“If we do our job right, people won’t notice it,” said city Finance Director Zane Johnston, who along with other city managers is responsible for plotting a course that will take Tracy’s general fund out of the red and into the black.
That might seem a daunting task. The city’s projected deficit, even with an extra $4.6 million from a voter-approved sales tax increase, is $1.4 million for 2011-12, the budget for which the City Council must still approve.
Meanwhile, property tax revenue continues to decline, and some pressures on city spending, such as retirement costs, are projected to increase over the next couple of years. (For more, see “ Measure E money can’t completely bridge budget gap,” on Page 2 of last week’s edition of the Tracy Press.)
But Johnston and others at City Hall say things actually look pretty positive for Tracy.
Johnston said Tracy’s reserve fund — projected to be $24.9 million after the city dips into it for 2011-12 — is the envy of other cities.
“I don’t think you’ll find a city in a 100-mile radius that still has a 50 percent reserve level for their general fund,” he said.
So while the city continues to negotiate pay and retirement concessions from employees, contract out services and whittle its bureaucracy, Johnston said Tracy has been spared the brutal cuts other cities have seen.
“We still have reserves, so that we’re able to make changes and do them strategically,” Johnston said, “rather than slash and burn.”
Doing more with less
Since fiscal year 2007-08, the equivalent of 93 full-time jobs has been cut by the city. It’s a statistic city leaders often tout when discussing Tracy’s fiscal responsibility.
Almost every department has fewer workers now than when city revenue was at its peak, and employees from department heads on down have agreed to work for reduced compensation.
In essence, the city is trying to do more with less.
“The game isn’t counting bodies, the game is delivering service,” Johnston said. “Everywhere in the city, we hope to deliver the same quality service with fewer city employees.”
More than $900,000 has been cut from the parks and community services general fund budget in the past three years, said director Rod Buchanan, largely because of “right-sizing” efforts in 2009-10.
But services have remained largely intact, thanks to targeted reductions and a switch to outside contractors.
This summer, for example, the City Council voted at the department’s suggestion to outsource aquatics programming to the YMCA, saving $60,000 in direct costs and hours of city staff time that would otherwise be spent processing lifeguarding permits and other paperwork.
Buchanan said that allows services for residents to be maintained, and sometimes improved, even as the city sheds costs.
“Our goal is to make sure we still deliver high-quality services,” he said.
And when cuts have been made — such as when the Lolly Hansen Senior Center began opening its doors a half-hour later and closing a half-hour earlier, in addition to occasional furlough days — Buchanan said they’ve resulted in “very minimal disruption.”
“We’re looking for every opportunity,” he said. “The quality of the services are really important to our community.”
The public works department has taken similar steps. Tree trimming has already been farmed out to a private company, as has custodial work.
“There has been some savings there, and we have had to shift some people around,” said Kevin Tobeck, head of the department.
In addition to staff who have been reassigned or vacant positions left unfilled, some park maintenance also takes a little longer to get around to, Tobeck said. But the idea is to prioritize so the impact remains minor.
“Most people probably wouldn’t realize, but we know (the jobs are) out there,” Tobeck said. “We try to provide as good a service as we can.”
The city has also shied away from cutting too deeply into safety staff.
The Tracy Fire Department avoided personnel cuts in 2011-12. While the city is trying to negotiate concessions in terms of pay and retirement benefits from the firefighters’ union, there’s no plan for layoffs.
Chief Alford Nero says that shows the city is committed to safety.
“I think that the city is making public safety a priority, and specifically fire safety is a priority here,” Nero said. “There’s a certain amount of resources we need to maintain response times and maintain getting people where we need them to be. … The city has taken that seriously.”
While he said the fire department is reviewing its schedule for replacing equipment, right now the city’s committed to replacing things when they need to be replaced.
“We do not have concerns regarding our equipment,” Nero said.
The police department is also escaping cuts, at least on the front lines.
Between the 2010-11 and 2011-12 fiscal years, the department is slated to lose one full-time equivalent. It has dropped about 22 equivalents since 2009-10.
But Johnston and the department insist any layoffs have been to administrative staff, not officers responsible for keeping law and order on Tracy’s streets.
“You have to separate police officers from police department,” Johnson said.
