Layoffs appear to be on the table for Fort Smith city employees as the city budget woes continue.
According to an email Fort Smith City Administrator Ray Gosack sent to the city’s Board of Directors on Thursday (Oct. 16), “there doesn’t appear to be an end in sight” to the budget problems.
“It may be time for us to consider a fundamental change in our General Fund services and the number of employees,” Gosack wrote. “We have experienced this fiscal stress for at least 6 years, and there doesn’t appear to be an end in sight. The increasing frustration with the budget difficulties year after year may have to be solved by re-evaluating our ability to sustain current service and employment levels in the General Fund.”
Gosack had said throughout the year that his goal was to provide pay raises to all city employees, but he said with sales tax revenues remaining flat and expected flat revenues through 2015, no money is available.
“We began the 2015 budget process with a goal of providing pay adjustments. We’ve worked diligently to do so, but the resources aren’t available unless we’re willing to make fundamental changes to the business we do. Perhaps the time has arrived to have that discussion.”
The city’s sales taxes (1% for streets and 1% combined for water and sewer projects and fire and parks and recreation) collected $3.27 million in the August report, the most recent data available. The figure is 0.74% above the same month last year, but 1.66% lower than budgeted.
For the first eight months of the year, the total tax collections including the August report from the city’s sales tax collections are up 1.37% from the same period last year but off budget by 1.04%.
In a separate email Tuesday (Oct. 14) to city department heads, Gosack called the pressure on the general fund “significant” and explained how cost of living adjustments (COLA) would impact the budget.
“A 2% COLA and restoring merit/step pay increases in the General Fund costs approx. $940,000. A 1% COLA and the merit/step pay increases would cost approx. $640,000.”
City Director Mike Lorenz blasted Gosack in an email to the rest of the Board, saying he was “disappointed” that the administration “would make a 180, pulling it off the table before exploring other options” after discussing pay raises for much of the year. He continued and said open positions should be reviewed in each department, asking whether the positions should be filled at all.
“Long-term open positions many times indicate that FTE is not needed, I truly believe there is opportunity in this area as well as careful review of work duties and roles. Why are we not considering eliminating some open positions in exchange for COLA and performance raises? I’m sorry, but I just don’t agree with jumping straight to the argument that more room in the budget can’t be found without cutting services. I am certain there is waste in nearly every department budget – we have to make some tough decisions and prioritize better.”
Gosack’s Thursday email said some of those efforts mentioned by Lorenz had already been underway.
“Over the last few days, we’ve had to reduce General Fund spending requests by $1.7 million to get to a 7.5% ending balance. And, those figures don’t account for any pay adjustments. If pay adjustments are included, the needed reductions become $2.6 million. We don’t have many vacant General Fund positions. The police dept. has frozen 8 patrol officer positions for the last 2 years, and will likely need to do so in 2015 in order to meet their budget targets. Fleet replacements in General Fund programs have been sparse the last few years. All this to say that I don’t believe there’s much waste in our budgets with these kinds of choices having been made, and with the staff’s desire to provide employee pay adjustments.”
It was last year that City Director Keith Lau was critical of the 2014 budget, calling it “faith-based budgeting,” and asked for a $2.2 million budget cut in anticipation of continued budgetary issues. At the urging of Lau, Gosack last year prepared a set of proposals that would have increased revenues by $500,000 and reduced expenditures by $1.695 million.
The biggest cuts to the general fund would have come to the police department, which showed expenses reduced by $667,200 in the hypothetical 2014 budget. The cuts included eliminating all animal control services and the boarding of animals at the Humane Society. Additionally, no calls for animal services will be answered by the police department. The proposal also eliminated two dispatchers, one records clerk and one police officer.
The department to show the next highest figure in reductions was the fire department, which could lose $332,000 in funding.
“(It) would result in a rolling brownout of fire station closures,” Gosack wrote in a prepared memo to the Board of Directors at the time. “It’s estimated that one fire station would be closed 86% of the time, and that two fire stations would be closed 20% of the time. This lengthens response times for affected areas, increases property damage from fires, impacts firefighter safety, could harm the ISO fire insurance rating, and increases the potential for vandalism/damage to unoccupied fire stations and apparatus.”
Also included in the proposed cuts was elimination of outside agency funding for non-profit organizations, which would save the city $162,000.
As a result of the cuts, the scenario formally rejected by the Board last year would have resulted in the elimination of 14 paid staff positions from the general fund and resulted in furloughs of three to five days in the building safety department.
Asked last year whether he was intentionally presenting a budget that was worse than it had to be, Gosack was direct in denying any such action.
“No. No. And that was one of the instructions to the staff when we began this was to make sure that we were not doing that because I knew it would be one of the criticisms.”
Attempts to reach Gosack, Deputy City Administrator Jeff Dingman and City Finance Director Kara Bushkuhl Monday (Oct. 20) were unsuccessful, with City Communications Manager Tracy Winchell saying the city would not comment on the budget outside of a public meeting.
Lau said by telephone Monday that all options were on the table for dealing with the budget shortfall, including raising not only the franchise fee from 4% to 4.25%, but imposing a franchise tax on water and sewer customers.
“That’s on the table, too. You could throw franchise fees on water and sewer. The bottom line is that we need to look at all revenue and all expenses in order to shore up our balance sheet in the general fund,” he said.
Word of the cuts, and the soon to be bankrupt police and fire pension contribution fund, has reached back to the Fort Smith Police and Fire Departments.
Cpl. Matthew Holloway, president of the Fort Smith chapter of the Fraternal Order of Police, said there had been discussions among not only police officers and firefighters, but other city staff, of staging protests at the city offices on Garrison Avenue. He said there could be a large number of police officers and firefighters showing up to city Board meetings to voice their displeasure with the budget situation, including the pension fund situation which Gosack did not mention in his emails regarding the 2015 budget.
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“I’ve been contacted by both fire department union guys and they are upset. We’re all upset. Our budget has been drastically cut again,” he said, later adding that plans at this point are for protests on Nov. 4, though the date could change. “But we don’t know if that’ll happen or not.”
In responses to the threat of protests, Lau said all city employees should understand that the budget cuts are not about city staff.
“This is only us looking at the financials,” he said. “This has nothing to do with them as employees. We’re still formulating (where the cuts will be made). There’s nothing written in stone. But this is not a slam on employees, this is simply a financial matter.”
Asked whether city directors and administration could shoulder some of the burden during budget cuts – including possibly giving up car allowances or rescinding a 2.5% pay raise given to Gosack last year – Lau said it was possible.
“I’m open for anything and I hadn’t even thought of that because we’re so early into this deal,” he said, adding that the outside agency funding of $162,000 was also on the table.