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Nearly half of Costa Mesa city employees get layoff notices

Officials hope outsourcing the work will eventually let them close a budget shortfall that's at $1.4 million this year. Workers are shell-shocked, and a union official says the city didn't try to negotiate other options.

March 18, 2011|By Joseph Serna and Mike Anton, Los Angeles Times

Costa Mesa has sent layoff notices to nearly half its employees in a dramatic austerity program being closely watched by other cities struggling with ballooning pension obligations.

City officials said the cuts were the first step in a plan to outsource many services to the private sector and significantly reduce the number of workers at City Hall.

The six-month termination notices affect 213 of the city's 472 full-time employees and cut across departments — firefighters, maintenance workers, jail staff, even dogcatchers.

Costa Mesa is among hundreds of local governments in California facing massive future shortfalls in what they owe retirees. This year's tab — $15 million out of the city's $93-million budget — is estimated to grow to more than $25 million within five years.

But while other cities have attacked the problem with less generous pensions for new hires and by requiring current employees to contribute more of their paychecks toward retirement, Costa Mesa aims to contract out services it has directly provided for decades in a bid curb future pension obligations.

"Clearly they are trying a new model," said Stuart Drown, executive director of the Little Hoover Commission, a bipartisan state public policy oversight agency. "A city that lays off half its staff — by any standard that's got to be considered a big move."

Costa Mesa "appears to have gone with the nuclear option," said Joe Nation, a professor of public policy at Stanford University who is studying the issue of underfunded public pensions.

Faced with an unprecedented pension and retiree healthcare crisis, "cities are being forced to look at things that would've been unthinkable before," he said.

Maywood, a small city in southeastern Los Angeles County facing an array of financial troubles and the loss of its insurance coverage, tried a similar approach last year when it laid off most of its employees, disbanded its Police Department and contracted municipal services with the neighboring city of Bell.

The move made national headlines as a way for cities to cope with rising expenses. But it quickly turned disastrous when Bell was consumed by its ongoing salary scandal. Maywood is now trying to rebuild its city staff, but residents have complained about slower municipal services.

Costa Mesa's effort has become a rallying cry for some conservatives, who would like to see other cities follow suit. Scott Baugh, chairman of the Orange County GOP, circulated an e-mail Wednesday applauding Costa Mesa officials.

"The good news is that a team of conservatives on the city council led by our endorsed candidate, Jim Righeimer, is fixing the problem in Costa Mesa," it read.

The newly elected slate of council members, though, say the move is about money, not politics. City leaders hope outsourcing will eventually allow them to close a budget shortfall that stands at $1.4 million this year. "This has been coming on for a long time, and we're coming to a point that's rock bottom," Mayor Gary Monahan told city employees at a recent meeting.

Added Councilman Eric Bever: "We're going to run out of money sometime this year if nothing changes."

But Helen Nenedal, president of the Costa Mesa City Employees Assn., which will bear the brunt of cuts, contended that money alone was not the motivator. She said the city moved unnecessarily quickly and didn't try to negotiate other options with employees.

"What happens here is going to happen through all the cities in Orange County and California," she said. "That's what you call politics."

Employees were shell-shocked upon receiving notices Thursday. Many spoke of feeling betrayed. "I still haven't told my kids," said Enrique Gomez, 33, a city maintenance worker for the last 16 years who will lose his job and $56,000 yearly salary. "There is no plan if we get laid off. There's unemployment, and work is hard to find. But I need to find a job, even if it's at McDonald's making" minimum wage."

Adding to uncertainty is that much of the city's outsourcing plans are still up in the air. A deal to have the Orange County Fire Authority take over city fire protection is still in the works. And City Council members have said that if they can't find private contractors to replace city staff, the layoffs could be rescinded.

"What should I do? Aggressively search for another job or try and weather the storm?" said Gant Corum, 36, a city fleet mechanic targeted for layoff. He and his wife gave birth to their first child, Caroline, three weeks ago.

Valente Martinez, 27, a park maintenance and irrigation worker, said he and his wife, who works part time, live paycheck to paycheck.

Last year, they were finally able to scrape up enough money to put a down payment on a home; their newest car is a 1995 Camry.

Now, one of the couple's two daughters needs an MRI to scan for a possible tumor — a procedure that will cost $2,500 out of pocket, he said.

"Where am I going to come up with that money?" said Martinez, whose birthday was Thursday.

"Worst birthday ever," he said.

joseph.serna@latimes.com

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