Grand Terrace Cuts Half Its Employees & Redlands To Lay Off 10 Percent Of Staff

Seven weeks into the coronavirus crisis, brutal consequences have been or are about to be visited upon local governmental employees as what was previously assumed would be a robust economy at least until the end of the year is now heading toward a virtually unprecedented crash. Once-bright economic prospects have been undone by stay-at-home mandates and the shuttering of a significant portion of the state’s retail businesses.
Local governments are being hit with a triple-whammy. With retail sales down, sales tax revenue, a staple of government in California, is dwindling. Simultaneously, California’s unemployment rate has zoomed to 12.6 percent and Governor Gavin Newsom has predicted it will jump to 18 percent before the crisis hits its zenith, while others are sounding a more dire warning that it could reach 21 percent. To placate the masses of those ordered to stay home – those who are now filling out the unemployment rolls – and prevent them from rioting, essentially, the federal government is augmenting the maximum state unemployment stipend of $450 a week with $600, so that those on the dole are collecting a maximum combined payment of $1,050 on a weekly basis, which is in many cases more than those recipients would be making if they were actually working. Paradoxically, the beneficiaries of that largesse, by and large, are not spending it, or not spending most of it, in some measure at least because with all of the shops closed, the goods and services to purchase are not available, and because of uncertainty and fear. Rather, much of that money is being hoarded. In this way the reserves of big government – federal and state – are being drawn down. According to Governor Newsom, California has now paid out $10.6 billion in unemployment benefits to workers as a consequence of the coronavirus-related business shutdowns.
In practical terms, this means that local government – counties and cities and districts – will not likely be able to turn to the state or federal government to bail them out. This presages drastic belt-tightening, fiscal austerity that translates into either substantial salary and benefit reductions, or massive layoffs, or both.
Two of San Bernardino County’s municipal canaries in the mine are Grand Terrace and Redlands.
At the Wednesday May 6 Grand Terrace City Council meeting, City Manager Howard Duffy previewed the Fiscal Year 2020-21 budget for the diminutive city, together with the imposition of an immediate adjustment of the current 2019-21 budget which will draw to a close with the end of the fiscal year on June 30. He called his proposal  a “revenue enhancement and expenditure reduction plan.” Up front, Duffy said, his approach meant immediate “layoffs of city personnel.”
Duffy teamed with Assistant City Manager Cynthia Fortune in making the pitch to the city council.
According to a written report from Duffy presented to the council, “As the economy continued to linger with city facilities closed, the city could no longer continue to retain its current level of expense without it having a significant impact on its bottom line. It is projected that the City of Grand Terrace is facing an estimated $545,210 shortfall for Fiscal Year 2019-20 and a projected $1,116,387 for Fiscal Year 2020-21. The expenditure reduction plan was developed to surgically correct operational losses, deliver services within fiscal means and strategically address fiscal deficits. The expenditure reduction plan calls for the reduction in staff through layoffs.”
Grand Terrace, at 3.5 square miles, is the county’s smallest city in terms of geographical area and, with fewer than 13,000 residents, the third smallest of the county’s 24 incorporated municipalities in terms of population. Positioned, as its name implies, on high ground above the frontier with Riverside County on its south, above the I-215 Freeway and Colton to its west, above lower lying Colton and San Bernardino to its north and Colton’s Reche Canyon and the further lying Loma Linda wilderness to its east, Grand Terrace does not get a great deal of vehicular through-traffic from the commuters and travelers on the I-215 Freeway or the nearby I-10 Freeway, so the relatively sparse retail establishments within its city limits count Grand Terrace’s relatively limited population base as their primary clientele. Thus, in the best of times, Grand Terrace has but a modest sales tax revenue stream. Under the duress of the coronavirus shutdowns, its revenue is extremely anemic. In years past, the city had reduced itself to a bare bones staff. Already at just 12 current employees, the staff will be reduced by half to six, under Duffy’s proposal, and one of those remaining employees will go from full-time, at 40 hours, to part-time, at 20 hours.
