The city of Santa Ana is so low on cash that it could end up without enough to meet all of its payroll obligations by the end of November, said Joaquin Avalos, president of the Santa Ana chapter of Service Employees International.
Francisco Gutierrez, the city's finance director, told union officials that if this scenario comes to pass, the city will have to decide which employees will be sent home without pay, Avalos said.
Whether Santa Ana will be able to pay its employees hinges on how quickly the city and its labor groups — specifically service employees, police and fire unions — can agree on large, immediate savings, Avalos said.
"My bargaining team is trying to speed up the [negotiating] process to help them [the city] as soon as we can," Avalos said.
It's no secret that Santa Ana's budget is in dire straits. The city is facing a potential $30-million deficit, and City Hall is operating at bare-bones staffing levels, leaving few places to make substantial cuts.
However, despite persistent rumors that the city could go bankrupt, city officials have so far refused to respond to a reporter's questions about the city's cash flow.
(Update: After this post was published, Jose Gonzalez, Santa Ana's public information officer, sent the following statement from City Manager Paul Walters: "There is no immediate concern for the city being able to meet our payroll obligations. Based on the latest information we expect that to be the case fro the remainder of this fiscal year.")
Reserve funds don't appear to be a viable option to keep employees paid.
Unlike most cities, Santa Ana does not have a general fund reserve policy, according to a report by Management Partners Inc., a consultant hired to study the city's budget. And the city has blown through almost all extra general fund money it had to balance its budget in recent years, the report stated. Other internal funds have been depleted as well, according to the report.
City officials have asked the union to come up with $7.9 million in savings, only $2.8 million of which will impact the general fund, the part of the city's budget facing the deficit, Avalos said.
The police and fire unions have each been asked to come up with between $12 million and $20 million in budget savings, according to a union source who did not want to be identified because of the sensitivity of the negotiations.
Councilman Vincent Sarmiento said he is inquiring about the situation at City Hall. "Things aren't good, but I haven't been given a specific date," he said.
Councilwoman Michele Martinez declined to comment on the situation. Other council members could not be reached for comment Wednesday.
— ADAM ELMAHREK