Memorandum

City of Lawrence

City Manager’s Office

TO:	David L. Corliss, City Manager
FROM:	Cynthia Wagner, Assistant City Manager
CC:	Diane Stoddard, Assistant City Manager Casey Toomay, Budget Manager
DATE:	10/29/09
RE:	Responses by other communities to budget challenges

The following provides information relating to response to the current economy by other communities, both local comparison communities and those around the country.  Changes to programs and services in 2009 are included as well as proposed 2010 budgeted reductions. 

Unified Government KCK/WYCO (UG)

In 2009, a hiring freeze has been implemented, vacant positions have been eliminated, salaries have been frozen and a furlough program has been initiated.  Additionally, a halt to capital projects and most equipment purchases has been imposed, merit pay increases for non-union employees have been cancelled and an incentive program to encourage eligible employees to retire is in place. 

The 2010 budget reflects a 3.6% reduction from the 2009 adopted budget.  The 2010 budget continues the pay freeze and the furlough program, which began in August 2009.  The program, which is a scheduled day each month where non-emergency government offices are closed, is estimated to reduce payroll expenses by more than $3.4 million in 2009 and 2010. 

As part of 2010 budget development, the organization is identifying ways to reduce the jail costs, including:  studying ways to lower the jail population; alternative means of incarceration; renegotiated charges for prisoners farmed-out to other jails; expanded use of house arrest; and evaluation of sentencing guidelines and options.

Specific cuts to UG programs and services in 2010 include:

• A 10% across the board reduction to all departmental divisions and operations;
• Reducing the frequency of mowing and weed cutting on vacant lots and easements as well as in County Parks;
• Snow and ice removal will not be as thorough;
• Street cleaning will be less frequent;
• Hours of operation of the UG Transit system will be reduced and routes will be eliminated;
• All capital expenditures, from equipment to street projects, will be suspended in 2010, with the exception of those purchases or projects paid for with grant funding or federal stimulus dollars;
• Travel to conferences and meetings will be reduced as will membership dues and contributions to organizations, associations and community agencies.

Just this week, the Kansas City Star reported that the KCK police union voted to forego a pay raise for 2010 in order to help with the projected revenue shortfall.  According to the article, UG officials had said that without the pay freeze, the City would be forced to eliminate 16 police officer positions.  The union contract called for a 4% increase in 2010.

According to the article, the UG has gone to the other unions representing city employees to ask for contract concessions.  The electrical workers union elected to take the wage increase.  The vote meant that eight union employees were laid off.

Lenexa

In February, the City Council reduced the 2009 adopted budget by $2.6 million.  These reductions included freezing certain vacant positions, reducing the amount budgeted for employee merit increases from 3.75% to 2.4%, reducing transfers to the Capital Improvement Program, and various other reductions.  In May, an early retirement/resignation incentive program was introduced.  More than 60 employees took advantage of this program, creating a number of additional vacant positions in addition to those previously vacated through attrition and a hiring freeze. 

The 2010 budget eliminates 25 FTE positions and places an additional 26 FTE positions on hold in a personnel reserve account (which will be further evaluated after staff has a better indication of future trends for property tax and sales tax revenues).  In addition, the budget freezes employee pay, includes organizational re-structuring to save additional costs, and transfers responsibility for ambulance transport of Lenexa patients from the City’s Fire Department to Johnson County Med-Act.  Staff initially proposed elimination of the crossing guard service in 2010, however, based on community response, the Council has approved contracting with a local security firm to provide these services.  Staff is also reviewing other services, which may be recommended for change in the future, including determining the viability keeping a swimming pool open and potentially adjusting park & recreation programs (including the city-provided taxi service for senior citizens).

Olathe 

18.5 positions are proposed for elimination in the 2010 budget.  In 2009, 37 employees took advantage of the City’s early retirement and voluntary separation incentive program. 

The 2010 budget anticipates a General Fund shortfall of $5.3 million.  The recommended budget assumes a three-tiered approach to addressing current challenges, while placing Olathe in a stronger future position.  The first tier, “Business Practices”, identifies savings through public and private partnerships as well as implementing cost saving technical solutions.  Recommendations include moving the police dispatch system into the Johnson County Sheriff’s department, generating an estimated $456,000 in cost savings.  An estimated $234,000 in annual savings is proposed through automation tools and contracting for support services related to security and telephone systems.

The second tier, “Growth and Development,” proposes elimination of 13 positions supporting growth, with an estimated $1.4 million in annual savings.  These reductions are identified due to the fact that not only the City is undertaking fewer projects, but the economy has also had a significant impact on private growth and development, requiring less staff support in the development area. 

The final area of reductions relates to “Service Level Impacts” and includes many one-time cuts that could have an impact on city services, including reduced mowing frequency, forestry maintenance and the elimination of seasonal staff that support the Fire Public Education program.

Overland Park

Reductions in expenditures have been implemented in 2008 and 2009.  In 2008, travel and training budgets were cut by half and capital outlay expenditures were frozen.   In 2009, further cuts to travel have been implemented, capital outlay reductions remain in effect and the salary pool was cut by half:  senior management received no increases; non-public safety employees received a 1.75% increase and public safety employees received a one-step increase (public safety budgets were cut to cover the costs of these wage increases).  Nine full-time and 19 full-time equivalent part-time positions have been eliminated in 2009. 

The 2010 budget includes no salary increases for City employees and the City’s cost for health insurance is budgeted to remain at the 2009 level.  Co-pays for higher dollar visits are increasing, generally doubling (emergency room visit co-pays will increase from $100 to $200 and hospital co-pays will increase from $200 to $400).