Eliminating a management analyst, Fortune said, will provide the city with $10,430 savings this year and $90,690 in Fiscal Year 2020-21.
Dispensing with two maintenance workers, will save the city $7,410 in 2019-20 and  $77,090 next year, according to Fortune.
Fortune said that laying off the city’s executive assistant will save the city $9,965 in the current fiscal year and another $82,210 next year.
The termination of an office specialist will provide $5,350 savings right now and cut $44,995 from the expenditure side of the budget in 2020-21, she said.
Continuing to leave the department secretary position unfilled will save $12,730  through to the end of 2019-20 and save an outlay of $76,370 in 2020-21.
One of the city’s code enforcement officers, who also works in the capacity of an animal control officer and is now making $56,960 per year, will have his or her hours cut in half, such that the city will see a savings of $4,745 between this week and June 30 and a $28,480 discount from the 2020-21 budget.
In addition, the city is going to reclassify the city’s public works director position, held by Allen French, to that of senior engineer, reducing French’s income for the remainder of 2019-21 by $3,935 and by $23,610 in 2020-21.
Overall, the adjustments are to save the city $45,985 in the current fiscal year and $371,355 in Fiscal Year 2020-21.
The elimination of the positions will amount to “not quite two months savings” in the current budget, Fortune said, as those leaving will be paid through their current paycheck period and will be given “leave balances and any accrued time they have.”
Fortune said that she and Duffy had attempted to be judicious in the elimination of positions “to reduce everywhere we can as best as we can and still be able to provide services that we normally would to the community.”
Duffy said, “We wanted to move forward in the new fiscal year to get as much savings as we can.”
There will be no cuts to the $2.1 million contract the city has with the sheriff’s department for the provision of law enforcement services, Duffy said. He said that he had contacted the sheriff’s department to see if it would defer or postpone the increase in rates the sheriff’s department will impose to continue the contract. He said other cities that contract with the sheriff’s department, such as Rancho Cucamonga, had made similar overtures, and that Sheriff John McMahon had agreed to pass the inquiry on to the county board of supervisors to determine whether that request can be fulfilled.
The city is currently in a dialogue with the entities that provide other contract services to the city to see if they will be willing to accept a ten to 15 percent reduction in the rates the city is paying for those services, Duffy and Fortune indicated.
Upon a motion by Councilman Bill Hussey, seconded by both councilmen Jeff Allen and Doug Wilson, the city council voted unanimously to follow Duffy’s and Fortune’s recommendation to lay off one of the city’s two management analysts, two of the city’s four maintenance workers, two of the city’s four administrative support personnel and to unfund or defund the currently vacant secretary’s position, leaving the city with one office specialist, and to reduce one of the city’s two full time code enforcement officers from 40 hours to 20 hours.
Redlands, the county’s 11th largest city with its roughly 72,000 population, has been hit every bit as hard as Grand Terrace. With over 520 employees and a $75 million budget in Fiscal Year 2019-20, the city is sustaining an $8 million shortfall in the current spending cycle ending June 30.
According to City Manager Charles Duggan, the best prognostication is that the city will be hammered with a $15.7 million downturn in revenue in 2020-21.
The city has scheduled a specially-called budget examination and strategizing meeting for next week, on Tuesday, May 12.
Duggan has put together a very somber report for that meeting, what he titled the Fiscal Year 2020-21 Budget Message. In it, he references, “an exceptionally challenging economic environment as a result of the COVID‐19 pandemic. Financial  market volatility, record‐setting increases in the unemployment rate, and eroding consumer confidence from this unprecedented halt in economic activity have led to deteriorating revenue streams for all forms of government.”
The upshot?
It looks like 52 Redlands municipal workers will lose their jobs. At the same time 28 positions with the city that are vacant at the present time will remain unfilled.
Faced with the loss of more than ten percent of the flow of money into the city’s coffers, something must be done, Duggan said, and rather than drawing down the salaries of the entirety of those that work at the city, he is recommending that something on the order of ten percent of the city’s work force be handed pink slips.
