On January 13, 2004, I placed an item on the City Council agenda to reduce the City Council budget by 10%. There was little support form the City Council, and Mayor Anderson said that the proposal would be discussed at the upcoming City Council retreat. But it wasn’t.

Now, with the full magnitude of the City’s financial situation known, it seems more appropriate than ever for the City Council to pitch in. The legislative budget is relatively small, and a cut will be more symbolic than substantial, but it has to be done to indicate that the City Council is willing to share the pain. One of the SEIU 790 speakers last night reminded us that San Francisco’s Mayor Newsom had taken a voluntary 15% pay cut, and that a number of highly compensated management employees had followed suit. 

I hope that the Richmond City Council will eventually agree to share the pain, but meanwhile I am requesting today that the Finance Department implement a voluntary 15% cut in my pay from now until the end of my term. 

I believe that Mayor Newsom set a good precedent. Like Mayor Newsom, I will get criticized for this by those who say that I can afford it while others can’t. I don’t have near as much money as Mayor Newsom, but I do work full time, and I can afford to give $10 a day back to the City of Richmond. Council members who want to share the pain could, as an option, take $10 a day from their travel budgets instead of there salaries and perhaps never feel the pain.

City Council criticized for deficit woes
Posted on Fri, Mar. 05, 2004
By Rebecca Rosen Lum
CONTRA COSTA TIMES

RICHMOND - Residents and public employees who turned out for a special City Council meeting Thursday night to discuss the city's $35 million deficit lashed out at officials for failing to track where the problems began.

More than 300 people packed into the council chamber to hear consultants detail a proposed action plan designed to pare the deficit.

The council took no action.

The plan recommends selling off surplus properties, postponing construction, issuing short-term tax and revenue notes and requiring all public employees to contribute to health and pension benefits. That would still leave the city short $7 million when the fiscal year ends June 30, they said.

At the top of the list is conversion of $13 million in bond proceeds.

"Every day you wait, you burn through more of your cash," said John Knox, the city's bond counsel and one of the consultants hired to shepherd the city through its fiscal crisis. But, "I want to emphasize to you, these one-time corrections are not available to you next year."

Peggy Sheneman, an attorney with Winston & Strawn, a law firm specializing in bankruptcies and financial restructuring, told the council that layoffs are an ineffective way to save money because exiting employees receive vacation and severance payoffs. A round of layoffs designed to save $9 million saved only $5 million, she said.

"You should know if there are layoffs, workers' compensation claims will increase," she said.

However, all the consultants insisted public employees, including police and firefighters, must begin paying a co-share of their health and retirement benefits, which they have never done. And all appeared to agree layoffs will be part of long-term savings.

Eleanor Loynd, president of the Richmond Coordinating Council, suggested the city save money by shutting down city hall one day a week, but extending hours by one hour each day; cutting council seats from nine to five; and requiring all employees to pay for insurance.

She also suggested the time is right to merge firefighting and library services with county agencies.

Anderson asked everyone present to avoid casting blame. But union representatives castigated the council for failing to track financial practices that ultimately proved disastrous.

SEIU Local 790 chief Millie Cleveland told the council little would change unless its members made it a point to see where the fault lay.

"Do your job, and stand up and admit you didn't do your job in the past," said Juanita Taylor, chief steward for Local 790, drawing prolonged applause. "Madame mayor, it always seems you've been a day late and a dollar short, and it still seems you refuse to accept responsibility for your decisions."

Anderson said City Council members learned the full extent of the problem when they received copies of the city's midyear budget report, unaudited financial statements and budget action plan after Tuesday night's meeting.

The report detailed cash shortfalls in the general fund, which pays for basic services such as police, fire, parks and administration, and separate special funds, including the port, housing authority, sewer and waste-water operations.

The city started the 2003-04 fiscal year with an $8.3 million general fund deficit, is projected to overspend by $6 million, and accumulated a shortfall of $20.9 million in nongeneral fund accounts.

In 2002-03, the city outspent its general fund revenues by $14.5 million.

Unless immediate savings can be found, the city will face a $21 million to $28 million deficit in the coming fiscal year, the report says.

The analysis pins much of the blame on skyrocketing salaries and benefits for public safety unions, whose members have seen salary and benefit increases of more than 40 percent in the past three fiscal years.

But it also noted that previous finance staff grossly miscalculated both revenues and costs, and left the city with nothing in its reserve fund.

The council will vote on adopting short-term fixes March 23.