Daly City could face layoffs to close budget deficit 

click to enlarge Daly City Mayor David Canepa says he will explore every available alternative to layoffs, but notes the city is required by law to have a balanced budget. - MELODY GULE/SPECIAL TO THE S.F. EXAMINER
  • Melody Gule/Special to The S.F. Examiner
  • Daly City Mayor David Canepa says he will explore every available alternative to layoffs, but notes the city is required by law to have a balanced budget.

Daly City officials say they may soon be forced to eliminate or outsource some jobs in order to balance the city's budget.

The city has streamlined its staffing in recent years by consolidating high-level administrative positions and not filling vacancies left by retiring employees, but officials warn that these changes haven't yielded enough savings to prevent further cuts when the new budget is finalized July 1.

City employees and their representatives appeared at a recent City Council meeting to voice their concerns about the potential impending layoffs. A union representative, Tina Acree, claimed that if city services were outsourced, the contractors would be less accountable to residents than city employees have been.

The possibility of layoffs, which was first announced a year ago, has created anxiety for union workers, she noted. "We need to move forward without fear of losing our jobs," Acree said.

City Manager Pat Martel invited all of the local labor groups to come to the next council meeting, when financial consultants hired to study the city's budget challenges will present their findings.

In an interview with The San Francisco Examiner, Martel said Daly City's structural budget deficit is partly due to the Great Recession, during which the California Public Employees' Retirement System (CalPERS) lost billions of dollars on its investments. To make up for the shortfall, the state now requires cities to make larger contributions to their employees' retirement funds, which in Daly City's case, has added several million dollars to the annual payroll costs, she said.

Martel further explained that the city's expenses are exceeding its revenues, partly because its tax base is mostly residential, with few hotels, corporate headquarters or industries located in town. Despite this, the city has for the past six years kept its inflation-adjusted costs at the lowest level in 25 years, Martel noted.

The city has worked to reduce payroll costs in recent years without layoffs by opting not to replace some employees' positions after they've retired, she said. In one case, the recent departure of the city's treasurer created an opportunity for savings when staff determined that a part-time employee could replace the full-time treasurer position. Another savings was realized a few years ago when the city consolidated its library and recreation departments into one organization.

The majority of cuts so far, Martel said, have been to higher-paid executive and mid-management positions. While officials are reviewing a range of options, she said it is still too early to comment on which city positions might be eliminated or which departments might be most affected by the cutbacks.

Regarding the options available to employees in the event of layoffs, Martel noted that many of the potentially affected employees already have over 20 years of service and would be eligible for benefits. But some workers employed fewer than 20 years would also have the option of retiring early and receiving certain benefits, she said. If the city chose to outsource any services, it would require service providers to give hiring preference to city employees, she added.

While the city hopes to preserve as many jobs as possible, Martel stressed that some difficult decisions may be necessary. "We have been avoiding the inevitable for several years now," Martel said.

Mayor David Canepa said he would explore every available alternative to laying people off, but noted that the city is required by law to have a balanced budget, and that its first responsibility is to give its ratepayers and residents the best possible services.

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