“The number of sworn officers available on a regular basis has not changed,” said police Sgt. Tony Sheneman. “The way we’ve deployed them might be different.”
Sheneman said out of a budget for 128.4 full-time equivalent employees, there are 84 sworn, certified officers in the department. He added that there’s no hiring freeze on sworn officers, so if one is lost or retired, another can be hired to keep up the thin blue line.
Police reduced staff in the departments of animal services, records and community service over the past few years, Sheneman said, while tailoring deployment to best fit the city’s needs based on an analysis of when and where police get the most calls for help.
“We’re committed to maintaining the service level we’re currently at,” he said.
As part of that, this year’s police department budget calls for overtime money to continue gang suppression efforts begun in the early part of 2011, when a spike in gang violence and community concern prompted police to adopt a new strategy of enforcement.
Mayor Brent Ives said that’s a reflection of the city’s promise to not cut safety services in exchange for voters passing the Measure E sales tax increase in November.
“… Measure E is, in essence, a promise to citizens that we will not cut life services as much as conceivable,” Ives said. “The council has been pretty clear to say, we have to be true to that promise to voters.”
However, Ives cautioned there are “wild cards” that could change the budget calculus for any given year and force city leaders to rethink spending priorities.
“It’s hard to anticipate all the shoes that can drop in this economy,” he said. “We have to be flexible.”
There will be cuts
Though city management stresses services shouldn’t be noticeably reduced by the 2011-12 budget, City Manager Leon Churchill’s letter to the City Council on May 17 set the stage for future cuts.
Those include, according to Churchill’s letter, certain unnamed services.
“When funding was more widely available … such programs were often nice things to offer to the community. But with city revenue restricted, programs of nonessential value may have to be eliminated or reduced,” he wrote, adding that it’s ultimately the City Council’s job to decide what to keep, reduce or eliminate.
When asked, Churchill also suggested departments within the city could be merged to improve efficiency and reduce costs. He wouldn’t comment as to what specific areas might be ripe for such a move, but said it could happen over the next few years.
One way or another, though, spending must drop for the city to achieve a balanced budget when Measure E expires in five years.
“We are going to shrink (the budget),” Johnston said. “It is the intention of the city to do additional organizational changes that will result in fewer people working for the city.”
At least, when it comes to the goal of a balanced budget, Tracy doesn’t face some of the same pressures as other cities.
County seat Stockton, for example, faces a long-term unfunded health care liability of $544 million for its retirees, largely because it hasn’t set aside any money for retired workers’ health care. Tracy, though, does not pay medical insurance for its retirees, so it is free of that albatross.
Tracy will have to increase its payments to the CalPers retirement system over the next few years, but Churchill wrote that the step will put the city on “sound funding status” when it comes to pension costs.
Also unlike Stockton, Ives said, Tracy has a relatively convivial relationship with its employees.
Unions and city managers have been willing to forgo pay increases, take furlough days and start paying more into their retirement funds to make the city stronger financially, something Ives said makes Tracy lucky.
“We are very fortunate to have not only the strong reserves that we had and still have a good portion of, but unions who are willing to work with us and an electorate who is willing to work with us,” Ives said. “I think we’ve taken a reasonable approach. … Some cities have been very draconian in their takeaways from employees, and we’ve been able to find a balance point.”
He said that when he shares Tracy’s situation with managers and mayors from other California cities, Tank Town comes off looking pretty good.
“They just shake their heads when I tell them the Tracy story,” he said. “It’s pretty incredible.”
At a glance: What does it pay for?
The bulk of the city’s general fund goes to pay the salaries and benefits of employees. In 2011-12, $34.5 million will go toward personnel costs, according to the city’s math. And the majority of those expenses are public safety-related.
Eighty percent of general fund taxes go to the police and fire departments, amounting to 63 percent of all general fund revenue. (Some general fund revenue is raised through fees, but those are not used to pay for safety — they must be used to defray the cost of issuing permits and other activities.)
The police department, all told, will cost the city $22.3 million for 2011-12. The firefighting and paramedic services of the fire department will cost about $15.2 million, though only $8.5 million of that comes from the general fund, because Tracy fire receives reimbursements from “the city’s partners in fire service.”