On Monday, the Pittsburg City Council heard the city is dealing with a $5 million deficit which they seek to address over a 2-year period.
The information came during the Pittsburg City Council Special Meeting for a budget workshop where the council was presented with a “hybrid option” by the budget subcommittee According to staff, the city was facing a $3.1 million budget shortfall—before the cuts and prior to the budget subcommittee meeting, the city was facing a $5 million budget shortfall.
In response, along with cuts, the city is using its budget stabilization funds and Measure M reserve to reduce the deficit by $1.5 million – note, significant cuts to economic development.
Recommended cuts include:
- $800k in salaries/benefits
- $665k in professional services
- $279k in operating expenditures
- $150k Transfers Out to Landscape & Lighting.
The Pittsburg City Council was also presented with other options for reductions that if all were approved would total $2.34 million which included:
- $50k – Police Department youth services director
- $600k – Landscape & lighting part-time staff
- $40k – 2 public works interns
- $50k – police department par-time staff ($450k reduction already made)
- $450k – Street sweeper (purchased delayed for 3 years)
- $75k – police department fleet
- $350k – California Theatre Outside Contract
- $200k – Small World Park closure
- $500k – Buchanan Pool Closure
- $25k – Pittsburg Promise Scholarships.
The city is looking to address the budget deficit over a two-year period of time.
City Manager Darin Gale explained they were looking at what type of structure changes they can make over the next couple of years and try to avoid the elimination of currently filled positions or eliminate jobs currently filled.
“Currently, we have around $5 million in a structural deficit,” said Gale. “As we talk about our current $5 million structural deficit, next year, it will be approximately $7 million. The reason that it is $7 million, again these are round numbers, there is a $1 million payment we have been receiving for 30-years from CALPINE, that goes away in the next Fiscal budget. That bumps us from $5 million to $6 million and then we have contractual obligations with all of our bargaining units for pay raises next year.”
Gale says looking at the numbers, it appears they are set to make $2 million in reductions which means next year, it could still be the same as it is today at $5 million. He said there are changes the city can make changes in revenue, but was not comfortable putting that in the budget until they realize the savings.
Gale added that by the mid-year budget in January, they hope to show new revenues to the city to bring the structural deficit down to $4 million or $3.5 million.
Councilmember Jelani Killings explained the thought process was that if the deficit was $5 million, they were looking to cut $2.5 million worth of operating expenditure reductions.
“When I see it only hitting $1.8 million, my mind is going to $5 million this year, its going to be $7 million next year, we are looking at making $5 million worth of cuts which is an even more drastic decision we are going to have to make,” shared Killings noting they cannot bank unrealized revenue.
Killings noted that the council had said economic development and infrastructure were high priorities, but everything on the list is economic development and public works – he wanted to discuss priorities vs. options for cuts.
Councilmember Juan Antonio Banales shared they were presented with various options from deep cuts to a lighter approach – they attempted to blend options together in the sub-committee while also maintaining service levels. He also said the tried to stay away from cutting too much from lighting and landscaping due to past experience with those cuts.
“I think the way how these items were presented, we do have a total gap of $5 million, and we are presenting 2 in ongoing cost reductions. The rational is we do need to make significant more cuts, but we want to give Darin and the team a little more time within the next 6 months to be able to propose those significant cuts,” said Banales. “That may mean structural changes… we wanted to avoid slashing really quick without giving our city manager the opportunity to have a little bit of runway when it comes to formulating some smart strategic decisions around cost containment.”
He said they wanted to avoid full-time staff layoffs at this time and instead, take 6-months to think this through.
Vice Mayor Angelica Lopez called it a scary situation but they were not a city that lays off people. She said the cuts would cause a ripple effect and asked the council to consider what the cuts would mean long term to the city – such as eliminating North Point Security and if that would lead to crime rates increasing.
“I want us to access the impact each cut would have,” said Lopez while asking for the value of services and how much it impacts the city over several years. “It is a time to be wise in our decision making process, but not jump into laying off certain positions or reducing hours if in the long run it creates additional issues for the city.”
Councilmember Arlene Kobata asked for clarification on other options such as the California Theatre contract.
Gale said those items (on page 6) are options are currently in the budget but not included in the cuts.
Mayor Dionne Adams shared that when they talked about cutting a security contract, they did look at crime trends and data before making the recommendation. They also wanted a “haircut” approach versus shutting things off.
“This gives time for staff to do that or inform the council with data versus looking at the numbers,” said Adams. “This is a way to meet on the middle. I appreciated the walk, the context and data.”
Killings appreciated the slow walk but warned the council of big decisions that have to be made – were they making the decision at mid-year or next year.
Gale said that next calendar year, they will be looking at increasing landscape and lighting district – currently residents pay $100 a year and have for 20-years without an increase. He said the outcome of that process will play into the budget at the city is supplementing approximately $1.8 million.
Gale also said come mid-year, they will have a better idea of what their revenue looks like. Within the budget, they are also realizing $1.5 million in vacancy savings and $500k in attrition (positions that the position is vacant and will not be filled) — allowing the council to make changes at that point.
“I think we will have options available for the council,” said Gale. “My goal is there is a light at the end of the tunnel and I don’t want to overreact now.”
He called what is being brought out now is well thought out changes and if they go further, they would be eliminating positions that are currently filled. Six months from now, they will bring back better information.
Lopez followed up by sharing she believed this was the equivalent of “ripping off the band aid slowly” over a 6-month period that will impact the city and staff. She questioned how they even got to this $5 million deficit and was okay with starting slow.
“We are going to have to make harsh decisions later on,” said Lopez and moving forward she hoped the council will be more wise in decisions and projects. “There is a difference in wants and needs.”
She hoped over the next 3-5 years, she hoped the council focuses on the needs of the community versus the wants.
Adams said the deficit occurred over time and it will take time to both unwind and course correct. She said there will be hard decisions but they had to be thoughtful.
Gale said the same dollar amount approved is the same amount from 2022-2023’s budget.
To watch the meeting, click here.