Salinas Council likes ‘Tough’ suggestions on taxes, benefits but worries about feasibility

Salinas, California Joe Szydlowski Salinas Californian December 5, 2018 Finance + Operation

A report suggesting benefit cuts, tax and fee increases and other ideas for Salinas to address a looming $60 million deficit received support at Tuesday’s council meeting.

The National Resource Network’s 214-page Salinas Plan offers ideas to relieve Salinas’ gloomy budget outlook, which predicts pension and health care costs will put the city in the red by 2023. It suggests Salinas pick a cheaper basic health plan, have its employees contribute more to their retirement and health benefits, explore a storm sewer fee as well as possible ballot tax measures, consolidate special pays and paid time off, change some policies and explore leasing or selling some city property.

The Salinas Plan, paid for with a $300,000 grant and $100,000 from the city, included its own analysis and drew from previous several previous reports on aspects of the budget, said Russ Branson, director of PFM Group Consulting LLC, which compiled the report.

It also suggests using some of the savings to increase pay in order to attract job seekers. The plan included an assumption that 2.5 percent cost of living increases will continue and a recession is in the near future, Branson said.

At the Tuesday council meeting, members of the public and consultants asked the council to begin implementing the ideas from this and previous studies, such as the study on public safety overtime.

“These are difficult things to do,” Branson said. “… You do have a problem, you do need to act… There is time to avoid a crisis.”

Mayor Joe Gunter said the network’s study will “become a major part of our strategic plan” at a public council meeting on the strategic plan Jan. 26.

Without any action, Salinas’ deficit is projected to hover around $1 million to $4 million through 2022. That would eat up all of the city’s current $10 million reserves, Branson said. By 2028, the deficit would swell to $60 million, he said.

“You’re going to be back at the same place as you were in the Great Recession. Cutting staff, furloughing staff,” Branson said.

That deficit is primarily due to rising pension and health care costs, Branson said.

Out of 32 proposals, the most important are addressing employee health care costs, consolidating or eliminating certain paid leave policies and implementing a storm sewer fee to end $1.8 million in costs to the general fund per year, Branson said.

“If you don’t do those major ones, it’s going to be tough to bridge that gap,” he said.