“Without question, the economic impacts of COVID‐19 will profoundly change the structure of municipal government and the way the City of Redlands delivers services to its residents for many years to come,” Duggan said.
Continuing measures to limit the spread of the coronavirus, including social distancing requirements and closures of commercial venues, will perpetuate the loss of revenue well into the upcoming fiscal year, until such time as a vaccine against the cornoavirus is developed, he said.
“With revenues estimated at $69.5 million and expenditures planned initially for $85.2 million, a staggering shortfall of $15.7 million was identified,” Duggan’s report, which consistently refers to him in the third person, states. “In meeting this challenge, the city manager and executive staff have been left with little choice but to address the city’s structural budget issues head on and consider how the city can continue to deliver those essential services that residents and local businesses require.”
The city is in a difficult position, Duggan said, in that it faces economic demands brought on by hefty commitments to the city’s workforce that were to escalate the city’s outlays in the upcoming fiscal year by something under $6 million over what it will have shelled out at the close of this fiscal year on June 30.
For Fiscal 2020-21, Duggan said, “On the expenditures side, department requests for appropriations in the amount of $77.8 million were cumulatively $5.9 million higher when compared to the department’s current 12‐month estimates for expenditures for Fiscal Year 2019‐20. Some of this variance is due to increases in the amounts budgeted for services and supplies, but the vast majority of this increase is attributed to higher personnel costs in the form higher pension costs, a 3 percent across‐the‐board increase to non‐safety employees, and natural growth in compensation levels that takes place over time,” he said, referencing “merit increases, reclassifications, etc.”
Somewhat obliquely, Duggan then alluded to “the elimination of 38 full‐time positions and 42 part‐time positions.” Duggan noted that at present, of the 38 full-time assignments to be eliminated, 21 are filled. He indicated that of the 42 part-time posts the city will shed, 31 are currently occupied. Thus, he stated “21 full-time and 31 part-time” city employees will be laid off.
Duggan explained the process by which a game plan for dealing with the shortfall was developed.
“With the decreases in revenue described, a total of $69.5 million was estimated to be available for Fiscal Year 2020‐21,” his report states. “Total department requests for appropriations were submitted to the city manager in the amount of $77.8 million and a total of $7.4 million was allocated for required transfers out of the general fund for a total estimated use of funds in the amount of $85.2 million – an unprecedented gap of approximately $15.7 million. Confronting this challenge, departments were asked initially to reduce their budget requests, understanding the monumental task that lay ahead in addressing a $15.7 million shortfall. Suggestions were provided for retrenchment strategies and the departments returned with $4.2 million in spending reductions. In addition, as a mitigation effort, finance staff have increased revenue projections above presently forecasted levels by $1.5 million in the hope that the economy will rebound at a stronger and much faster rate. Additionally, transfers to the city’s liability fund from the general fund were reduced by $450,000. Further reductions to transfers out of the general fund were sought in an amount of $800,000. These modifications resulted in reducing the deficit to $8.8 million. Departments were then tasked with the objective of establishing a budget floor based on $8.8 million in reductions requested as a percent share of their payroll. Each department performed tremendous work to reimagine their operations and service capacities. Collectively, and at great cost, departments reduced their budgets even further by an additional $7.2 million toward the $8.8 million gap. These reductions saw severe, deep cuts in the form of position elimination of public safety & sworn staffing positions and other positions – and brought the projected deficit to $1.6 million.  At that time, and in assessing the municipal overburden such drastic and deep reductions would cause, the city manager sought to restore the most critical, essential positions throughout each department with the partial use of reserves. As a result, departments were able to restore roughly $3 million in funding to their operations.”
Duggan said he and his management team are doing their best to deal with a very tough situation. He acknowledged that the solution is not a comfortable one. Worse, he acknowledged, the draconian measures might still be inadequate to the task.
