In the last few weeks I've written a lot about the city of Lakeport's budget challenges. Last week city staff gave the Lakeport City Council a very good proposal to address this year's shortfall.

I've been covering Lakeport's city government for close to eight years, and as a careful observer of the city's business I feel able to offer a few suggestions of my own on how the city can close a $400,000 budget gap.

Going back to last week's special budget meeting, despite the concerns voiced by some council members that the actual mismatch between spending and revenue wasn't really addressed, I actually think it was. Staff has curtailed spending by $200,000 so far this budget year, so that's at least half of the problem addressed right there.

But, let's say that there still would be a $400,000 gap going forward, accounting for reduced revenues in the form of sales and, eventually, property tax due to reassessments.

And let's say that city staff is able to further cut down expenses by $100,000 a year, and that several staffers take a “golden handshake” early retirement that saves about $71,000 in the first year and $96,000 in the second.

In addition, the city could shift payments for county and chamber of commerce marketing services to the redevelopment agency, which could successfully argue that those services benefit the redevelopment area.

The city's redevelopment attorney thinks they should pay no more than $5,000 for each event or service, so that might mean curtailing contracts with the county and chamber significantly, or otherwise using redevelopment to supplement general fund payments. Still, that could mean about $20,000 in savings to the general fund.

So, let's say we're now down to a $200,000 budget gap. Where to go next?

My basic philosophy about budgets is this: Balancing a budget and keeping spending plans sustainable are impacted not just by actual bottom line decisions, but by smart management that approaches critical resources with an eye to the future.

Luxury items that have to go

First off, it's time to look at getting rid of City Council salaries and benefits.

Do they deserve to be compensated? Absolutely. But sometimes what you deserve and what you get are two vastly different things. The more important question is, can the city of Lakeport currently afford it? Maybe not. I'd go so far as to suggest this is a luxury item in the current economic climate.

Council members currently receive $300 a month each, which comes out to $18,000 annually. In light of the fact that city employees are now having to take furloughs, essentially cutting their salaries, I think it's only right the council give their own salaries back until the city's financial condition improves.

The bigger issue is the full health benefits package – including health, dental and vision – council members receive for themselves and their spouses, which is budgeted to cost the city $58,503 in this budget year. Those costs can expect to grow in the years ahead; those costs have risen more than $3,000 since the 2005-06 budget year.

Salaries and benefits together are costing the city $76,503 this year, or $1,275.05 per month, per council member.

For the budget years 2005-06 up through the current fiscal year, council salary and benefits packages have cost the city approximately $300,492. That's not a drop in the budget for a small city like Lakeport.

It's interesting to note that the city of Clearlake's annual expenses for council members are actually much higher. While they pay the same $300 per month salary, health insurance for the fiscal year 2008-09 is budgeted at $94,200, plus $2,970 for redevelopment agency stipends, for a grand total of $115,170. That's up by approximately $69,768 since fiscal year 2006, when two council members waived coverage. In 2005, the city administrator had suspended council health insurance temporarily.

Compare what the two cities offer to the benefits the county Board of Supervisors' members receive.

This year's county budget includes $42,000 for all five supervisors. That number is the county's share of the premium, not the supervisors' individual share, which they pay out of pocket. The county doesn't pay 100 percent of the premium for dependent coverage for any county employee, including its supervisors.

Keep in mind that the supervisors are considered full-time employees.

If things begin to look up for Lakeport in the future, maybe it would be reasonable to consider reestablishing a generous salary and benefits package for council members.

But when they're asking employees to give up pay, and looking at curtailing the benefits of both current employee and retirees, it's hardly reasonable that the council members themselves shouldn't also participate in the sacrifice.

In fact, I believe self-sacrifice is an essential ingredient in effective leadership. It basically says, “We're all in this together.”

This, I'm sure, will be unpopular with the council. The benefits were mentioned by Burke briefly in the special Feb. 24 budget meeting. The reaction from the council on that point was silence.

My feeling is, if you're on the council to get the benefits, you're there for the wrong reason.

The big ticket item

OK, so we're now down in the range of a budget gap of $123,000.

What to cut next?

In my estimation, it's the big ticket item that the city can't really afford right now: The city manager job.

