Layoffs, cuts to community organizations likely

The city’s financial situation has taken a turn for the worse with administration officials saying they may have to resort to employee layoffs to cope with drastic revenue declines.

Though financial numbers for December have not been made public, the administration indicated Wednesday evening that opening revenues for 2009 will be down by at least $1.2 million from assumptions made when the 2009 budget was approved on Dec. 17.

A Dec. 23 administration memo stated that 2009 opening revenues would be down by at least $500,000 based on November numbers.

At a council retreat last Thursday, City Administrator Mark Dombroski told council members that all options are on the table, including layoffs for city staff.

“It is not our first option by any means,” Mayor Darlene Kordonowy said. “If Building and Development Services and Real Estate Excise Tax continue to fall off at the rate it did, we’ve got extra people that we can certainly reassign. But that means there is no work happening at planning and permitting. The question is, do we wait a couple more months or do we look at layoffs now?”

So far, layoffs have been avoided by the city, which has reduced staffing levels through natural turnover, leaving positions vacant and implementing a 10-day furlough for most city staff.

Staff levels for 2009 are budgeted at a level of 140 employees.

Kordonowy said the furlough, which was negotiated by Dombroski over an eight-week period and agreed upon by city union members in December, was an interim step while the city watched its financial situation.

Dombroski met with International Association of Machinists (IAM) union representatives Thursday.

Before the meeting, which was arranged before revenue declines were projected, Dombroski said layoffs could be a topic of discussion.

After the meeting, IAM union business representative Ron Harrell said layoffs were likely.

“It looks like there will be some isolated labor reductions, won’t be a lot of folks ultimately,” Harrell said. “It will probably happen, revenues are way below the expectations coming into this years.”

Despite the prospects of cuts, Harrell said the city had been cooperative with the union regarding the financial burden.

“They have been really direct with us about what has gone on,” Harrell said. “The City of Bainbridge Island has been one of the most forward looking public agencies I have dealt with and they have tried to anticipate problems better than most places.”

Still, cuts may come from other areas of the city’s budget as well.

“From my point of view there are no sacred cows, everything is on the table,” Dombroski said. “The only thing we can’t touch are taxes and debt services.”

The changes mean the administration will be reevaluating the 2009 budgeted spending allocations and will eventually recommend further cuts to the city council. The city will also begin operating on a month-by-month basis, carefully monitoring all incomes and expenditures. Dombroski said that such close monitoring hasn’t been done before.

“It’s certainly something done in the business community, but the city has always had plenty of reserves,” he said. “It’s never been a high priority, but it’s how we need to manage our business.”

Revenue shortfalls will ultimately have an effect on community and government services. What those changes will look like depends on cuts proposed by the administration.

“The prospects are daunting,” said Chris Snow, the outgoing finance committee chairman, regarding the potential for layoffs and further cuts to community services. “We are reaching that threshold; there could be a whole different set of problems that come with it.”

The council agreed to hold a special finance meeting to discuss the implications of the downturn. The meeting is scheduled for 5-7 p.m. on Jan. 28.