Saturday, April 13, 2013

Fortuna Facing Public Employee Crunch

Shame to see Fortuna seeing the budget crunch as reported in the Times- Standard the other day. It seems Fortuna joins many other cities in struggling with quickly rising employee costs and either flat or falling revenues:

"City numbers show that health insurance costs and employee salaries have roughly doubled since 2002. Retirement expenditures to the California Public Employees' Retirement System have more than tripled in that time. This fiscal year, the city is facing a 10 percent increase in health care costs and a 1.5 percent increase for retirement benefits."

As I've mentioned before, I'd love to see how Eureka fares in this regard. The above story has me becoming even more convinced that Eureka's recently passed sales tax increase might have been meant to cover the ever increasing gap between revenues and rising employee pension and health care costs more than anything else.

I'm curious what percentage of Eureka's general fund went to employee pay and benefits before Measure O, and what percent goes to it now? I thought I'd try and figure it out myself but accounting certainly isn't my forte. These pdf files of Eureka's last two budgets help a little...maybe. Maybe not:

According to the pie graph of revenues for the 2011/2012 budget, taxes accounted for 33% of city revenue. In the 2012/2013 budget, taxes accounted for 27% of city revenue.

How can this be? Measure O should have increased tax revenue. Maybe because Measure O wasn't in effect yet? I'm guessing the 2013/2014 budget would be what we need and that's not available.

As far as expenditures go, 2011/2012 shows 48% of the general fund being used for salaries and benefits and 7% going for debt service. 2012/2013 has 49% going for salaries and benefits with debt service climbing to 10% of the budget.

So, salaries and benefits climbed 1% over the year but debt service went up 3%. I wonder if the increase in debt service is related to the city using bonds to meet their commitment to the retirement system?

Then I thought I'd look a bit further back. The 2007/2008 budget is as far back as I could find. Debt service took up 11%(?) back then. Salaries and benefits took up only 45%. Since it's up at 49% four years later, that would mean it's taking up about 1% more of the budget each year at the current rate.

I'm still not sure how Eureka compares to Fortuna as far as employee pension and health benefit issues. Is Eureka, or will Eureka be in trouble, too? Anybody else want to take a crack at it? I suppose I could always just call City Hall and ask.


At 10:01 AM, Anonymous Anonymous said...

"Henchman Of Justice" says,

reduced sales transactions within city limits means that Measure "O" is less effective. Need consumers to generate sales taxes. Empty storefronts, higher unemployment, etc... Be sure to pay attention to any schemes of new taxation where implicit uses of the funds are not "spelled-out" clearly, thus allowing bureaucrats to "play games" with taxes. - HOJ

At 10:18 AM, Anonymous Eel River Ermie said...

Go to and take a look at the number of employees and salaries and benefits for each city. I think this is 2011 data but it will give you a idea of the costs. You also have to extrapolate the seasonal and part-time folks from the overall count and salary averaging. For instance Fortuna shows some 170 employees when in fact there are only about 80 full time employees.

At 10:50 AM, Blogger Fred Mangels said...

I think this is 2011 data but it will give you a idea of the costs.

Thanx, Ernie. I'm not so much interested in the actual costs of city employees themselves as I am in how much their costs can continue to be supported by the city's revenue.

At 5:40 PM, Anonymous Anonymous said...

"Henchman Of Justice" says,

Societal costs are too high across the board (all industries + government).

Societal costs will be Americas downfall if it ain't disease first.

As a matter of fact, past societies have encountered the same fate, thus raising the thoughts again about looking into the past to predict the future.

Lies, lies and more lies, that is what America has devolved toward. Lies are meant to "cover-up" and "protect interests and gains".

Lies, lies and mroe lies, get ready for the real socio-economic crash as all the past hick-ups have been "filler gasps".

The intention of small and limited government is to keep costs LOW to avoid bankruptcy, default.

Alas though, to keep power and control, government must recruit more public employees for the ever-expanding size of all levels of government. Recruit the votes who depend on their jobs and viola, government is building an army of staters who will eventually must choose between sides when law and order is breached and fails.

America is a cynical place to live these days! - HOJ

At 9:26 PM, Anonymous Anonymous said...

Dweedle dumb and tweedle dee, serve your goobimint masters...


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