By JEREMY HAY
THE PRESS DEMOCRAT
The Rohnert Park City Council on Tuesday said labor costs must be reviewed to keep the city fiscally sound in the long term, setting the stage for what’s likely to be a contentious period of relations with its 154 employees.
“It’s the elephant in the room that has to be looked at,” Councilwoman Amie Breeze said.
Labor costs — the combination of salaries and benefits — amount to $22 million and consume 78 percent of the city’s general fund, Interim Assistant City Manager John Dunn told the council Tuesday.
He said that with the passage in June of Measure E, a voter-approved half-cent sales tax that is projected to bring in $2.8 million a year, the city has gained breathing room to put itself on a path to fiscal health.
“It’s not an impossible situation but it is a very difficult situation,” Dunn said.
He reminded council members that the tax ends in five years and said the city has a short window of time to “get our financial house in order.” To do that, he said, it needs to save $800,000 to $1 million a year through a combination of cuts and revenue increases.
“It calls for discipline over the next six years.”
Faced with that, and with a deficit that is still about $2 million even after Measure E, council members said they do not want to make more layoffs or service cuts.
“I think we’re getting to a very dangerous spot in terms of not having enough employees to do the work we need to do,” said Mayor Pam Stafford.
On the way to achieving $2 million in savings in the current fiscal year budget, the council eliminated 34 positions through layoffs and attrition.
But council members emphatically agreed that looking at labor costs and raising revenue were their best options.
“We’ve run out of ways to cut our budget,” said Councilman Joe Callinan. Referring to labor agreements the city completed this year with its five employee unions, he said, “We have to go back and look at that thing.”
Representatives of the city’s unions could not be reached after Tuesday’s budget meeting, but earlier this week several expressed reluctance to make further concessions.
The discussion over personnel costs was part of a larger one that took place over more than six hours and was devoted to analyzing the city’s financial position and $25 million general fund budget.
One telling measure of the city’s fiscal condition: Dunn said it had improved from “devastating” to “very bad.”
Finance Director Sandy Lipitz painted in part of that grim picture, telling the council that the city faces an overwhelming cost of supporting medical benefits for retired employees.
The city is facing potential costs of $2.7 million a year in retiree medical benefits “that we’re not setting aside,” she said, adding that the city will one day reach a point where it can no longer afford to pay its employees because of what it will owe on those benefits.
Dunn and Public Works Director Darrin Jenkins said the city’s infrastructure is in poor shape and that it should be setting aside up to $8 million a year to address those problems.
“There’s going to come a time in the life of the city when we’re going to have this tremendous need to repair and rehabilitate our infrastructure,” Dunn said, “and the amount of money we have for that is totally inadequate.”
Vice Mayor Gina Belforte said those liabilities needed to be figured in to the overall deficit the city needs to deal with, in addition to the called-for cuts of $1 million a year.
“Our deficit is closer to $15 million,” she said. “I’m not seeing how we’re going to get there, that’s where I’m at.”
The council considered a variety of revenue raising ideas, including increasing its building fees, playing-field fees and fines. It also discussed raising business license taxes, a step that would require voter approval.
Belforte said labor costs, while part of the problem, may be additionally spotlighted in the current budget crisis because the city’s revenues — largely sales, property and bed taxes — are down due to the recession.
“Yes, our labor costs might be high right now, but is it because our revenue is so low?” she said.