- Mayor Irma Anderson said Friday that another round
of cuts and layoffs may be needed given the city's stricken finances
and the governor's desire to take $1.3 billion in property taxes
from local governments.
Earlier this week, acting City Manager Jay Corey painted a bleak
picture of Richmond's finances: With cash flow threatening to slow
to a $125,000 trickle by April, checks could start bouncing in the
spring if spending is not curbed radically.
Under Gov. Arnold Schwarzenegger's proposal, Richmond would forfeit
about 5 percent of its $23 million in yearly property taxes -- not
an enormous amount to the $90 million general fund, but devastating
in the current fiscal crisis.
"We'll have to come back with another round (of cuts), although
we won't know for sure until we get our midyear report in February,"
The Service Employees Union Local No. 790 has been bloodied in
the first two waves of cutbacks -- 80 of its members have received
layoff notices -- and has pleaded for other unions to share future
losses, she said.
Eighteen firefighters were laid off Jan. 1.
If current trends hold, the city could come up $8 million short
on a $12 million bond payment due in April, Corey said earlier this
week. On Friday, he issued a news release indicating the city "expects
to make all current debt service payments to bondholders."
"Cash flow changes daily," Corey said earlier. "We're scrutinizing
Finance Director Pat Samsell did not return phone calls Thursday
The most recent round of service reductions, layoffs and bone-deep
spending cuts are expected to yield $10 million, the amount of the
current projected general fund deficit, by the fiscal year's end
on June 30.
City officials pin much of the blame for the shortfall on soaring
pension costs. It is unclear if Richmond can fill the widening fiscal
gap without concessions from its unions, which until now have declined
to share the costs of their benefits.
"The only way is if we do come around to some concessions" on benefits
by union memberships, said Councilman Gary Bell, who also chairs
the council's finance committee.
The loss of property tax and vehicle license fees "has created
a very unpredictable environment for local government," said Contra
Costa Supervisor John Gioia.
Richmond has felt the sting more acutely than many cities. Questions
remain unanswered about how, why and when its fiscal slide began.
"My impression is, they don't really have a clue where they are
within a $10 million range, which is insane," Councilman Tom Butt
said of city finance officials.
For instance, the city is locked into two unwieldy bond payments
a year, rather than the incremental payments most cities make.
"It's a matter of planning," Butt said. "Richmond has refinanced
its bonds as interest rates have gone down, and they had the opportunity
to renegotiate (the payment schedule) each time."
After the Times outlined Richmond's financial distress Thursday,
the city issued an unsigned statement saying the Times' and other
news stories contained unspecified inaccuracies. The statement was
faxed to media outlets and posted on the city Web site.
The statement, which was distributed to city employees as well,
said only Corey and Samsell were authorized to discuss city finances.
City bond counsel John Knox initiated and drafted the statement,
elected officials said.
On Friday, Knox refused to identify errors in the news report.
"My advice to my client is privileged communication," he said.
Late Thursday, Corey said, "I had no quibble with the text of the
(Times) story. I thought it was pretty accurate."
Contacted on Thursday about the city's fiscal problems, Councilman
Nat Bates referred queries to Corey.
Council members Richard Griffin, Mindell Penn and Charles Belcher
did not return phone calls. Councilman Jim Rogers declined comment.