Modesto warns of deep budget, service cuts in coming years without more revenue
The Modesto City Council on Tuesday approved the city’s $508 million operating budget for the fiscal year that starts July 1, but not before officials talked about budget challenges and the prospect of more cuts to services in the coming years without more revenue.
The council then approved firefighter pay increases that will cost $1.4 million over the next two years.
The council at its June 28 meeting is expected to approve placing a 1% sales tax increase on the November ballot. If approved by voters, the tax is expected to raise about $39 million annually for the city’s general fund, which makes up about a third of the operating budget. About 80% of the fund is spent on public safety.
Modesto resident Emerson Drake accused the city of ignoring its financial problems over the years while continuing to approve pay increases for its employees.
“It’s almost as if the City Council has decided to run headlong into this (financial crisis) by not holding back our spending,” he said. “... But you’ve ignored chances prior to this to be fiscally responsible.”
City Manager Joe Lopez refuted Drake’s claims. He said the city has been a good steward of its finances, including working on addressing its steeply rising pension costs. Modesto is a member of the California Public Employees’ Retirement System, which is asking its members to pay more.
Lopez said the city’s employees have stepped up by contributing more toward pension costs, and the City Council has approved setting up a trust to accumulate money to help offset rising pension costs.
The city’s pension costs have doubled since 2011, from nearly $20 million then to nearly $40 million now, according to a presentation at the city’s April budget workshops. The costs are projected to reach about $50 million in five years.
Expenses keep rising
“I completely disagree with your assertion that this council has turned a blind eye,” Lopez told Drake.
Modesto officials say while general fund revenues are growing, they are not growing as fast as expenses, primarily employee compensation. Officials say the city has balanced its general fund each year through freezing or reducing positions, deferring maintenance and other expenses and using one-time money.
The general fund is supported by sales, property and other taxes. Lopez said the fund’s revenues are inadequate for the level of service residents expect and deserve. He said after many years of budget cuts, the city is reaching a tipping point and faces more drastic reductions without additional revenue.
Councilman Chris Ricci said when he was first elected in November 2020, his views were similar to Drake’s. But Ricci said his perspective has changed as he’s learned more about city government and its challenges.
Modesto has to compete
Ricci said Modesto has to offer competitive compensation if it wants to attract and keep good employees. He said if Modesto does not, police officers and firefighters can go to nearby communities for better opportunities. “We just can’t freeze salaries,” Ricci said. “That’s not an option.”
The council approved a two-year labor agreement with the Modesto City Fire Fighters Association. The terms also apply to the Fire Department’s nonunion firefighters, from battalion chiefs to the fire chief.
The agreement includes such enhancements as increasing the pay incentives for longevity and education. For instance, a firefighter with a bachelor’s degree will see his education incentive increase from 3.5% to 5%.
And starting in July 2023, the agreement increases the number of step increases in the salary schedule from five to six. Firefighters receive the increases after a certain length of employment in which their performance meets expectations. The newest step is 5%. The city report does not give the increases for the other steps.
The agreement replaces one that ends June 30.
According to information on the city’ website, the salaries for firefighters range from $75,472 to $91,746 for a firefighter, $83,302 to $101,271 for a fire engineer, and $96,626 to $117,429 for a fire captain. This does not include incentive and other pay and overtime.
This story was originally published June 9, 2022 at 12:09 PM.
