(November 16)   A series of a cost saving measures approved by the Upland City Council last week are merely short term fixes that will not redress the city’s looming financial crisis, which will require a far more radical austerity program to cure, city manager Stephen Dunn has told the Sentinel.
Because employee payroll and benefit costs represent the lion’s share of city expenses, Dunn said, he will be seeking concessions from employees in all of the city’s divisions and departments with regard to current and future contracts, including downward adjustments on salaries and benefits. He will also explore new forms of revenue, including citizen approval of a city-wide sales tax and increasing the cost of municipal services.
If sufficient cost savings cannot be obtained or adequate revenues brought in, Dunn said, he will be forced into contemplating ever more draconian options which will include dissolving the city’s police, fire, engineering and inspection departments and contracting for those services with outside agencies such as the county, the California Division of Forestry or the city of Ontario.
Informed that the city’s general fund reserves, which were earlier projected at $4.2 million, have dwindled to $932,000, the council readily bought into two short-term measures Dunn offered them during a special meeting called last week, including cutting $229,000 from various elements of general government operations, as well as within Dunn’s office and that of the city’s development services division.
The council also gave Dunn permission to transfer $250,000 from the city’s gas tax fund, normally utilized for street and road improvements and required by law to be deposited in a separate bank account, to the city’s general fund, if the general fund becomes depleted. The general fund is used to pay for the city’s day-to-day operations.
According to Dunn, the city is no longer adhering to its policy of salting away 10 percent of its revenues, and it is running a deficit in its animal services department. Slated expenditures for capital improvements are outrunning revenue available for public works undertakings, and the city, which does not purchase liability insurance but instead indemnifies itself with its own available funds, is one lawsuit loss away from being pushed into bankruptcy.
Dunn, who was the city’s finance director before he was elevated to the city manager post, said the city needs to get an infusion of roughly $8 million to put its financial house fully in order and return to normalcy. If the city can dogpaddle furiously enough to generate $2 million more per year in revenue or achieve that sum through a combination of revenue and savings, it can keep its head above water, he said.
“Basically, what we are doing is we adopted short term measures to shore up the general fund reserve,” Dunn said.  “The city council directed me to return on November 26 with a whole matrix of items I can recommend to achieve cost savings, improve services and avoid the degradation of public safety. We are going to have to make cuts in certain areas or enhance revenues, perhaps by increasing taxes. We are taking a look in all directions and all methods of delivering services, police fire, animal control, library, engineering, information technology, and inspections. If we cannot enhance our position on the revenue side, we have to do something on the expenditure side.  I will be recommending selling the fire department’s ladder truck and converting Fire Station #2 to a paramedic team by going from a three-man to a two-man crew. We are considering periodic shutdowns of one fire station to drive down overtime. And we will look into renegotiating the existing contract for the city’s air ambulance.”
Dunn continued, “We are evaluating existing fees and new fees to enhance revenue. I will ask the council to consider increasing the business license fees. Another option will be increasing taxes. We may ask the voters to approve some form of tax, a sales tax or a parcel tax for the library. I mentioned that. I am not recommending the tax. However, if the council is not willing to make the cuts, we have to raise revenues.”
Dunn said the city is also considering leasing communication towers to cellular phone companies and selling off certain assets for one-time revenue. “We are already evaluating what properties we have and what could be sold off to shore up our reserves,” he said. “We could rent cell towers.”
Dunn emphasized that at present “We are not looking at layoffs.” He said, though, that he will be seeking concessions from all seven of the city’s employee bargaining groups on their labor contracts.
At issue is the city’s assumption of many employees’ contributions toward their retirement funds. In years past, during brighter economic times, the city, while providing what was designated as its part of that contribution toward employees’ pensions, also agreed to pay that portion of the pension fund that was put up by the employees themselves. At present, the city is paying $1.6 million per year in covering what would otherwise be the employees’ burden. If the seven employee bargaining groups would make that concession alone, Dunn indicated he is reasonably sure that layoffs will be avoided for at least the next two years.
Without either concessions, other savings or new revenue, far less palatable measures will have to be taken, Dunn said.
