That question was the source of two hours of discussion during a special Lakeport City Council meeting Tuesday evening.
About 60 people filled the council chambers at Lakeport City Hall to hear the discussion. Many of those in the audience were current or retired city employees, along with Lakeport Regional Chamber of Commerce members who were interested in a planned discussion on the city's payment of outstanding chamber invoices.
Interim City Manager Kevin Burke said city staff – with a combined 150 years of municipal experience – spent the last few weeks looking at options for how to close a $400,000 budget shortfall. Staff brainstormed and threw out every possible option for reducing expenses and increasing revenue, and prioritized the suggestions.
They came up with a four-point recommendation: adopt/implement the golden handshake; suspend paving/street material; a citywide freeze on unreimbursed travel and training; and restructure the Safe Routes to School Project grant (for the full list of suggestions, see sidebar, “City of Lakeport proposed spending reductions, new revenue sources”).
On the revenue side, Burke noted that a $400,000 line of credit that had been included in the budget but which had never been established by the city wasn't included in staff's proposals. He said senior management staff felt it wasn't an appropriate way to close the gap.
Road projects wouldn't be abandoned altogether. Regional Surface Transportation Program funds in the amount of $220,000 could be used on some road projects, explained City Engineer Scott Harter. He noted that Mike Stevenson, his predecessor, had squirreled away the money – the city receives between $40,000 and $50,000 a year from the state for the program – in order to do larger projects.
Sale of additional city assets, a utility user tax that would need voter approval, metered parking and more parking enforcement were other options for increasing revenue, Burke explained during a 25-minute presentation.
He outlined the spending reduction possibilities, including the city employee furlough, which already reduced employee salaries 5 percent for a savings of $40,000 in the general fund and $26,000 to sewer and water accounts. Doubling the furlough to 10 percent next year was a suggestion.
The golden handshake – early retirement for employees who are over 50 – was the source of much discussion throughout the meeting, and appeared to be favored by both staff and the council. During the course of the meeting Burke said it was staff's No. 1 recommendation.
What wasn't favored was staff reductions and layoffs.
Burke said city staff was unanimous in the sentiment that layoffs should be a last resort.
He said it would take the city a long time to recover from such a measure, and would make it difficult to attract good employees. “There also would be a significant stigma associated with that,” he added.
Among the possible cuts was listed the closure of the Westshore Pool, which would save $40,000 a year. However, Burke noted that the city would have to pay back a $150,000 state grant that assisted with the pool renovation, meaning the pool would have to be closed for four years in order to recognize the savings.
In coming up with the list of suggestions, Burke said city staff had to go beyond their traditional way of thinking and focus on what's in the best interest of the city in a time when traditional spending philosophies won't work. “Any concept of turf was put aside.”
Burke told the council that city staff discovered $17,000 erroneously budgeted in one city account, so they were starting off with that money in the savings column. He said the golden handshake won't save the city any money this year, but for the first fiscal year that it's in effect it's estimated to save $71,000 and $96,000 in the second year.
In addition, there is the proposal to suspend paving for the rest of the year, which would save $55,000.
“It's a tough choice,” said Burke, adding that none of the recommendations were pleasant. “They all were made with the understanding that we would rather not do any of it.”
The Safe Routes to School Project also could be suspended. The city was awarded the grant to make street improvements to benefit Lakeport Elementary, Terrace Heights, Terrace Middle School and Clear Lake High School.
While it's supposed to be largely grant-funded, the city must pay out the entire project amount – which is estimated to cost as much as $549,000 – out of Measure I monies, which are raised from a half-cent sales tax. Those funds come out of the general fund, which is the real concern, because it will weaken the city financially.
However, Burke said they could use $215,000 in Regional Surface Transportation Program to advance the project. That will free up general fund money.
Different approaches to closing the gap
City staff noted that expenditures for this fiscal year are down by $200,000 due to the departments tightening their belts.
With reduced expenditures and the proposed cuts, Burke said they could come out with total savings of $440,000 at the end of the year, which should cover the gap.
As the council began its discussion, Councilman Bob Rumfelt said he was concerned about the council taking action Tuesday night since Councilman Roy Parmentier was not present. Councilman Jim Irwin said he didn't like the idea of putting action off.
Looking at the financial situation, Rumfelt said, “I really don't want to see anybody laid off.”
“The tougher issue is next year,” said City Attorney Steve Brookes.
Burke said once they get past the issue of this year's $400,000 budget gap, staff plans to begin work on next year's budget and coming up with a plan to balance it.
Irwin said one of his goals is a sustainable budget, and he was concerned about the use of what he felt were one-time funds to stabilize the city's financial situation.