Equipment replacement for 2010 has been limited to only the most critical replacement needs and reductions in funding for travel implemented in 2008 have been expanded.

Wichita

The 2010 Proposed Budget maintains a General Fund balance of 10.61 percent and the fund balance as a percentage of expenditures continues to decline.  Operating deficits are forecasted to begin in 2011. 

Employee pay adjustments are not included in the 2010 Proposed Budget.  96 positions are proposed to be cut in the 2010 budget, including several in the Police Department.  The Fire Department will shift resources.  Outsourcing of turf maintenance operations will reduce costs and the need for 66.5 full-time equivalent positions in the Parks and Recreation department. 

Douglas County

Two positions were eliminated from the County budget in 2009 and 16 employees took advantage of an early retirement program anticipated to result in savings of $1 million over five years.  Two additional positions are eliminated in the 2010 budget. 

Topeka

While no plan has been announced, staff continues to review revenues and is developing a contingency plan to respond to lower than projected revenues.  The 2009 budget included no increase for employee salaries and as positions become vacant, some are not filled. 

The 2010 budget includes a projected savings of $1 million in salary savings through elimination of some positions (possibly 20 to 25) and by not filling vacant positions.  An overall 3% salary increase is anticipated based on no increases in 2009.

Manhattan

The 2010 budget reflects an increase over 2009 levels.  Traditionally, annual personnel increases for cost-of-living and merit increases have been budgeted at 4%.  However, the 2010 budget includes only a 1% increase for a merit pool. 

Nationally, a number of cities have been exploring options and making adjustments to budgets to address current and projected revenue shortfalls.  Information provided below has been gleaned primarily through daily bulletins from the International City/County Management Association or press releases from regional communities. 

Austin, Texas

The approved 2010 budget includes an estimated $30 million revenue shortfall, which will be closed by eliminating 105 vacant staff positions and including no pay increases for city employees.

Batavia, Illinois

Two police unions in this city have agreed to deferment of a 4.5 percent wage increase, the elimination of four days worth of holiday pay and reductions in uniform allowances, expected to save the city about $180,000 next year.  In exchange, the city has promised to avoid layoffs in those unions through the end of 2010.

Colorado Springs, Colorado

The Colorado Springs City Council has discussed “severe budget cuts," including 53 police officers' jobs and 34 firefighting positions, eliminating bus service on weekends and after 6:45 p.m. weekdays, and eliminating maintenance of 128 city parks.

Gig Harbor, Washington

In August, the City Council approved a plan for mandatory city staff furloughs that includes designated days off for government offices, excluding wastewater treatment staff and police.  According to reports, the Council may also need to consider eliminating some positions and the possibility of extending the furloughs into 2010 in order to close a projected $1.9 million budget gap.

Jacksonville, Florida

In order to close an estimated $53-million budget gap without a tax increase, City Council members in August discussed asking for concessions from every municipal employee, including public safety employees, which means revisiting the collective bargaining process.  The mayor has indicated the potential for a two-year pay freeze. 

Liberty, Missouri

The 2009 budget included freezing four vacant positions, reducing training and travel and provided no funding for compensation adjustment for employees.  At mid-year, based on revenues collected to date and projections through the end of the year, the City anticipated a revenue shortfall in the General Fund of $600,000.  As a result, additional expenditure reductions were made:

· Four additional General Fund positions were frozen.

· Fire administration personnel (the Chief and Deputy Chief) worked shifts in order to reduce overtime costs.

· The City’s match to the employee deferred compensation retirement plan was eliminated.

· The City moved to on-line access to employee paychecks, completely eliminating printing of employee paychecks.

The City also announced in October that a net of four positions will be eliminated (this is in addition to the frozen positions) yet this year to accomplish efficiencies and savings.  Seven positions are being eliminated are in the public works, police, fire, and planning departments, due to a slowdown in the pace of development.  Three new positions will be created in maintenance divisions, allowing a focus on maintaining an aging infrastructure. 

Orangeburg County, South Carolina

The Orangeburg (SC) Times Democrat reported that Orangeburg County has frozen wages, delayed new capital purchases and reduced department operating budgets for supplies and staff training in order to balance the budget this year. The County Administrator Bill Clark has indicated that staff will be focused on continued efforts to create and retain local jobs through economic and community development efforts for fiscal year 2010-2011 in addition to aggressively pursuing state and federal grant funds.  It is anticipated that there will be further cuts from the state.

Reading, Pennsylvania

The City Council increased fees for use of facilities at city parks in order to bring them “more in line with the actual cost associated with the rentals, such as cleanup and maintenance.”  The new fees were the result of a study conducted by a Virginia-based consulting firm hired by the city to study fees and make recommendations for changes.

Salt Lake City, Utah

A divided County Council decided last week to cut 2.75 percent from the paychecks of the county's 4,000-member work force.  The reductions are expected to save the county an estimated $4.8 million.

Santa Barbara, California

The City has identified a possible $5 million revenue shortfall in the 2011 budget and has begun to look at cutbacks in several areas, including public safety.  Identified potential cuts include shifting community policing officers back to standard patrol, cutting vehicle replacement programs for the fire department, reducing fire truck staffing from four firefighters to three, elimination of positions, including a training captain, or “fire station brownouts”, which would essentially mean closing a station and referring calls to other stations.

Santa Rosa, California

The City is removing 6,000 of the city’s 15,000 streetlights and placing 3,000 lights on timers that shut lights off from midnight to 5:30 a.m. for an estimated savings of $400,000 annually.