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HUNTINGTON BEACH : Smaller Raises Urged to Offset Shortfall

January 22, 1992|JOHN PENNER

After four months of studying the city's budget problems, a citizens' panel told the City Council on Tuesday that unless all city employees forgo a portion of a scheduled pay raise, the city must lay off 19 full-time workers to help offset a $5.6-million spending shortfall.

In its primary recommendation to council members, the 11-member Budget Review Task Force proposed that the city save $1.7 million by reducing employees' pay raises this year to 2% from 5%.

The council will consider the group's recommendations, along with those from City Administrator Michael T. Uberuaga, before adopting a 1992-93 budget plan. Uberuaga will present his spending proposals to the council at a special meeting Monday.

By reducing the pay raises, the city could limit its personnel reductions to eliminating unfilled jobs and laying off part-time employees, the panel said in its long-awaited report to the council.

"Are we saying that employees are not deserving of these raises? Absolutely not," said Phillip Inglee, chairman of the task force. "This is dependent purely on what's going on in the marketplace."

The task force--made up of bankers, accountants and other financial specialists--was formed last September by the council to propose ways to overhaul the city budget. The city faces a $500,000 deficit this year, and officials project a $5.6-million shortfall for fiscal year 1992-93, which begins July 1.

Under the panel's primary recommendation, the city would slash spending by $4.6 million, and increase revenue by $1.6 million. Any surplus money would be used to help replenish the city's dwindling reserves.

Aside from the proposed pay-raise cuts, the spending reductions would include eliminating unfilled jobs, slicing in half the city's Public Information Department budget, grounding a police helicopter and trimming spending on cultural and social services.

The plan calls for increases in selected user fees to raise the additional income. The proposal does not call for any new or increased taxes or citywide fees.

The primary plan, however, is contingent upon city employees agreeing to the proposed pay-raise cuts. Aside from firefighters, who are embroiled in an 18-month-old contract feud with the city, all other city employees are under contracts that fix their salaries through 1993.

The council could not cut those salaries without approval of the respective employee unions. Union leaders so far have refused to consider employee pay cuts.

The task force reported, however, that the only feasible alternative to trimming the scheduled pay hikes would be job layoffs. In the panel's alternative plan, the city would lay off three firefighters, six police officers and two building planners, among others. The police and fire positions that would be cut are involved in community relations, such as crime and fire prevention.

The alternative plan would total $4 million in spending cuts--including $1 million saved by the layoffs--in addition to the $1.6 million in new city income.

Some of the city's financial problems, at least for next year, are expected to be eased by a one-time, $6.5-million refund the city will receive from the state Public Employees Retirement System. That money may be restricted for employee salaries and benefits, however, pending the outcome of a lawsuit filed by a group of state employee unions against the state.

If the city receives that money without restrictions, the task force has warned against using it as a quick-fix for city budget problems, since it is one-time revenue.

The panel suggests that the retirement system refund be used for capital improvements which, they note, cost the city more money the longer those projects are postponed.

The task force in its report says that the causes of the city's budget woes are not expressly related to the national recession. Over the years, the panel said, the city officials have been unable to say no to special interest groups in the face of the budget crunch, and that a "club-like atmosphere" exists between the city management and its employees. Those problems, and others, have also contributed to the city's current fiscal dilemma, the group's report says.

And, "if not altered," the report concludes, "the city will continue to sink even deeper into a financial quagmire."

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