EVERETT — City officials are in crisis mode after learning about yet another multimillion-dollar hurdle in balancing the city’s budget.
The city payroll is projected to cost $3 million more than expected in 2012. That’s on top of a $10 million projected gap that officials were struggling to
The unexpected additional expense emerged last month when the city received the annual Consumer Price Index number.
The index, a measure of prices paid for a market basket of goods and services, had shot up 3.15 percent since last year. The city had prepared a budget based on a 1 percent increase.
A thousand city employees represented by six unions have contracts stipulating a cost-of-living bump tied to the index.
“We thought we could see the light at the end of the tunnel,” said Debra Bryant, Everett’s chief financial officer. “Then the CPI came in and hit us like a boulder from the sky.”
Mayor Ray Stephanson had a solution: He asked all city employees, including those represented by unions, to forgo cost-of-living raises next year. He approached union leaders quietly in a meeting July 25 to talk about it.
The idea didn’t go over well with union leaders, who say the idea was presented on short notice and with no room for discussion.
Leaders of the six unions sent the mayor a letter, stating they were ready “to meet with the city to explore cost savings ideas.” Without any opportunity to talk about other ideas, they had “no choice but to respond in the negative.”
The nearly 500 members of Everett Municipal Employees Local 113, part of the American Federation of State, County and Municipal Employees, want to talk about furloughs or other cost-saving measures, said Darrell Stuart, president of the union.
“I don’t think what he’s asking is unreasonable, given the economy,” he said. “It’s just the way he was asking. He didn’t seem willing to explore other alternatives.”
Some of the employees in his union also wondered why the city couldn’t have better forecast the Consumer Price Index, Stuart said.
Now city officials are scrambling to put together a proposed balanced budget, something that by state law must be in front of the City Council next month. That’s the reason, the mayor said, he gave unions such short notice.
In May, the city projected $110 million in revenue and $121 million in expenditures in 2012.
Department heads are hoping to spend $2.5 million less than originally budgeted this year, which can be put toward next year’s budget, Bryant said. The city also is proposing to again defer contributing to the city employee pension fund. Everett is ahead of schedule in meeting that obligation. That should save between $4 million and $5 million.
The mayor wrote city employees a memo last week detailing the situation and asking for cost-saving ideas.
“Over the past few years, unlike many city governments around the state, we have been able to minimize the recession’s impact on our residents and employees,” he wrote. “Rather than deep service cuts, furloughs and layoffs, we have maneuvered through the downturn thus far through attrition, deferrals and efficiency-related cost-saving measures.”
In the letter, the mayor told workers that he wants to avoid the “damaging impact” that layoffs would have on city employees and their families. He added that he can’t promise that there won’t be layoffs.
Reporter Debra Smith: 425-339-3197; firstname.lastname@example.org.