First of two parts
Perhaps as soon as hours from now, the cruelest pinch of the universal recession will be felt rather harshly for the first time at City Hall — a round of personnel cuts sweetened by incentives.
There is a ringing difference, though, about these job-eating moves.
Instead of the traditional low-level, ever-vulnerable, last-in, first-out types, people with clout will be subtracted.
The titled.
City Manager Mark Scott says 8 to 12 managers, age 50 and over, will be offered early retirement in the most overt move to date to whittle the 720-employee city roster. Once notified — the messages are imminent — invitees will have 90 days to make up their minds.
Wracked by budget deficits and revenue shortfalls, farewell parties for uprooted old friends seem destined to become the social tone of the spring season.
“After incentivizing people to leave (this month), it is possible we will have to go further,” Mr. Scott said. “We have a Reserve Fund. Thank goodness, we have had years and years of fiscal control that has created this Reserve Fund. My attitude is that a reserve fund is for a rainy day. If this isn’t a rainy day, we don’t need a reserve fund.
“It’s legitimate to use some of the Reserve Fund to get through a downturn. The questions are: How much? How fast? Especially when you couple that with retiree medical benefits that we haven’t entirely funded in the past and anticipated huge jump in the retirement rates for our regular retirement program.
“Then couple those with deferred infrastructure costs and all these words that government bureaucrats love to use. They are all real. So the question is, Do we want to use up our whole Reserve Fund in a hurry? Or do we want to break down the size of government to what we can afford to pay?”
Those, Mr. Scott acknowledged, are the central questions. They are not rhetorical. He didn’t merely flirt with an answer.
“Obviously, we are going to have to start reducing,” the City Manager said as he started the seventh month of his return to Southern California from the Deep South.
“If this were going to come back in three years. Or, if we had a projection it is going to come back in three years, then I could make an argument that we would just try to soften the downturn and come out strong.
“But there is so such projection. All the projections suggest we could still have pretty much this same economy in 10 years.
“That is why we have to look at ways that we can get smaller.”
The Background
The deceptively warm sunshine bathing Culver City this week could stand as a metaphor for the often-invisible truth about the economy, which, says the grim City Manager, is not nearly as robust as some have claimed.
“I am fighting my normal pollyanna attitude about life,” Mr. Scott says. “What I see happening in the government sector is something to be really fearful of.
“I will start with the state, because that is the big one everyone is looking at. The state has virtually run out of ways to balance the budget. It is not like the city of Culver City, where we still have some reserve funds left. They have no money.
“We really are at a point where the state of California is on the verge of having to make wholesale layoffs, not just these 15 percent furlough things.
“What is happening in Sacramento, then, will affect all municipalities, many of which are at the same point themselves. The city of L.A. already has announced that it will have to lay off thousands of people. L.A. Unified announced it will lay off several thousand. Long Beach has to cut 20-some million dollars. San Jose’s city manager recently told me they have to cut lots of employees.
“Up and down the Coast. This is going to be widespread. It is happening at a time where the banks were poised to do the next level of foreclosures. The banks have intentionally not foreclosed everybody forecloseable because they didn’t want that much inventory.
“And so banks now are ready to go to the next level of foreclosures just as we are going to have more people hitting the market unemployed. I think the state of California is in for a real tough time in 2010. I think it is going to happen sooner rather than later in 2010.”
(To be concluded Wednesday)
