City proposes furloughs, job cuts to fill budget gap
The South Lake Tahoe City Council might postpone approval of its budget for the new fiscal year by a week or more while the city manager talks with labor representatives about proposed furloughs.
Furloughs of two days per month for city employees next year and potentially three days per month in subsequent years are needed to balance the city budget as the economy struggles to emerge from a recession, officials said.
The elimination of 10 non-public-safety positions over the next two years, with up to 13 positions eliminated over the next five years, is another budget-balancing step that’s been proposed. The new fiscal year begins on Oct. 1.
Whether various labor groups that city workers belong to will approve the furloughs, and if so, how soon they can take effect, is key information that’s needed to complete the budget, City Council members said during a budget workshop on Tuesday.
As a result, a vote on the budget – scheduled for the Oct. 6 council meeting – might be postponed for a week or more while labor and management work on an agreement. An interim budget could be approved in the meantime, allowing the city to keep paying its bills, according to City Manager David Jinkens.
Jinkens said he has already met with representatives of some of the labor groups, and has more meetings scheduled this week.
“It’s been very positive,” Jinkens said.
Jere Copeland, who represents city labor groups, said he’d like city officials to look at other ways to trim the budget, aside from furloughs. City officials described furloughs, staff reductions and use of reserve funds as the three legs of a balanced budget; Copeland said perhaps there is a “fourth leg” that has not been looked at.
Whatever is decided will have to result in a 9.23 percent reduction in personnel costs, Jinkens said.
Because the budget proposal calls for “no reduction in boots or snow plows on the street,” some employees would take alternatives to furloughs – for example, police officers might forgo their uniform allowances, Jinkens said.
The furloughs provide flexibility in the budget while allowing employees to keep their jobs, city officials said. When the economy improves, the number of furlough days can be reduced.
The city would also dip into its reserve fund for the next four years – as it did this fiscal year and last – to make up for reduced revenue during the recession.
The budget proposal calls for using $1.5 million in reserves next fiscal year, and lesser amounts in the three subsequent years, for a total of $3.1 million by 2014. That would leave reserves at $7 million in 2014, or 21 percent of the projected general fund spending for that year. That’s less than the 25 percent called for under city policy.
For the 2008-09 fiscal year, which ends Sept. 30, general fund revenues fell short of initial projections by about $3.9 million; the city trimmed spending by $1.3 million and used $2.6 million in reserves to augment revenues of $28.2 million.
Of the three top sources of general fund revenue, hotel/motel and sales tax have been falling since 2007; while property tax revenue has increased.
Property taxes are projected to be flat next year, based on the El Dorado County assessor and auditor’s office calculations, said city Finance Director Christine Vuletich. Sales taxes are also projected to be basically flat (0.4 percent increase) for next year, based on a combination of information from the California Department of Finance, the city’s sales tax consulting service and historical data, Vuletich said. Hotel/motel tax is projected to increase.
City officials expect general fund revenues of $29 million for the 2009-10 fiscal year.
While each city department has tightened its belt for the next year, for a combined savings of $320,000, costs are still expected to rise due to salary increases specified in contracts and the greater cost of benefits.
The furloughs, staff reductions and use of reserves would make up for the projected $3.4 million shortfall in the next fiscal year, according to city officials.
How much future state take-aways of city funds will add to South Lake Tahoe’s budget woes remains to be seen.
The City Council in the 2008-09 fiscal year adopted a cost-containment plan that included cutbacks on travel, training, contracted services, and community marketing; deferral of capital improvement projects; and the elimination of 10 staff positions through early retirements and lay-offs. Another 5.5 vacant positions were frozen. The 15.5 positions equate to 6.6 percent of the city’s workforce.
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