The city established a city manager position in 2001. The current salary and benefits package for the position totals roughly $110,000, according to previous statements by city officials. That's a salary level pretty comparable to much larger cities, and it's beyond what Lakeport can afford.

So I'd suggest one of two options.

First, indefinitely suspend the city manager position. Appoint one of the city's department heads to be a “first among peers,” essentially a position of senior rank; that person would then be the point of contact between city staff and the council. Give them $20,000 a year extra for that duty – think of it as hazard pay. The city last year went through an expensive reorganization process to create new titles and rearrange the place. That has nicely set the stage for this transition.

My second suggestion is better.

The redevelopment manager position goes hand in hand with that of the city manager. Combine the responsibilities of those two jobs into one. Then the council can do what it should have done nearly two years ago: Hire Richard Knoll to lead the city and give him a raise, which will still save the city money.

I want to make clear here that I think Kevin Burke is doing a fantastic and effective job as interim city manager. But he's made clear numerous times that he doesn't want the job permanently.

If the average city staffer has intellectual capital, Knoll is a literal bank of it. He's been with the city for years, is calm in the face of challenges, understands the city's responsibility to its citizens, has extensive knowledge and contacts, and is ultimately a very decent person, a trait that's often in short supply in any field these days.

He's no yes man, and that's also what the city needs – someone who isn't afraid to tell the council the truth when they need to hear it. To simply hire someone to say yes to you, even when they really shouldn't, is like hiring someone to watch your kids who won't hesitate to give them beer and your car keys. (Apologies to PJ O'Rourke for a wild paraphrase of one of his quips.)

In either scenario, the city stands to save as much as $90,000.

So, we're now down to about $50,000, which can be recovered with a nip here and a tuck there, including modest reductions in professional services budgets and training, without completely gutting those items altogether.

A better approach to city staff

The proposals I've offered above are made with an eye toward protecting one of the city's most valuable resources: its staff.

The city of Lakeport has an eminently qualified group of employees who, despite the recent tough times and enormous normal workloads, have stuck by the city and continue to try to serve it and the public the best way they can.

So it's been especially hard to see them have to take a 5-percent pay cut in the form of furloughs – which the city's employee bargaining units agreed to do – in order to help the city's bottom line.

You can bet that 5-percent pay cut was no small sacrifice for many of those employees.

So the suggestion that the city consider an additional furlough, raising the cut amount to 10 percent in the coming fiscal year is, to me, patently unacceptable.

Further, I believe the city should have no pay cut at all in the year ahead.

What about saving money, you ask? Aren't furloughs better than layoffs?

Yes, in the short term, they are vastly preferable to layoffs.

However, I think that the furlough is an emergency measure that simply shouldn't be repeated, and that if it's used again it will do quite the reverse of its intended use, and end up costing the city money.

That cost to the city will come in the form of experienced employees walking out the door, taking their intellectual capital – an often hard-to-quantify value that includes a person's experience, knowledge and training – with them elsewhere. In the current job market, they may not leave right away, but they will leave eventually. The cost to replace those employees could easily exceed any savings.

Just as costly will be the damage to the city's reputation if it begins layoffs, a point Burke has made numerous times.

The specter of layoffs has been hanging about the city like an unwelcome guest over the last year, and the council needs to dispel it immediately, for the sake of the city's reputation and employee morale.

Some of the council appear to want to say the word “layoff,” but are weighing the political ramifications. Let me remove any doubt for them: The fallout will be severe.

And why take that step if it may not be necessary? I think there are better ways to address the city's budget problems and they don't involve making cuts at the expense of employees or the much-needed services they provide to the public.

It's crucial to point out that this isn't just about employees, but the work they do for the public.

If you don't like the fact that you can't get your street paved now, just wait until there's no one to run the pavement grinder. Want the parks kept up? What if you suddenly have two or three less people to do that work? How will that make the city look to the rest of the world? And what about when you need a police officer and can't get one?

These are questions everyone in Lakeport – from council members to the citizens paying the taxes – must weigh carefully in the months ahead.

E-mail Elizabeth Larson at This email address is being protected from spambots. You need JavaScript enabled to view it..

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