Council approves job cuts, hotel tax sparks criticism
SOUTH LAKE TAHOE, Calif. – The South Lake Tahoe City Council cut eight positions Tuesday as part of a reorganization plan intended to restore the city’s financial health.
The plan is included in a five year financial strategy, also approved by the council Tuesday, to save the city $3.4 million annually over the next five years and operate each year using revenue collected. The council has used reserves to fill budget gaps during the past two years.
A task force of 40 city employees provided input on some of the cost-saving measures in the financial strategy, but not the reorganization plan, which was developed by City Manager Tony O’Rourke.
The positions cut Tuesday include an accounting technician, administrative assistant, assistant engineer, associate planner, fire division chief, housing rehabilitation specialist, senior accounting technician and senior airport assistant. Two of the positions are filled by temporary employees and two are vacant. The cuts take effect April 15.
One employee who will be laid off under the plan, Senior Airport Assistant Krista Eissinger, pleaded with the council to retain her position at the start of Tuesday’s meeting, saying she has held several positions at the city during the past eight years and has often completed duties outside of her job description.
“I do my job very well and efficiently,” Eissinger said.
Near the end of the meeting, Eissinger’s mother, Sandy Eissinger, also reminded the council the budget cuts will have human costs. Krista Eissinger is the only provider for herself and two children, Sandy Eissinger said. Her daughter does not know what she’ll do after being laid off, Eissinger said after the meeting.
“I hope you understand this is not just a line item on an agenda, this is people’s lives,” Eissinger told the council.
Mayor Hal Cole said layoffs “are the most difficult, by far, decision” council members must consider. He said eliminating jobs hurts the city as much as it hurts those who are laid off.
“Nobody wants to do this, but we have to live within our means,” said Councilman Tom Davis. “We have no choice.”
The reorganization plan also includes offers of early retirement to several employees and a wide-ranging restructuring of city departments.
The financial strategy proposes a five year cap on employee salaries, ending furloughs, requiring employees to contribute more to pension and health care plans, instituting a personnel vacancy rate to account for turnover and opening operation of Ice Arena and Airport to outside vendors.
O’Rourke, as well as several council members, emphasized the strategy is only a framework and many of its components are still subject to council approval.
Some of the strategy’s proposals, including a freeze on cost-of-living adjustments and increased employee contributions to pension and health care plans, will need to be negotiated with city labor groups.
“This is a plan, this is not decided fact,” said Jere Copeland, executive director of the South Lake Tahoe Employees Association. Copeland said he is willing to work with the city to get to the desired savings.
The city’s General and Public Works Employee Association collective bargaining agreement ends Sept. 30, while the city’s agreements with six other collective bargaining units end Sept. 30, 2012.
The city’s hotel tax, referred to in city documents as the Transient Occupancy Tax, could also increase from 10 to 12 percent in 2014 under the financial strategy.
Metered parking at city beaches, as well as a 5 percent amusement tax on recreational equipment rentals and the Tahoe Queen are also proposed under the strategy.
Taxes on tourist-based activities garnered significant support as a revenue stream for the city from South Lake Tahoe residents in a recent survey. The additional taxes would need a support from a majority of voters before taking effect.
Aston Lakeland Village General Manager Jerry Bindel said he is concerned by the proposed increase to the city’s hotel tax, saying an increase could place the South Shore at a disadvantage to competitors like Mammoth Lakes, Monterey and Napa Valley.
Bindel said the lodging community is willing to discuss a tax increase, but said the city needs to pay attention to how the city’s tax structure relates to those competing markets.
In a Monday letter to the City Council, Heavenly Mountain Resort Vice President and General Manager Pete Sonntag asked the city to remove proposed increases to the hotel tax, new taxes on recreational equipment rentals and suggestions for paid parking at recreational areas from the financial strategy.
“This will send the wrong message to our visitors who make up the region’s economic base that if you come to the South Shore, we will tax you more,” Sonntag wrote. “This will put the South Shore region at a competitive disadvantage to other recreation-based communities in the Sierra Nevada which do not have this type and level of taxation. Given the current state of our economy, it is the wrong time to add more taxes.”
Davis said he is reluctant to raise taxes in a recession, but said the strategy is about more than just pinching pennies.
The five year financial strategy is designed restore public trust in the council by showing they can be responsible with public dollars, Davis said.
“I think this plan helps us do that, Davis said.
Angela Swanson, Cole and Davis each voted to approve the plan.
Claire Fortier did not attend Tuesday’s meeting. A voice mail requesting comment was not immediately returned Tuesday.
Councilman Bruce Grego also did not attend Tuesday’s meeting, but said he supported the principles in reorganization plan and five year financial strategy during a Tuesday afternoon phone interview.
Grego attended a Nevada Assembly Ways and Means Joint Subcommittee meeting Tuesday morning to request funding be withheld from the Tahoe Regional Planning Agency until the agency’s 15 member Governing Board is locally-elected. The council man has pushed for the change since running for office in 2008.
Subcommittee members said they would look into the suggestion, but did not take any action, Grego said.
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