Climbing costs 'not feasible' with Modesto's money woes

Modesto had fewer city workers and provided fewer services last year, but its payroll costs still climbed.

The city paid $122 million in wages and benefits. That figure could be the highest Modesto will see for some time.

Last year marked the beginning of the city's effort to rein in spending on salaries and benefits, a push that will continue as Modesto grapples with an $8 million to $10 million deficit this year.

Mayor Jim Ridenour said the city's payroll costs are "just not financially feasible" over the long term.

"When you get into 80 percent of your general fund coming from wages and benefits, you've got a problem," Ridenour said. "You can't sustain it. We've got to figure out a way to reduce that and keep jobs."

Public salaries in the Northern San Joaquin Valley could be close to reaching their peak, said Jeffrey Michael, director of the Business Forecasting Center at the University of the Pacific Eberhardt School of Business.

Pay for public employees is relatively high here compared with private sector salaries, Michael said.

Although private sector pay has been falling, public salaries have increased. The mean wage for all occupations in Stanislaus County is $40,566, according to the state Economic Development Department.

"You had an unsustainable situation before the economy collapsed, and there are no prospects for a rebound that would make these numbers work out in the long run," Michael said. "You need to talk about permanent renegotiating of salaries that makes sense in the long term."

Salaries and overtime

In Modesto, those reductions have started and there are more on the horizon.

Last year's payroll costs included $1.5 million in severance packages to a record 75 retiring employees. Employees were offered up to $30,000 to leave their jobs.

Those who stuck around — except police officers and firefighters — took 4.6 percent pay cuts in the form of furloughs. They will amount to about 12 unworked days and save Modesto $1.1 million this budget year.

Between pay cuts and early retirements, the number of city workers who made at least $100,000 fell. In 2008, the city had 200 six-figure earners; in 2009 there were 166.

Most employees on the $100,000 list are police and firefighters. City Manager Greg Nyhoff says that shows the city is putting scarce resources where residents and the City Council want them most, in public safety.

Modesto's third-highest-paid employee, after Nyhoff and Fire Chief Jim Miguel, was Fire Capt. Jerardo Avila. His base pay was $85,783, but he made $30,687 in extra pay because he trains firefighters. He also made $33,542 in overtime.

If Ridenour has his way, the days of five-digit overtime payments are numbered.

"If you look at (police and firefighters) base pay, I don't think we're out of line, but it's all this overtime. How do you control it?" Ridenour said. "We can't get rid of it, but we have to control it."

The city paid $6.5 million in overtime across all departments last year.

The mayor says he wants to zero in on overtime costs the city racks up when police patrol downtown on weekends.

He's made that vow before, however, and the city has failed to come up with a solution.

Modesto is on track to spend at least $225,000 on police overtime for weekend nights downtown this year. Ridenour says the clubs don't generate enough revenue to offset those costs.

More layoffs or furloughs

Overtime isn't the only budget line the city will take aim at this year. More layoffs or furloughs are a possibility too, says Nyhoff.