How to Remedy Long Beach’s Projected $43.3 Million Deficit

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long-beach-budgetLong Beach City Manager Pat West offers sobering portrait of multi-year outlook; outlines approach to preserve services, avert hundreds of layoffs.

The City Manager today unveiled his proposed three-pronged approach to reduce the 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,” said Pat West. “Long Beach can weather this and emerge more efficient and financially stable, with all parties participating in implementing solutions” emphasized West.

The framework recommended by City management 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,” said Mr. West. To solve the projected $43.3 million dollar 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.

The City Manager’s proposed strategy would allow for fewer cuts in programs and services and limited employee layoffs. The City Manager’s proposal includes $20.3 million in department service reductions (6 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. The three-pronged approach proposed by Mr. West 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.

Mr. West will present this strategy at tonight’s City Council Special Meeting on the Budget, and this strategy will be the basis of his recommended Fiscal Year 2010 Proposed Budget to the Mayor and City Council to be released on July 1, 2009.

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