18, but one-time moneys should not be calculated into the operations budget in any year as a way of achieving a balance, as they will run out and leave the City with potentially large holes to be filled in the future. 

City of Port Hueneme

 

9A  BUDGET REPORT March 21, 2016 Page 2  

Achieving a balanced budget for the current year (ending June 30, 2016) was made difficult as almost one half of the year had already passed when the City Council adopted the budget. Concessions with employee groups were not achieved until February. Restructuring requires analysis of the impacts it will have on services and employees. Program reductions that will impact employees must be carefully considered and communications must be initiated with employee organizations in accordance with labor agreements and laws governing representation. 

While there are some known savings that will be available to the City for both the current year and FY 2016-17, there are also some very possible unknowns that could dramatically affect our budget picture. The most significant one could be a negative decision from HUD and its financial audit of our housing program. We are awaiting a determination and will hope to have it before the middle of April. Secondly, it is expected that pension costs will continue to increase. The trend has been an annual increase of approximately four percent (4 %). 

Current Year Adjustments 

The FY 2015-17 budget “borrowed” $1,440,895 from GF reserves to achieve a balance of revenues and expenditures. Realistically the reductions in the current year had to come from 1) concessions from employee groups through the meet and-confer process, 2) maintenance of vacant positions, 3) limited right-sizing, and 4) one-time savings. There was generally not sufficient time to deal with programs unless they did not contain existing employees.  

 

Attachment A summarizes the adjustments that are projected for two budget years. The first column represents the current year and indicates that a combination of employee concessions, unfilled positions, minimal rightsizing, ongoing savings, the elimination of lifeguard services for the final two months of the year, and one-time savings results in a deficit of approximately $665,018 on June 30 (as contrasted against the deficit of $1,440,895 at the beginning of the budget cycle). This amount is carried to column two as part of the deficit that needs to be made up in FY 2016-17. 

When projecting the deficit for FY 2016-17, the one-time savings from the prior year (column one) must be added to the resulting structural deficit from year one to get the true deficit for year two as the one-time savings are no longer available to offset a deficit. At this point there would be impacts on two part-time employees in Recreation.   

 

BUDGET REPORT March 21, 2016 Page 3  

2016-17 Budget Projections 

I project we will begin the new budget year with a two-year deficit of $1,734,236. This is the amount needed to erase the structural deficit that will have grown over a two year period beginning July 1, 2015. If we can achieve the adjustments included in this report, we will enter FY 2017-18 with an addition to the undesignated GF reserve balance of $216,833 – subtracting the one-time adjustments from the balance shown at the bottom of column two on Attachment A. We will still be approximately $2.5 million behind the Council stated policy of maintaining a minimum reserve of $8.5 million.  

As stated previously, to this point we have impacted only two part-time filled employee positions. Unfortunately, we will not be able to get to a structural balance of revenues and expenditures without some further employee reductions.

The process that was followed in developing a plan of savings included the following: 1) analysis of current vacancies and projected retirements, 2) a survey of employees requesting input on possible ways of saving money [the results of the survey were limited but provided some fruitful ideas that have been incorporated into the proposed reductions], and 3) department head analysis of every GF program/service to determine savings that could be achieved by consolidation of tasks, reduction of service levels in less essential programs, elimination of entire programs, and transition to contracted services.  

The result of all these efforts are summarized in column two of Attachment A. More than one-half of the cost savings is made up of employee concessions (for a full year) and holding vacant positions as unfilled ($1,205,604). It is noted that the vacant position figure includes some positions from the Police Department, including the vacant permanent Police Chief position, which will be filled sometime in the future. The others are part-time service and intern positions that will remain vacant. No sworn police positions are impacted by the GF reductions.  

The right sizing in the organization includes the two positions noted in the current year (two in Recreation) and two positions in Public Works that are currently filled. It also includes the addition of a full time planner in place of the on board contract planner. 

The next largest reduction comes from outsourcing landscape maintenance and facilities maintenance in Public Works ($346,501). This is an action that will result in the layoff of twelve full-time employees – eight in landscaping and four in facilities.

 

BUDGET REPORT March 21, 2016 Page 4  

The program reductions of $282,722 shown in column two of Attachment A include City Council deferred compensation and insurance ($56,700), city administration and City Clerk expenses ($6,367), reduction of CARE and Chamber of Commerce subsidies ($61,135), recreation program expenses ($118,520), and charging customers for charges related to customer credit card transactions currently paid by the City ($60,000).  