“These reductions will weigh heavily on departments’ capacity to provide service. Departments have been  impacted in substantial ways,” he said. “Recommendations from staff and decisions made as part of the Fiscal Year 2020‐21 budget process have been painful ones, with difficult decisions still left to be made. While city staff at every level work to provide the highest quality service to the public despite severe constraints, changes, such as those included in the Fiscal Year 2020‐21 proposed budget and those that may be required beyond, will not be achieved without profound reductions in the level of service to which residents and local businesses have been accustomed. This year, instead of efforts to present a budget balanced on recurring revenues, the city manager’s office is presenting a budget that strives to minimize service reductions to the community while making use of measured amounts of the general fund’s unassigned fund balance to counteract the immediate and devastating impacts on revenue from the COVID‐19 crisis. There remain many unknowns. As we consider the financial outlook for Fiscal Year 2021‐22 and 2022‐23, we are left with little choice but to address the city’s structural budget issues head on and consider how the city can continue to deliver those essential services that residents and local businesses require.  Despite cuts of more than 12 percent to each department, including the elimination of more than 38 full‐time positions and 42 part‐time positions  (21 filled full-time and 31 filled part-time), and the assumption that additional revenues of $1.5 million could be achieved as a result of a stronger‐than‐projected economic recovery, a $5.6 million estimated shortfall remains at June 30, 2021.”
The Redlands City Council is set to consider action that will be taken in response to the prolonged cash flow difficulty the city is experiencing during a specially-called meeting for 8:30 a.m. Tuesday May 12 in the council chamber at City Hall. Because of the social distancing mandated in reaction to the ongoing coronavirus outbreak, the public will not be allowed to attend. According to City Clerk Jeanne Donaldson, “Following public health recommendations to limit public gatherings during the Covid-19 pandemic, City Manager Charles M. Duggan Jr., acting as the City of Redlands emergency services director, has directed that city council meetings be closed to the public until further notice or until the current local state of emergency has been lifted. The council chamber will not be open to the public during the city council meeting. In order to have your public comment read into the public record at the meeting, members of the public are asked to submit comments up until 5 p.m. the day before the city council meeting by email at, through the public comment form on the city’s website at, or written comments directly to the city clerk’s office at 35 Cajon Street.”
During the meeting, all of the city departments, including the city clerk, city attorney, city council, management services, development services, the library, the police department, the fire department, the facilities division, community services, municipal utilities and the engineering department will be afforded the opportunity to make a presentation with regard to what economies each has already proposed to make or has sustained, and appeal for being spared from further cuts.
A reckoning within local government in California has been looming on the horizon for some time. Salaries and benefits in most cities and counties are extremely high based on pay, perquisites and pensions provided for comparable work in the private sector, exacerbated by what public employees refer to as the “10-90 rule,” which holds that a significant number of public sector jobs are not demanding, such that “ten percent of the people working for government do ninety percent of the work.” Redlands is a particularly egregious example of that circumstance. Former Redlands City Councilman Jerry Bean, a captain of industry in the private sector who has owned or published six newspapers, previously openly remarked about what he termed the “municipal culture” at Redlands City Hall in which productivity did not match the outlay of taxpayer money to achieve it. Across the county, in Upland, former City Councilman Glenn Bozar lamented that local government in Southern California had become “a huge jobs program” which created “make work” assignments for a workforce too unskilled to be meaningfully or productively employed in the private sector. Bozar likened the majority of public employees to “a parasitic growth on the body politic.”
Of question is whether the Redlands City Council will on Tuesday suspend its members’ reception of a stipend for their work on the council, thereby assuming the symbolic moral authority to make further inroads in whittling down the size of municipal government in what has traditionally been one of San Bernardino County’s most affluent cities.
For the 22 incorporated cities and towns in San Bernardino County beyond Grand Terrace and Redlands, it is a matter of time before the fiscal reality of the economic contraction precipitated by the coronavirus crisis results in similar parings of their respective workforces.
Mark Gutglueck

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