We are not alone...
"Misery loves company" is how the old saying goes and it looks like our neighboring city to the west is now following in our budget footsteps.
Yesterday's Tracy Press had an article detailing (click here) the financial woes facing Tracy's city government. As many of you know, the voters in Tracy put the brakes on residential development several years ago. Like most valley cities, Tracy was very dependent upon the revenues generated by new development. The voter intiative basically put a stop to new development for up to five years. In order to survive during the no growth years, Tracy saved up funds during the boom times. By 2007-2008, they had about $38 million in the bank. They had hoped that this would keep them afloat during the tough times.
When the recession hit, Tracy was in a better short-term situation than the rest of us--who hadn't anticipated a sudden drop in development revenues. Unfortunately, their rainy day account has only delayed the inevitable. While their reserve started out much larger than the rest of us, they also started cutting later than the rest of us as well. They were hoping that the recession would be quick and that their reserves would allow them to survive without deep cuts.
Tracy realizes, just like the rest of us, that revenues are going to stay significantly below the peak of the real estate bubble. Thus, they must make major structural changes in their budget in spite of their still healthy reserve--as a $14 million structural deficit can eat up reserves very quickly. While they've apparently made $5 to $7 million in cuts to the deficit, it now appears that up to 67 positions will need to be eliminated to reduce the budget deficit.
I continue to see similar stories crop up in cities across the state. The deteriorating financial status of the economy is forcing additional layoffs in local government. Click here for an article about the City of Oceanside, which is looking at losing up to 50 positions due to the recession and thefts from the state.
One (semi) positive note. The State of California has dropped its appeal to the judge's ruling that forbid the state from stealing redevelopment funds in last year's budget. Unfortunately, as most of you know, the state ended up taking six times as much from redevelopment agencies over the next two budget years as punishment for winning the lawsuit. Click here to read more about the status of the lawsuit we'll be filing this year to once again block their illegal theft of $8 million of Manteca's redevelopment funds.
Yesterday's Tracy Press had an article detailing (click here) the financial woes facing Tracy's city government. As many of you know, the voters in Tracy put the brakes on residential development several years ago. Like most valley cities, Tracy was very dependent upon the revenues generated by new development. The voter intiative basically put a stop to new development for up to five years. In order to survive during the no growth years, Tracy saved up funds during the boom times. By 2007-2008, they had about $38 million in the bank. They had hoped that this would keep them afloat during the tough times.
When the recession hit, Tracy was in a better short-term situation than the rest of us--who hadn't anticipated a sudden drop in development revenues. Unfortunately, their rainy day account has only delayed the inevitable. While their reserve started out much larger than the rest of us, they also started cutting later than the rest of us as well. They were hoping that the recession would be quick and that their reserves would allow them to survive without deep cuts.
Tracy realizes, just like the rest of us, that revenues are going to stay significantly below the peak of the real estate bubble. Thus, they must make major structural changes in their budget in spite of their still healthy reserve--as a $14 million structural deficit can eat up reserves very quickly. While they've apparently made $5 to $7 million in cuts to the deficit, it now appears that up to 67 positions will need to be eliminated to reduce the budget deficit.
I continue to see similar stories crop up in cities across the state. The deteriorating financial status of the economy is forcing additional layoffs in local government. Click here for an article about the City of Oceanside, which is looking at losing up to 50 positions due to the recession and thefts from the state.
One (semi) positive note. The State of California has dropped its appeal to the judge's ruling that forbid the state from stealing redevelopment funds in last year's budget. Unfortunately, as most of you know, the state ended up taking six times as much from redevelopment agencies over the next two budget years as punishment for winning the lawsuit. Click here to read more about the status of the lawsuit we'll be filing this year to once again block their illegal theft of $8 million of Manteca's redevelopment funds.
Labels: Budget, Labor, Redevelopment
posted by City Manager @ 6:48 AM
2 Comments:
At October 2, 2009 12:33 PM ,
support said...
I will post my question here rather then the newspaper as I feel this is a little less public.
Many of your workers would like to know what the chances are that they might get back what they have given up if in the future the economy picks back up and the City once again begins to prosper.
It is one thing to ask your workforce to take big hits indefinitely but another thing entirely to never allow them to get back what they have given to help the City.
There was a time when the workforce came to the city asking for help with outrageous increases medical insurance and were flat out denied. So will this be a you scratch my back and I will scratch yours or are you just stepping on your workers and their family's forever?
At October 2, 2009 1:03 PM ,
City Manager said...
In our negotiations, we have made it clear that these reductions will only stay in place if our economic projections are correct. If things substantially improve, we will certainly put the negotiated benefits back in place.
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