Seeking to cut its $26 million budget by 10 percent, the Hermosa Beach City Council voted unanimously to seek cuts in workers’ pay and/or benefits, offer another round of early retirement packages to workers and study a “pay for performance” approach to replace pay raises for city workers based on seniority.
Council members also agreed to consider issuing bonds to pay off some city pension funds, and said they would study further cost-cutting measures such as outsourcing jail, parking and animal control operations.
Hermosa Beach in recent years has eliminated 17 employee positions, negotiated salary freezes for employees the past three years, and became the first area city to negotiate a two-tier pension system in which new employees receive leaner benefits. The current budget is balanced, with about a projected $1 million left over to help fight a $700 million breach-of-contract lawsuit by an oil company which, officials say, could bankrupt the city.
The city also has $14 million in unfunded pension liabilities, according to a cautionary report by a Los Angeles County civil grand jury.
The council directed negotiators to use upcoming negotiations with employee groups to seek cuts in their compensation, which could be sought in salary or benefits, or both.
Sylvia Moreno, an 11-year city employee and president of the Professional and Administrative Employees Association, told the council that the workers already are making due with less, and are feeling the strain.
“While we, the employees of Hermosa Beach, have been able to ensure that services remain at the level experienced by the community, that does not mean that we have not felt the impact of these changes,” she said.
“Many of us are dealing with significant increases in workloads, stress, and taking on added responsibilities,” she said.
“Although city employees are harder than ever with fewer staff, the City Council believes we are overpaid and should happily accept reductions and/or layoffs,” Moreno said.
Councilman Peter Tucker said he did not take a request for pay cuts lightly. He told Moreno that 6 percent pay cuts in Redondo Beach, where he works as a building inspector, have devastated morale.
“We have suffered greatly in our pay to the tune of a 6 percent pay cut. The morale at City Hall, there isn’t any. The people are just like robots,” Tucker said.
“I’ve always been proud of our staff here and the job they do for our community,” he added. “…Anything we can do up here to ease that pain, I will be leading the charge.”
Tucker called layoffs “a last resort.”
Councilman Michael DiVirgilio, who has spearheaded the effort to cut the budget 10 percent, said the city’s workforce “is lean” and pointed to the freezing of vacant positions and pay levels.
But, he said, the number of employees has dropped 12 to 14 percent in the last couple of years while “employee costs dropped slightly more than one half of 1 percent,” showing that salaries and benefits should be examined.
DiVirgilio said for the long term, the council must study replacing seniority-based pay increases with a merit-based system. “We need to pay the positions based on the performance and value of that position,” he said.
Council members noted that in addition to reducing costs, they have sought to increase revenue by updated fees charged to residents and developers, and asking voters for some increases in business license taxes. ER
