Santa Ana Faces Massive Budget Shortfall


A man stands outside Santa Ana's City Council chambers. (Photo by: Violeta Vacquiero)

Thursday, September 1, 2011 | Santa Ana is facing a huge budget shortfall, and city officials are planning immediate top-to-bottom cuts that could affect all levels of city services, Voice of OC has learned.

The city administration has refused to release any information about the budget deficit or planned cuts. Jose Gonzalez, the city's acting public information officer, has twice canceled meetings scheduled between a reporter and the city's finance director on the topic.

Council members have been more forthcoming but not specific. A public announcement on the budget is expected during a council meeting this month, but officials are being vague about even that .

"We're going to have to look at everything from salary and benefits to how we order paper to what services we're providing," said Councilman David Benavides.

In June, the City Council closed a $13.6-million deficit in the city's $210-million general fund budget for fiscal 2011-12, mostly by borrowing money from the liability and workers' compensation reserves. But revenue projections — which predicted a nearly 10 percent uptick in sales tax revenue — are already falling short of expectations, said Councilwoman Michele Martinez.

Sources close to City Hall say the deficit could be as high as $30 million, but it is unclear whether that is the number for this fiscal year or for the city's ongoing structural deficit.

John Franks, president of the Santa Ana Police Officers Association, said city officials told association leaders that the current fiscal year deficit is $13 million but could exceed $30 million if the association doesn't make concessions.

"It's alarming, obviously," Franks said. "We've always been willing to cooperate and do our part. We've done it two years in a row."

The City Council has still not hired a permanent replacement for former City Manager Dave Ream, who announced his retirement early this year after more than three decades with the city. The interim city manager is Police Chief Paul Walters, whose Police Department together with the Fire Department constitute 72 percent of the general fund budget.

Earlier this year, the city awarded a $98,900 contract to the municipal consulting firm Management Partners Inc. to, among other things, craft a budget stabilization plan that would address the city's structural deficit over the next five years. Not only has that plan not been released to the public but Councilman Vince Sarmiento acknowledged he hasn't seen it.

Some City Hall workers have expressed fear that layoff announcements will immediately follow the announcement of the budget deficit. Council members, however, have said that will not happen. They did say the cuts will take effect immediately after City Council adoption.

It would be impossible for the city to close the kind of deficit being talked about without at least cutting salaries. That could prove challenging, since the city has some union contracts that cannot be reopened without the unions' consent.

Franks became president of of the police union this week after the previous president, Joe Perez, retired to become the union's general manager. Franks said he suspects that pension benefits and salaries will be on the negotiating table.

Police officers received an across-the-board raise in July after the union agreed two years ago to defer raises on the assumption that the economy would rebound, Franks said.

"What I can say is that we will make the necessary concessions," Franks said.

Officials with the city's firefighters union did not return phone calls for comment.

Council members wouldn't provide details of what they might ask from the unions.

"We have cuts that we need to make, and we're going to be asking people to help us make those cuts," said Councilman Sal Tinajero.

Added Martinez: "All I can say is this is a time where we all need to come together and show support, regardless of your bargaining unit — this goes beyond contracts, beyond relationships."

There have already been big cuts in recent years, including multiple rounds of employee layoffs. The city has reduced its staff by 391 since fiscal year 2008-09 through layoffs, retirements, leaving vacancies unfunded, and contracting for some services.

Reserves have been tapped and can no longer be relied upon, council members said. City Hall is already operating at bare-bones staffing, they said.

"It's pretty common sense that if you have a gap that's so large, there isn't a silver bullet," Sarmiento said.

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