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City Needs To Achieve Cost-Certainty With Labor Units, Soon

Jamestown entered the year with a $3.76 million surplus.

It certainly won’t be ending the year with that much money in the bank.

That was already true thanks to the financial wrecking ball known as COVID-19. The news late last week that the city’s Hail Mary pass to overturn an two years of retroactive pay increases for members of the Kendall Club Police Benevolent Association has fallen incomplete means the city’s already precarious finances are even more precarious.

Friday’s decision by the Fourth Department Appellate Division confirming about $840,000 in back raises for city police officers is just the first in a series of dominoes that is likely to leave Jamestown’s surplus in shambles before too long. City firefighters will use the same legal arguments used by Kendall Club Police Benevolent Association to secure a similar raise for 2016 and 2017 that are currently in dispute between the city and firefighters. Settling those two contracts slices the city’s fund balance from $3,786,912 to about $2.1 million.

Assume, for argument’s sake, that similar raises are approved once the 2018 and 2019 contract years are settled between the two largest city bargaining units — that healthy surplus is all of a sudden down to roughly $500,000.

That would have been manageable, since it will take time for the firefighters’ contract to be settled and to settle the 2018 and 2019 contracts.

COVID-19 wreaking havoc on the city’s sales tax revenues and the uncertainty over state revenues may remove the city’s breathing room for unresolved contracts. Remember, the city can’t raise taxes because it has exhausted its state constitutional tax limit.

It is estimated the pandemic will blow a $2 million to $4.75 million hole in the city’s 2020 budget. In response, the City Council last week approved a COVID-19 Financial Restructuring Plan. The first phase of that plan cuts $1,155,674 from the budget, including a $100,000 budget reallocation from the Jamestown Urban Renewal Agency to the city because of additional funding the city has received through the federal CARES Act; a $100,000 savings through the Public Works Department central garage; a $289,000 savings in Public Work Department streets; a $251,000 savings in the Parks Department; and a $310,187 savings in overall benefits.

Other possible cuts in future phases of the plan include $228,044 in Phase 2 by cutting as many as 20 city employees from the budget. Phase 3 would lay off 10 more employees and save an additional $54,292.

Those cuts don’t come close to the low end of the projected sales tax losses, so city officials are planning to use the fund balance to plug the rest of the gap. , calls for the possibility of 10 more employee layoffs across all departments.

Plugging the COVID-19 gap with the surplus means the surplus isn’t there when the police and fire department unions come calling for retroactive raises that they are going to receive, either through negotiations or arbitration.

The city needs to achieve cost-certainty with its labor units, soon. It is difficult to see how continued years of retroactive raises are sustainable unless the city chooses to take revenues from the BPU. That option is difficult for the utility given how profits from off-system sales are required to be spent.

Buckle up, Jamestown. This ride is about to get bumpy.

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