Posted on Sat. Jan. 10, 2004
Richmond is facing more cuts

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," Anderson said.

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 every expenditure."

Finance Director Pat Samsell did not return phone calls Thursday or Friday.

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.

Reach Rebecca Rosen Lum at 510-262-2713 or

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