Fresno's credit rating downgraded from stable to negative

FRESNO, Calif.

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Friday, City Manager Mark Scott went public with his city-wide employee memo requesting cuts to salaries and benefits. Soon the city will face tough decisions, like whether to pay for a new police cruiser or officer training.

Three separate credit analysts recently sent credit reports to Fresno City Hall. One cites the city's lack of plans to build reserve funds for the rating drop. Another blames a 'weak economic base, with unfavorable demographic and economic trends.'

"Fresno is in a cash flow situation right now where we can't afford to be off in our projections," Scott said. "We can't afford to have a catastrophic liability claim. We can't afford things that, in many respects, we don't have control over."

Scott said city finances are so far in the red there is little to no reserve fund left. The negative credit ratings disqualifies city hall from borrowing any money. That means if a replacement fire truck or police car is needed the city has to pay cash for it. And with little cash on hand that leaves the city in a tight spot.

"Now, it's time to deal with the systemic problems that now we're paying more than we can afford, in terms of labor and benefits at all levels of the organization," Scott said. "So I'm asking employees to realize there are consequences of not voluntarily helping with that."

Back in March, Scott asked all city employees to take pay cuts. The union representing Fresno City Firefighters had agreed to a 3 percent cut over two years. That and a large reduction in staff is already straining the department. Most other departments offered no concessions.

And now unions, like the one that represents Fresno city bus drivers, will face tough negotiations with the city. Scott's proposal calls for a minimum 5 percent pay cut, a cut in medical plans, a reduction in paid time off, as well as lowering future retirement benefits.

The city has cut back on staffing and implemented furlough days. This time around, Scott said layoffs are not the answer, neither is asking the public for increased taxes.


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