The city of Fresno, after treading water for the last few years with stopgap measures to shore up the budget deficit, now appears to be sinking.
The city is under “severe financial stress,” Mayor Ashley Swearengin explained last week. City Manager Mark Scott even warned that the “B” word — bankruptcy — was a possibility.
Indeed, the city is in big financial trouble. The economic recession, poor city investments and extremely generous pension plans have resulted in a $2.1 million deficit this year, which would grow to almost $66 million by 2017.
Needless to say, this is unacceptable.
Rather than relying on the short-term fixes of the past, Swearengin has proposed a Fiscal Sustainability Policy to restructure the city budget and make it sustainable. Her plan controversially relies on the backs of city workers.
According to the mayor’s plan, “employee compensation constitutes such a major portion (80 percent) of the General Fund that meaningful cost changes necessarily require reduction in salary and employee benefit costs.”
Instead of laying off more employees and cutting more city services, Swearengin proposes overhauling city workers’ compensation, including salaries, medical benefits and retirement benefits.
It seems this is a non-starter for Fresno union bosses.
After declaring his disappointment in the administration, police union president Jacky Parks, in a letter to Scott, said, “Surely you do not believe that threatening the [Fresno Police Officers Association] membership will generate the meaningful discussion that has to take place to resolve the city’s financial crisis.”
Kirk Wanless, the president of the firefighters union, also expressed his disappointment, saying, “If we make another deal, do we get asked again next year? When does it stop?”
It seems that Parks and Wanless, in their efforts to protect their workers, have a short-sighted view of what is best for their union employees.
However generous the current rates of salary, medical benefits and pension may be for current employees, unless they are restructured now, they will inevitably be restructured later, for the good of no one.
Unless the unions agree to decrease employee compensation, the city will be forced to lay off more employees and cut more benefits. It will have a hollowed out structure, serving as a pension provider for former employees while traditional city functions will be cut or eliminated en masse.
In a down economy, private businesses are forced to make tough decisions. Employees must be laid off. Budgets must be restructured. Salaries and benefits must be frozen or decreased.
Government is not above the struggles that the private economy must withstand. Budget gimmicks and short-term solutions cannot work in the long run. City government must be restructured in a way that it can prosper in the years going forward, rather than being drowned in millions of dollars of debt.
Unions must capitulate, both for the good of the city and for the good of future employees. If Fresno is going to survive in the future without making harmful, drastic cuts to essential government functions, as Swearengin says, “structural changes in employee compensation are now required.”
Scott’s warning that bankruptcy is possible may have been politically unwise, but it certainly reflects the gravity of the situation.
Tony Petersen is the opinion editor of The Collegian. Follow him on Twitter @tonypetersen4.