The city of Santa Monica is asking staff to voluntarily leave their jobs as the city faces a looming budget crisis due to the coronavirus pandemic.
City Council will hear a proposal at its April 14 meeting to incentivize departures of current employees. The “voluntary employee early separation program” will include compensation and benefit guarantees for workers who choose to leave their municipal jobs. The agenda item also calls for staff to return to City Council on April 28 with a broader plan for restructuring operations and balancing the budget to address impacts of coronavirus.
The proposal is a reaction to the massive budget deficits staff are predicting as a result of the ongoing pandemic. The coronavirus lockdown has shuttered stores, emptied hotels and vacated beaches.
“Because the city relies heavily on revenues impacted by the quarantines including shopping, tourism, dining and entertainment, our city is facing massive deficits to our budget as a result of the pandemic,” the staff report said. “The Voluntary Employment Separation Incentive Program is intended to mitigate some of these impacts while also avoiding some reductions in our workforce.”
The report said the city will need to restructure and workforce reductions are expected.
“Staff projects that between the period through June 30 (the end of the fiscal year), the city will have a $72 million budget gap in its General Fund in large part due to the sudden loss of revenues,” the report said. “We expect to use all of our Economic Uncertainty Reserves and some of the city’s rainy day fund to fill this General Fund gap.”
If the city were to reopen for business in July, officials predicted a $154 million deficit through June 2021.
City Manager Rick Cole said the city’s workforce will be significantly reduced, and officials will need to prioritize foundational programs and emergency response and recovery.
“This comes at a time of dramatically changed community needs due to the health emergency and requires us to look at every viable option to ensure our community can rebound as quickly as possible and for our city to balance its budget,” City Manager Rick Cole said in a statement. “It is too soon to make definitive judgments, but we are urgently assessing options for recommendation to the City Council for decisions in the weeks ahead, starting with a recommendation for a voluntary separation program to provide greater flexibility as we reshape services in response to the public health emergency and its impact on city revenues.”
Incentives to leave a job include a cash payment of up to $10,000 and 18 months of city-paid medical benefits.
Councilman Ted Winterer said City Council is aware of the need to reduce costs.
“These are unprecedented times,” he said in a statement. “During the Great Recession, Santa Monica was one of very few cities in our region which did not have to lay off employees and was able to weather the economic storm with only moderate disruptions to services.”
However, he said the current economic crisis brought on by the need to fight the spread of coronavirus are far more sudden and devastating to the city’s bottom line.
“Today’s health and economic crisis is much different, posing fiscal challenges of a much greater order of magnitude than we saw in 2008,” he said. “We are confronted with a catastrophic decline in municipal revenues which we anticipate will extend for at least one more year. Hotel bed tax, parking revenue and sales tax have evaporated almost overnight. So we will have to make cuts to balance our budget while maintaining the most essential city services.”
Staff will return to City Council at the end of the month with a proposal to restructure government services. According to the report, a restructured government would continue to focus on public safety, reduce revenue producing programs to self-sustaining levels, cut positions across the city and possibly bring back high value programs as revenues improve.
Cole met with union representatives Monday to discuss the proposal.
“City employees are committed to protecting and serving this city, its citizens, and its resources,” said a statement issued by the Coalition of Santa Monica City Employees. “We are fully confident that city leadership will be trailblazers during this trying time by guiding us all, employees and citizens alike, with creative solutions to our shared challenges that comply with the law and uphold Santa Monica values of equality and justice.”
City Council is scheduled to meet via teleconference at 5 p.m. on April 14. Visit https://www.smgov.net/departments/clerk/agendas.aspx for more information.