HUNTINGTON PARK — Financial setbacks suffered by the city's Redevelopment Agency have created a $350,000 monthly budget deficit that could bankrupt this city by the end of the month, officials say.
City officials have been meeting for the past two weeks to decide how to reduce spending to offset the shortfall. Mayor Thomas E. Jackson said last week that the problem has been caused by delays in redevelopment projects that have left the Redevelopment Agency without enough money to meet its bond obligations.
"If we do nothing . . . the city is bankrupt Dec. 1. We cannot meet payroll," Jackson said.
To reduce spending, the City Council is considering whether to lay off 52 municipal employees--about 23% of its work force.
Pay Cuts a Possibility
The employees, including five police officers, received notice last week that they could be out of jobs Friday. The City Council held a special meeting Wednesday to approve the layoffs but delayed action until Monday to search for alternative reductions, including pay cuts for all city employees.
The Redevelopment Agency is receiving less property-tax income than expected because several developers have defaulted on projects, Jackson said. The agency also has tied up millions of dollars in 88 properties it cannot sell because it lacks other pieces of land to make up large, marketable parcels. The City Council doubles as the governing board of the Redevelopment Agency.
To meet bond payments, Huntington Park is tapping its sales tax revenue of about $3 million a year. That revenue was budgeted to fund general city expenses, including Huntington Park's $6.9 million annual payroll. The city, which employs 227 people, guaranteed its bond payments with sales tax revenue, Jackson said.
In recent years, Huntington Park has embarked on an ambitious redevelopment campaign, an effort city officials have said will transform Huntington Park into "Renaissance City." Of the city's three square miles, 40% has been included in redevelopment project areas. Redevelopment projects completed to date include several shopping plazas, several hundred town homes and single-family homes.
If approved, the 52 proposed layoffs would save the city $150,000 to $200,000 a month; the city hopes that sales tax revenue, which usually is higher in the holiday season, various fees and property tax payments will make up the rest of the deficit, a city official said.
"We know, based on past years of experience, that the revenues in the last six months (of the fiscal year, which ends June 30) are higher than the first six months," Assistant City Administrator Craig Robinson said.
The city decided to react when it became apparent property tax and sales tax revenue expected from redevelopment projects was not forthcoming, Robinson said.
James Funk, the city's redevelopment director, did not return numerous calls for comment last week.
Jackson made a plea to department heads to come up with alternatives to the layoffs.
"The one main alternative could possibly be . . . everybody would take a percentage cut (in pay) with the idea that in June of next year we would be able to pay them back," Jackson said. "But we have to make sure that in June of next year we'd have enough money to do that."
Jackson said the city has been reluctant to press for an overall wage reduction because it wants to be able to pay its employees competitive salaries.
Department heads and city employees held meetings at the end of last week, trying to reach an accord on how the budget cuts should be made.
The news of possible layoffs brought sharp criticism from some employees, who said they favor across-the-board salary cuts to avoid the firings.
"We feel from the City Council all the way down, we should all bite the bullet," said Art Limon, a maintenance worker and shop steward for Teamsters Local 911, which represents the maintenance workers. "It's not fair for them to mismanage the money and for us to be victimized by it."
Limon is one of the 15 public works employees who would lose his job if the layoffs are approved.
Although the layoffs would affect various departments, cutbacks in the police force could have the greatest effect on public safety.
17 in Police Department
As proposed, the Police Department would lose five officers, and 12 administrative and clerical positions. The layoff of non-sworn employees would require officers to do more paper work and spend less time in the field, interim Police Chief Charles Plum said. The Police Department has 64 sworn members and more than 30 non-sworn employees.
"It's definitely going to have an effect as far as the amount of people out in the field," Plum said. "What's going to happen is we'll have to start shifting people around to cover all the spots we can."
Police Sgt. Carl Heintz, vice president of the Huntington Park Police Officers Assn., declined to comment because the city's officers had not yet agreed on a position.