Daly City avoids layoffs in balancing budget through mid-2016 

Daly City government workers who feared possible layoffs can breathe a sigh of relief as the City Council has approved a balanced budget for the next two years without laying off any employees.

However, City Manager Pat Martel noted the city has an ongoing structural deficit and must start planning now to address challenges anticipated for the next budget, due in mid-2016.

"We're not out of the woods, and we won't be for several years," Martel warned.

Daly City's approved budget for fiscal year 2014-15 is approximately $168.2 million in 2015, with about $72.8 million allocated to the city's general fund. For fiscal year 2015-16, the council has approved a total budget of approximately $157.1 million, with about $73.6 million allocated to the general fund.

At a recent City Council meeting, Martel noted that a year ago, it appeared that as many as 40 city jobs might need to be eliminated in order to balance the budget. The city managed to avoid making any cuts to those jobs while balancing its budget by implementing several belt-tightening measures, Martel said. They included not expanding any services or programs currently offered by the city, maintaining vacancies in several positions and reducing library hours, she said. While the city has streamlined staffing in recent years by consolidating high-level administrative positions and not filling vacancies left by retiring employees, officials had warned prior to the budget approval that such efforts may not be enough to prevent further cuts.

By not replacing employees who retired or quit, the city has reduced its workforce by 20 percent, leaving most departments understaffed. The city is therefore less able to provide immediate responses to many service requests, Martel said.

While the city's collective bargaining groups had opposed the possible job cuts, the city manager insisted that Daly City must not fail to adequately compensate its employees. The city has not been providing scheduled salary and benefit increases, and it could begin to lose workers if it doesn't do so, she suggested.

"We're going to face a mass exodus of our employees," Martel said, "and I don't think we can afford to do that."

Payroll costs account for roughly 80 percent of Daly City's budget. According to Martel, much of the current budgetary challenge stems from the fact that the California Public Employees' Retirement System is making up for the budget shortfall it experienced during the Great Recession by requiring cities to make larger contributions to employee retirement plans. Another factor driving the deficit is that the city's expenses are increasing at a greater rate than its revenues, she explained.

Mayor David Canepa, who described balancing the budget as "a herculean task," praised city employees for taking on additional responsibilities and "doing more with less." He said committee hearings are needed to address the deficit, and he believes measures such as the planned expansion of the Serramonte Center shopping mall would give the local economy a boost and increase city revenues.

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