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City to tap into reserves

Council also mulling over voluntary separation incentive program for staff
By: Jon Brines, Placer Herald Corrspondent
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The Rocklin City Council agreed 4-to-1 to dip into the city’s virtual savings account, it’s cash reserves, to balance the next fiscal budget. City Manager Rick Horst tried to massage the concerns of worried council members, during Tuesday’s budget hearing, that the city’s budget is conservative and that on-going cost efficiencies are making the outlook better every day. “The worst thing I can do as your city manager is to sit back and let Humpty Dumpty fall off the wall,” Horst said. “It’s my job to stay in front of it.” Horst proposed the city maintain a self-insured loss reserve of an additional $1 million for any expenses not covered by insurance. He garnered unanimous support for the creation of a general fund operating reserve. According to city documents, the city would maintain an operating reserve equal to 25 percent (or $8,020,000)of the planned budgeted expenditures in the General Fund, less any capital equipment and/or project cost determined by the council. “It is the consensus from the whole senior management team that this is doable,” Horst said. Horst also proposed reducing the current emergency cash reserves from $2 million to $1 million. The new fiscal budget due July 1 will also dip into the city’s cash reserves by $840,862, according to Horst. That didn’t sit well with council member Brett Storey, who wanted more cuts before savings were used to balance the budget. “I always thought it would grow, but we’re taking it every year,” Storey said. “I am not comfortable at all with $840,000.” Storey said he was disappointed the city did not present a proposal that would leave reserves alone and said more cuts should have been considered. “I’d like to hear if there is any more ideas out there,” Storey said. Council member Peter Hill said the city needs a break from the numerous cuts implemented this year. “We’ve gone through a substantial reduction in services,” Hill said. “We saved (reserves) when we didn’t need (them) and now we’re going to spend it when we do need it. I am not willing to cut anymore.” Horst is optimistic the residents will be unaffected by cuts despite the more than $1.1 million in cost efficiencies identified in the last three months that included things like eliminating summer swim lessons, continuing furlough Fridays for some staffers and reorganizing the police department. “It is my feeling, as far as the citizens are concerned, I don’t think they will see impacts in services,” Horst said. “The impact is on us — the employees.” Council member Scott Yuill also had reservations about using reserves, but said the budget as a whole was doing a lot to save money with cost efficiencies, reorganization and pension reform. “If we weren’t discussing any of those and this was just an exercise of just spending more money I would say, ‘no.’” Storey took issue with the apparent security expressed by council members in the new proposed reserve policies. “If sales tax and property tax don’t increase, it doesn’t matter what we have written in a policy. We’ll be cutting,” Storey said. The budget anticipates a 2.5 percent decrease in property tax revenues, but an increase of 2 percent in sales tax revenues. Horst said the city can continue to weather the recession. “We will make course corrections as we go along,” Horst said. One of the new cost savings ideas that Horst got the nod from council to pursue is another round of voluntary separation incentives for city workers. The city will now be surveying employees to gauge how many employees are interested in up to 16 weeks of additional salary, depending on experience, if they agree to quit their jobs. The new program will be different than the controversial early retirement buyouts of 2009. “This will have no impact on pensions,” Horst told the council. The council is expected to vote on a finalized version of the incentive program before it can be implemented. The new budget is expected to be approved later this month.