State - INACTIVE

City of Merced might lay off 7 more workers

MERCED -- For the fourth year in a row, projected budget shortfalls could force Merced to lay off workers.

That would make the city's staff cuts exceed 100 positions in recent years.

But the probable bad news is better than last year's.

The City Council will vote tonight on the proposed layoffs of seven employees and a freeze of 14 vacant positions in an effort to cut the budget and meet continuing revenue shortfalls.

"It never feels good to have to lay people off," City Manager John Bramble said. "We've got just so much money, and we've got to make certain decisions."

The projected layoffs come on the heels of three years of deep staff and budget cuts. The staff reductions and layoffs over the past three fiscal years, plus the proposed cuts in 2010-11, will equal 101 lost positions from job freezes to layoffs, according to city management.

This year's planned layoffs and the freezing of 14 positions won't fill the 7 percent drop in general fund revenues. This year's proposed expenditures are more than $7 million less than last year's.

Even after the staff cuts, the city will be left with a projected budget shortfall of $3.4 million, which will be filled with reserve funds, Bramble said.

Over the past three years -- including the coming fiscal year -- the city has used $10.5 million of its reserve funds to fill budget gaps.

Although the 2010-11 budget has yet to be completed, the signs of increasing financial troubles are many, according to a city staff report and Bramble.

Property taxes fell 16 percent in the past year. Local sales tax saw the 13th straight quarter of declines. In addition, the state plans to withhold gas taxes for the first nine months of the 2010-11 fiscal year.

To help meet the coming shortfall, Bramble asked department heads to cut 5 percent to 10 percent from their budgets. The city has frozen all vacant positions.

The savings from layoffs and freezing positions will be $1.7 million, Bramble said.

If approved by the council, the layoffs would become effective June 13, with a single exception staying on until Oct. 31.

The police and fire departments didn't have any layoffs but made cuts in other areas.

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