Rumfelt didn't want to see training and travel cut, although he suggested having people use city vehicles to travel in order to save mileage money. He said he liked the rest of the staff proposals.
Mayor Ron Bertsch also said he was not in favor of using one-time money to balance the budget, and said he thinks they can save more money by choosing four eligible candidates for the golden handshake.
One option that didn't appear to get much support was cutting benefits to retirees.
“I really believe that the people who put in their time here deserve to get what we promise them,” said Bertsch.
Irwin asked how the budget will impact Measure I, and asked if the sales tax funds will be spent on anything other than roads. Burke said yes, it would be spent on other things, which the city can do since it's a general fund tax and is not exclusive to roads.
“We're already spending Measure I money,” said Burke.
City Finance Director Janet Tavernier said they've spent $146,000 in Measure I funds so far this fiscal year, with $758,000 left.
Irwin said the city's road system is near and dear to his heart, and he wanted to know how much it costs to maintain the city's roads in their current condition. Harter said about $1.2 million annually, which Irwin said is about twice the amount Measure I takes in each year.
He objected to using Measure I monies for regular city services. “I for one do not support using the Measure I monies to balance the city's general fund budget.”
Rumfelt said they should consider going for a specific road tax if he didn't want to see Measure I used for other things. Irwin said he couldn't support that, saying they're “stealing” funds from Measure I for other uses now.
Brookes said the council can dedicate a percentages of Measure I to certain uses. “That can be tried for a while so you don't lose the spirit of Measure I.”
He said if they use it to get over the hump they can track the funds, but added that they were getting hung up on being too strict about the funds.
City Public Works Director Doug Grider said the city already is spending a lot of Measure I funds on projects, and he didn't want the public to get a different idea.
City staff is trying everything to keep the road program going while keeping the city afloat during a tough time, Grider said.
Rumfelt said he was concerned about addressing the deficit on the backs of city workers, adding that some workers could be hurt irreparably by losing more days to furloughs. Council member Suzanne Lyons agreed.
Irwin said the $400,000 budget gap wasn't addressed in a permanent way in staff's recommendations, but Rumfelt disagreed.
Lyons suggested, “It looks like we will be able to do this,” when it comes to fixing the budget. She said they can get there without all of the cuts coming from any one place.
Disagreements over how to pursue the golden handshake
Parks Foreman Rich Lubecki told the council that, while the golden handshake wouldn't make a difference during the remainder of this fiscal year, he said it would help going forward. Lubecki, who was on the short list of golden handshake candidates, urged the council to make the decision Tuesday night to begin pursuing the early retirement plan.
The council appeared at one time to get mired down in disagreement about whether to pursue golden handshakes with two employees or with four.
Irwin asked if the golden handshake is offered in staffing areas where layoffs would take place. Burke said yes. “The idea is to avoid layoffs,” Burke said.
Irwin asked if the city would rehire the positions vacated with the early retirement plan. Burke said no. Grider added that the responsibilities would be taken on by current city staff. That, said Burke, would result in a reduction in some service.
The council continued to go back and forth over how many workers to offer the golden handshake to, which resulted in some frustration from audience members. The list of prospective candidates included Lubecki, as well as the public works lead worker, wastewater supervisor and Redevelopment Director Richard Knoll.
Bertsch wanted to consider four candidates but at one point said he didn't want Knoll on the list because of his concern that the position wouldn't be filled.
Rumfelt finally became exasperated. He said he wanted the best for the city, and he was willing to let city staff make recommendations.
“It's not a 'me' thing, it's an 'us' thing,” Rumfelt said, telling Bertsch that he was getting upset with his attitude toward staff's suggestions.
“Let the staff do their job,” Rumfelt said, which got a loud round of applause from the audience.
Staff has been doing a good job, he said. “I think we need to stop being so controlling.”
Eventually, Bertsch moved to consider four golden handshake candidates, with Rumfelt seconding. Irwin voted no and Lyons didn't vote at first until the motion was repeated, at which point she voted yes, so the motion passed 3-1.
“Don't get any bright ideas, Richard, you're not going anywhere,” Burke said to Knoll.
By consensus, the council also agreed to give staff direction not to use the $400,000 line of credit.
Rumfelt thanked city staff for the hard work they've done on the budget.
The council held a half-hour discussion on the Lakeport Regional Chamber of Commerce's outstanding invoices, but put a decision on paying $5,000 for the Dickens Christmas Market and more than $13,000 for last summer's July 4 fireworks display on hold until next month. The city also didn't include in this year's budget the $75,000 that it pays the chamber for marketing services for the city.
E-mail Elizabeth Larson at
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