Commentary: Three-pronged approach necessary to remedy projected $43.3-million deficit

by Patrick H. West
Long Beach City Manager

The City of Long Beach is facing a projected $43.3-million structural deficit in Fiscal Year 2010 brought about by the national economic crisis.
The economic realities we face have no easy answers or painless solutions. However, I am confident that Long Beach can weather this and emerge more efficient and financially stable, with all parties participating in implementing solutions.
The three-pronged approach that I’m recommending addresses each of the factors underlying the projected $43.3-million deficit and call for service reductions, employee contributions and revenue generation.
While City employees are our greatest assets, and are underpaid in the relative market, they are also the City’s single greatest expense, with 84 percent of the General Fund dedicated towards employee salaries and benefits.
To solve the projected $43.3-million deficit, the City would need to either implement 49 days of furlough for all employees, a 12-percent reduction in department services, 569 civilian layoffs or 338 sworn police and fire department layoffs. Adding significantly to the local unemployment rolls could also have broader local economic consequences at a time when economic activity has been waning for several months.
My approach calls for fewer cuts in programs and services and limited employee layoffs: $20.3 million in department service reductions (six percent) and $23 million in contributions or equivalent savings generated by employees. By law, any compensations or benefit-related savings must be negotiated, and negotiations with all employee labor unions are ongoing.
Without the participation of employee unions in generating costs savings, in Fiscal Year 2010 alone employees would be required to take 26 furlough days, equivalent to a 10 percent reduction in wages.
Participation of public safety is imperative. The police and fire departments account for 66 percent of the City’s General Fund budget. My three-pronged approach will enable all areas of city government to share in the responsibility for addressing the shortfall. In these times everyone must work together as a team to keep Long Beach a safe and vibrant community.
This strategy, which I recently presented to the City Council, will be the basis of my recommended Fiscal Year 2010 Proposed Budget to the Mayor and City Council, to be released on July 1, 2009.