After City Manager John Nachbar last night established the tone for the next fiscal year budget — “Culver City is better off than many California cities but we still have a significant problem to solve” — Chief Financial Officer Jeff Muir presented explanatory snapshots of a $212 million budget.
With revenues declining and expenditures rising, if not soaring, City Hall is confronting a $2.8 million deficit. In context, though, it is not nearly as wide of a gulf as numerous neighbors are experiencing.
(The full budget is scheduled to be available today on the city’s website, culvercity.org.)
Through a combination of trimming the city’s galloping contributions to the runaway costs in pension packages during the present hurried bargaining talks with most of its six labor unions and a slight cutback in personnel, 9 positions, the city hopes to restore a measure of stability.
Not coincidentally, those are the two dimensions over which the city commands the strongest influence.
Mr. Muir, who returned to City Hall 13 months ago when Culver City was weathering a leadership crisis in the midst of deficit budget planning, and Mr. Nachbar, supervising his first Culver City budget, teamed to design a package the City Manager called “cautious, prudent but hopeful.”
In an effort to avoid inflicting employee pain, Mr. Muir stressed that the 9-position reduction addresses jobs not presently filled:
Elimination of a Deputy City Attorney, a Business License Inspector, a part-time Graphic Services Worker, a Park Maintenance Supervisor, Police Lieutenant, Police Officer, Safety Services Communications Operator, Fire Captain/Training Officer, Community Services Officer RPT, and the Firefighter/Paramedic position is downgraded to Firefighter.
Redevelopment in the Background
Since the recession began three years ago, the formerly hyperactive Redevelopment Agency has virtually disappeared as retail and development revenues have plummeted. General Fund revenues were $86 million the year before the recession, and they are expected to be $80 million for the year that starts July 1. While the Agency remains vulnerable to dissolution sometime this year, by desire of Gov. Brown, he has been stymied for more than 4 months in an attempt to win 4 Republican votes that would set in motion massive structural changes.
If the Redevelopment Agency is killed by Sacramento, it will represent yet another major financial setback for City Hall.
If Culver City, for a range of reasons, has avoided the mountainous financial difficulties plaguing the rest of California, inflation of pension package payments has pierced the city as profoundly as any other town.
That is the main motivation for urgently seeking to restructure, to rebalance, employer-worker contributions to the various pension plans whose costs have skied in the last three years and will continue to climb.
A Pension Penchant for Rising Costs
Because CalPers, the California Public Employees’ Retirement System, which manages the health and pension benefits for government workers, suffered enormous and well publicized investment losses as the recession was breaking, costs to employers, once deemed reasonable, have been racing toward the stars.
And a City Hall-hired actuary says the news will be markedly more bleak throughout the coming five years.
“Without changes to the current structure,” said Mr. Muir, “the city is on a path — in retirement costs alone — to be paying over 26 percent of salary for non-sworn (generally, non-police, fire) employees and over 51 percent of salary for sworn employees.
“It is projected that employer rates for non-sworn employees will increase from the current level of 12.2 percent of pay to 20.4 percent by the fiscal year ’15-’16, a 67 percent increase.
“For sworn employees, rates are projected to increase from the present level of 26.5 percent to 42.7 percent, a 61 percent increase.
“The employee share for non-sworn workers is 8 percent, and the city currently pays 6 percent of this. For the sworn employee, the worker share is 9 percent, and the city pays the entire amount,” Mr. Muir said.
Last year the city took its first steps, he said, in “significantly addressing the ongoing structural deficit in the General Fund through a retirement incentive fund and the elimination of 51 existing vacancies.”
What took so long?
Mr. Muir said the main obstacle was multi-year labor union contracts that don’t expire until the end of this calendar year.
Of the six unions, tentative agreement was reached late last month with the Culver City Management Group and concurrence is reported near with another. Two unions have not begun formal talks, adding to the air of uncertainty that clouds the skies over City Hall.
