The five members of the Chula Vista City Council aren’t quite sure how close the city is to filling the estimated $18.6 million deficit it faces next year.
Councilwoman Pamela Bensoussan says the city’s “nowhere near” filling the gap. Councilman Rudy Ramirez says it’s “pretty close,” Councilman Steve Castaneda says the city’s “nearly there,” and so on.
This afternoon, I sat down with Maria Kachadoorian, Chula Vista’s director of finance, and asked her to lay it out for me: How does the city plan to balance its budget, and how much of that money is coming directly out of workers’ pockets via a set of pension deals recently inked with employee unions?
On paper, at least, it looks like the city will be able to weather the financial storm over the next 18 months, thanks in part to the pension deals but more so to the massive drawback in city services and staff layoffs I wrote about earlier.
Let’s look at the pension stuff first.
Late last year, Chula Vista asked all of its employees to start making contributions into their pension plans. For years, the city’s been paying both the employer and employee contributions into the plan — something that was once a bragging point for city recruiters.
That costly benefit lured police officers, lawyers, firefighters and other city workers to the city by the bay. It also proved unsustainable. The city’s property tax revenue, the backbone of Chula Vista’s budget, plummeted with the real estate market and the city found itself on the brink of bankruptcy.
As part of the pension deal, the city also froze some employee’s cost of living increases and other pay hikes that were due to go into effect over the next year. The upshot of these deals, which city leaders have hailed as a triumph of negotiation, is that Chula Vista will save about $5.3 million next fiscal year.
But, there’s more.
The city’s fiscal year runs from July to June. Because many city employees started taking over their pension payments in January, and because Chula Vista already has enough money to make it through the rest of the year, the city will therefore be able to save a chunk of money over the next six months. Kachadoorian plans to roll that money over to help fill next year’s deficit.
Over the next six months, Chula Vista hopes to save $1.7 million from not having to pay so much into employee pensions. That brings the total savings from the pension deal to about $7 million over the next 18 months — less than half the $18.6 million needed.
Which means that the bulk of the savings will come from the sources I wrote about earlier: Layoffs and service cutbacks.
Kachadoorian said she thinks the city has done enough to be able to pay its bills for the next 18 months.
Here’s where the money’s coming from:
• $3.5 million the city will save over the last six months of this fiscal year (including that $1.7 million they will save in the pension deals);
• $1.7 million in vacancies that won’t be filled next year;
• $5.6 million in staff layoffs — wages that won’t be paid next year;
• $1.5 million in decreased hourly wages;
• $5.3 million from the pension deals;
• $2.9 million in non-personnel costs like library books, equipment and increased revenues.
Making a total of $20.5 million.
However, Kachadoorian cautioned that these are all estimates. Nobody knows how badly Chula Vista will fare over the next 18 months. The city could bring in extra revenue through property taxes if the real estate market rebounds. There could also be a second recession, dragging home prices — and revenues — down even further.
If the city can’t fill its budget hole, then it’s going to have to strip back services even more and lay off more people — a tactic the city manager’s obviously not been shy to use so far.
That could mean closing Chula Vista’s libraries entirely, closing the senior center, and even getting rid of the one guy who now spends one day a week clearing up graffiti.
Check back later for a look at a case study on Chula Vista’s budget crisis: How seniors are revolting at The Norman Park Senior Center.