“One of the things we are looking at is outsourcing,” Dunn said. In practical terms, that means disbanding the police department and contracting with either the San Bernardino County Sheriff’s Department or the Ontario Police Department for law enforcement service, likewise dissolving the fire department and contracting with the Ontario Fire Department, the San Bernardino County Fire Department or the California Division of Forestry for fire service. Dunn is also poised to consider contracting with Ontario for engineering and public works services as well as building and code compliance inspections.
One member of the city council, Gino Filippi, is adamantly opposed to outsourcing of police and fire services.
“I understand that if we cannot find $2 million annually, then we will be looking at outsourcing,” Filippi said. “I think to be responsible, we have to show that nothing is off the table and we have to look at all opportunities to balance the city’s budget. But until I receive additional information to contradict what I have been told, my position is that the most crucial and vital services to Upland are public safety, which are essential services to protect our city, the police, fire and paramedics and public works. I know for a fact that public works has experienced the brunt of the reduction in the last two years. In addition, our police force has been reduced 20  officers since 2005. We had 90 sworn officers then and now we are down to 70. I don’t think it responsible to allow reductions in our police service. Since then we have seen the addition of the 210 Freeway, the Colonies commercial center and the residential area. We have rising crime throughout our city. We have break-ins and burglaries in areas where that was uncommon before. We have pockets of homeless, including at Memorial Park. That is of great concern to me. I would be against looking to move our police service away from Upland. I know the firefighters union is providing alternatives that would be more in line with keeping our services and looking at having nearby cities that have deep resources assist us rather than outsourcing to the county or other agencies like the California Division of Forestry. I think we need to get a clearer picture before we try to solve our problems piecemeal or eliminate whole departments. If we unwind those [the police department and fire department] and then try to go back in and regroup, we are going to have a problem. We have to think this through clearly before we reach for the knife.”
Filippi said he hopes the city’s employee bargaining units can be convinced to simply give back the city’s pick-up of the employee contributions toward retirement funding.
“I understand that if they are willing to come back to the table and if all of the employee groups provide their own contributions, that gets us to $1.6 million in savings annually. I am hopeful. That is certainly a place to start. That was one of the area’s most important to me during my campaign for mayor, to take them back to the negotiating table. Some of the groups have already agreed to do that. I am not at liberty to say which ones. This is a positive step. We are moving in the right direction. We are moving toward a responsible budget.”
Another member of the council, Brendan Brandt, indicated that the dissolution of either or both the police and fire departments would likely prove irrevocable, given the cost that would be entailed in reinitiating them. Once the police and fire departments are shuttered, he said, “we will never bring them back. I just know that,” Brandt said.
For that reason, Brandt said, “I would not make those kind of decisions without having all the information possible.”
Among the economizing approaches open to Dunn and the council short of outsourcing is laying off up to a third of the police and fire department personnel and then reframing the next contract, in which officers and firefighters would be classified not as hourly personnel but rather as salaried employees, extending contracts only to those individuals willing to work to carry out their assignments, even in the event that it takes 50 hours per week to complete them.
Michael McGill, an attorney with the law firm of Lackie, Dammeier, McGill & Ethir, which represents the Upland Police Officers Association, told the Sentinel, “I don’t see the option of working 50 hours per week as being legally permissible.  Federal wage and hour laws would not allow an employer to work an employee at that level without paying them overtime.  This is the case whether you classify them as salaried or hourly, exempt or non exempt.  And whether the unions agreed to it or not, the union cannot legally waive the wage and hour rights of any member.  Thus, the union could agree to it but any member could legally challenge it and would surely prevail.”
McGill did however, indicate that concessions of some order on the part of the city’s employee bargaining units may be unavoidable.
“All employees should have an appreciation of and commitment to an employer’s solvency,” McGill said. “Without an employer, there is no employee.  If cuts are necessary to maintain solvency, the city has to prioritize those cuts, and then make them where appropriate.  My personal philosophy is that cutting public safety should be a last resort.  If taking measured and necessary cuts, at a time where they are without a doubt needed, works to save the entire department, I would personally be okay with them.”