The final two reductions are elimination of the lifeguard program ($175,900) and a continuing reduction of street paving ($70,000). In the case of the lifeguard program, we have been informed by CJPIA that the City has less liability exposure with no program and a posting of signs saying “Warning: No Lifeguards on Duty. Swim at Your Own Risk” (CA Govt. Code 831.2 and 831.21). 

I am also projecting that we will have some added costs in the coming fiscal year that will add to our costs – costs that cannot be avoided. Animal Control services from the county are expected to increase $100,000 over the currently budgeted amount. We should also expect an increase in our liability insurance of approximately $100,000, and as reported in the budget presentation, it is expected that pension costs will continue to increase.  

One-time savings during FY 2016-17 should be $248,850 and includes delaying or eliminating the electronic document management implementation that includes not replacing network servers for proper electronic storage, reduced equipment purchases and delaying roof work in Public Works. 

If all the projections we are currently making come to pass, we would end FY 2016-17 with an increase in the GF balance of $216,833. It is almost a certainty there will be a requirement to look for further savings during FY 2016-17 to ensure a balance of revenues and expenditures by June 30, 2017. 

We do not have the luxury of completely relying on projections 18 or more months in advance. The projections contained in this report are the best we can make, hoping that we do not have any major “landmines” that will disrupt the projections. As we look at FY 2016-17, it is likely that we will see a GF budget that is 49.3% police services. If we are faced with any significant deficit in subsequent years, I do not think it will be possible to leave police services out of consideration for service reductions. The City Council may want to begin to consider now other alternatives as budgets are assembled in years ahead.

 

BUDGET REPORT March 21, 2016 Page 5  

Process Going Forward 

The City Council must provide staff with direction on how it wishes to proceed with the preparation of the FY 2016-17 budget. Should we proceed with the areas that have been covered in this report? Are there other areas that need to be considered for reductions? Should we use up more of the GF reserves in anticipation of better times in the future? 

We have already had initial meetings with SEIU and POA to inform them of the financial status of the City and of the contents of this report. If we move forward with any of the contents of this report that impact employees, more meetings will be held. 

We will continue to refine the numbers contained in this report, looking for ways to increase our revenues and ensure that our projections of reductions/adjustments are as accurate as possible. If there are further developments as we do this refinement, we will report back to the Council in order to get further direction. 

It is recommended that the Council set June 6, 2016 as the date for final adoption of the FY 2016-17 budget. Updates will be provided between now and then to ensure that all remain on the same page during this very difficult process.  

FISCAL IMPACT 

There is no specific GF fiscal impact with this report. However, there will be considerable impact with the implementation of the recommendations contained in this report for the remainder of FY 2015-16 and for FY 2016-17.  

Attachment  – FY 2015-16, 2016-17 Comparison

 

ATTACHMENT A     2015/2016          2016/2017    2015/2016   2016/2017           FILLED  POSITIONS            FILLED  POSITIONS

Beg G/F Balance               (1,440,895)          (665,018)     

Structural Deficit (            1,069,218)

Concessions                       46,956                   377,468      

Unfilled Positions             334,330                 828,136      

Right Sizing 20,317           40,342                   24

Outsourcing                     346,501                   0 12

Insourcing                        30,000        

Budget Reductions        282,722                  01

Program Eliminations     29,317           175,900         15

CIP Street Paving             70,000           70,000             0

Ongoing 

Adjustments                      (129,243)        (200,000)     

Ongoing Savings               371,677         1,951,069   

One Time Adjustments

Non Labor Related          404,200         248,850      

Net Changes 775,877         1,130,701   

End G/F Balance (665,018)        465,683

Jim

~~~

See our last article: https://citizensjournal.us/port-hueneme-council-monday-significant-job-cuts-ie-landscaping-lifeguards-more-deficits-coming/


 

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Eileen Tracy

After watching Oxnard fund recreation at the expense of public works and watching the emergency they are facing to “catch up” with the public works neglect, I was saddened to see Hueneme take the same route. I thought it would have been wise to go along with the city manager’s approach and then seek the $170K from outside sources like NRG and others.
Sacrificing so many public works positions is foolhardy.

george

Now that we have the video, we can see what’S in it.

george

Thanks for that clarification. No one we talked to was clear on exactly what it said. Perhaps such things should be clarified more at meetngs. I don’t envy you in your weighty tasks and allocation of Limited resources to seemingly unlimited demands.

Jon Sharkey

The motion passed by the City Council consists of three elements: 1.) Approve the recommended budget cuts, 2.) Direct staff to research economies to provide some level of funding for lifeguards, 3.) Direct staff to proceed with an organization-wide assessment of contracting opportunities.