Modesto considers not filling jobs, furloughs, layoffs as pandemic hits budget
Modesto is considering furloughs, not filling about two dozen open public safety jobs and — in the worst case — even layoffs as part of balancing its new budget that is excepted to be several million dollars short because of the coronavirus pandemic.
Budget Manager Steve Christensen and city spokesman Thomas Reeves laid out this stark scenario Friday as they spoke with The Bee about the city’s proposed 2020-21 budget, which starts July 1.
The City Council’s Finance Committee will meet Monday through Thursday to discuss the proposed budget. The budget would then go to the full council at a later date for discussion and adoption.
Christensen and Reeves emphasized there still are lots of unknowns, and city officials are putting together a budget during a rapidly changing economic environment. “These are early projections, our best-informed estimates,” Christensen said.
The unknowns include the outcome of the city’s talks with its labor groups and what kind of concessions may come from that and whether the city will get financial help from the federal government to deal with the pandemic’s economic hardship.
The roughly $2.2. trillion Coronavirus Aid, Relief, and Economic Security Act that Congress passed and President Donald Trump signed into law in March included financial help for families, businesses, states, counties and cities with 500,000 or more residents.
Stanislaus County received $96 million from the CARES Act. Christensen and Reeves said the county could give some of that to its cities. And the U.S. House of Representatives passed Friday another coronavirus bill that includes help for cities, though it faces opposition from Republicans.
Budget assumes better economy
The proposed budget is based on the assumption the local economy will improve as Stanislaus County eases the restrictions put in place to stop the coronavirus from spreading. The city could be looking at more cuts if that assumption does not turn out to be true.
City Manager Joe Lopez said in a statement the city will meet its challenges while serving residents.
“In these times of navigating uncharted territories,” he said, “the delivery of city services may look different in the future, but I am committed to working with our council, our dedicated employees and labor partners to ensure we provide quality services to our community.”
Modesto’s proposed 2020-21 operating budget is $443 million, but much of the focus will be on the budget’s general fund, which is roughly a third of the operating budget
More than three-quarters of the general fund is spent on the Police and Fire departments. The fund is highly dependent on the economy because much of its revenue comes from sales and other taxes.
Christensen said before the pandemic and California’s March 19 stay-at-home order that has crippled the economy, Modesto was expecting general fund revenues of roughly $146.2 million for its 2020-21. It is now forecasting $139.4 million, a shortfall of roughly $7 million.
$8.1M shortfall in current general fund
He said the city’s proposal to balance the general fund includes not filling 30 open general fund positions. He said about 22 are in the Police and Fire departments. How many are for police officers and firefighters was not available Friday.
Modesto also is looking at furloughs and layoffs throughout its organization. Reeves said layoffs would be a last resort. He and Christensen were not yet ready to discuss the furloughs and layoffs in detail. However, Thomas said: “The word we’d use at this point is ‘significant.’ But I can’t give specifics.”
Modesto put in cost-savings measures in mid March as the stay-at-home order and restrictions took hold. But Christensen said Modesto expects its current general fund to have an $8.1 million shortfall because of the economic fallout from the pandemic.
He said the city is looking at filling that shortfall with $6.5 million from its $18.4 million in general fund reserves and the $1.6 million it has left over from its 2018-19 general fund budget. Christensen said it would not be prudent to use reserves to balance the 2020-21 general fund when there is so much uncertainly about the economy.
“We don’t want to deplete our already dwindling reserves,” he said.
The budget hearings are 10 a.m. to 3 p.m. and will not be open to the public as part of the city’s social distancing efforts. But the public can watch by livestream at http://media.modestogov.com and participate during the hearings by emailing ccmeetings@modestogov.com.
This story was originally published May 16, 2020 at 5:00 AM.
