BILL CUMMINGS
Article Last Updated: 09/01/2008 01:22:17 AM EDT
BRIDGEPORT — Mayor Bill Finch is readying a new round of municipal layoffs as worries escalate over a growing budget deficit in the fiscal year that is only two months old.
"We are thinking about layoffs. We are considering all kinds of options," Finch said.
Although the mayor declined to say how many workers may be laid off and when, the ax may fall across the board, including departments usually immune to cuts, such as police.
The prospective layoffs are caused by diminishing revenue, a reflection of the national economic downturn. Although the 2008-09 fiscal year began July 1, city officials are watching nearly every category of revenue come in at levels lower than projected.
City Council member Robert Curwen, D-138, co-chairman of the Budget and Appropriations Committee, said Finch warned of layoffs when the current budget was put together during the spring.
"That was discussed. He said to me he would have to lay off if there were no givebacks from employees," Curwen said.
Last year, the city finished the fiscal year with what is now believed to be a $20 million deficit, up from $19 million a few weeks ago. Although cost-cutting last year saved some money, the city has drained its fund balance to about $9 million, down from nearly $30 million at the beginning of the 2007-08 fiscal year.
The fund balance is essentially the city's savings account. For this year's $492 million budget, a $9 million reserve account is considered dismal, and could cause credit and bond rating companies to reduce the city's rating. If that happens, the city will pay more to borrow money, further fueling a budget crunch.
Although the mayor called for nearly 100 layoffs in his proposed 2008-09 budget, most of those were avoided through a compromise with the City Council that kept library personnel in place. The school-based health clinics were restored, although that service will eventually be privatized and those city workers will be cut from the payroll. Finch said recent cost trimming efforts, such as asking employees to work one week for free this year, have not won sufficient support to avoid the need for further layoffs.
"Some departments agreed to it, but some of the unions said they won't do that, and said it's like bargaining," Finch said.
Another mayoral order, to trim 10 to 20 percent from each department, has resulted in some creative ideas, but again not enough savings to cover expected shortfalls, he said.
The mayor has also ordered the Police Department to cut in half the nearly $9 million in overtime paid last year. The Fire Department, which also spends millions on overtime, is also being asked to cut back.
Still, those savings are not expected to be enough to cover the flood of red ink being caused by the bad economy. That's where the need for more layoffs comes in, and officials are focusing on higher-paid workers in an effort to reduce the number of people who must be let go.
One revenue source not likely to materialize is $4.5 million from the sale of Steel Point, which Finch and the City Council included in the 2008-09 budget passed earlier this year. The city missed a key deadline last week to begin the planned Steel Point redevelopment, making it unlikely the property will be sold this fiscal year.
Without the Steel Point money, a $4.5 million gap in revenue will be created.
Finch also included $1.5 million in savings from union concessions in the current budget. If those savings don't materialize, the projected deficit would grow to $6 million, and that doesn't count expected shortfalls in property and real estate taxes, conveyance taxes, rising medical costs and lower state funding.
"Every day the news gets worse. Any deficit is bad when you only have a cushion of $9 million," Finch said.
Curwen said he understands the challenge Finch is facing. "There is no construction going on. No new businesses are opening. And the Bootfinder revenue is way down," he said, referring to the program to crack down on motor vehicle tax delinquents.
Finch is also asking the City Council to institute a new fund balance policy. Under the proposed rules, the city would have to maintain an amount equal to 8 percent of the operating budget, or about $40 million for the current fiscal plan, in the reserve account.
If the fund balance exceeds 12 percent of the budget, any additional money could be spent for other purposes.
But simply creating the minimum $40 million fund balance will require huge savings or cutbacks, or a major influx of new revenue. Finch hopes to gradually rebuild the fund balance, an impetus to cut expenses even further this year.