Fresno Budget Could Get Worse

Fresno, California Swearengin says the city is nearly $28 million in the hole. She's proposed cuts that would eliminate more than 190 city positions. Many of them are unfilled jobs, but that number includes layoffs for 125 city employees. And now, one big problem could force even deeper cuts in the future.

City Councilman Lee Brand called retirement costs an 800-pound gorilla. And if nothing changes in the next five years, that gorilla's going to be almost four times as big.

A depressed economy left a lot of red on the budget charts mayor Ashley Swearengin brought to City Council as she proposed almost $28 million in cuts over the next 18 months. "When I think about all the numbers and what they say to us, it's clear we can't avoid this," she said.

The cuts will be painful to every department with five days of forced furloughs and nearly 200 job cuts. Even the SPCA loses $100,000.

"Not surprised in terms of where we are based on economics," said Councilman Blong Xiong. "But we want to make sure we're able to do what's right for our residents."

The city's losing out on a lot of tax revenue as people spend less and properties lose value. Its expenses went up too and now, there's one big cost that's about to explode.

Retirement costs eat up $12 million of this year's budget. Within five years, they'll be more than $43 million – about one out of every six dollars in the city budget.

"As part of the 2011 budget we present in the spring of next year, we will include a recommendation about how to get our arms around the retirement cost," the mayor said.

The city guarantees pensions for most of its employees, in part to make government work more attractive to people who could earn more money in the private sector. But now, a private sector standard may be the city's only option to avoid falling farther in a fiscal hole.

"Maybe there'll be a day in the future where there won't be defined benefits," said Brand. "There'll be a 401(k) and a lot less liability."

City officials will start negotiating with employee unions Friday, trying to get pensions changed into 401(k) type plans.

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