By SCOTT SMITH, Kokomo Tribune staff writer
About 50 Kokomo firefighters looked on grimly Monday evening as their union leaders informed Kokomo Common Council about city layoffs announced late Friday.
Six city workers, including two rookie firefighters, two city day care workers, a police secretary and a wastewater plant worker, learned Friday they were officially laid off.
News of the layoffs comes as all three city unions appear to be locked in a standoff with city negotiators on new contracts, and administration officials are expressing concerns about the city's cash flow.
Firefighters Local 396 vice president Chuck Sosbe called the layoffs "disturbing," telling city council members his department is now five firefighters short of being fully staffed. Three firefighters who have recently retired haven't been replaced, he said.
"It creates safety problems," Sosbe said. "This is the hardest time of year [for staffing], with vacations scheduled. We don't want to shut trucks down."
Mayor Greg Goodnight said Monday the staff cuts are part of the administration's plan to deal with the fallout from the Indiana General Assembly's property tax reforms.
Those reforms, often referred to as House Bill 1001 (the state budget bill), are expected to cut city revenues by $2.2 million over the next two years. The city will take a $675,000 hit next year, and another $1.5 million hit in 2010.
"We've been putting together a plan for a few months now, and the firefighters have been asked to run on minimum staffing," Goodnight said. "There's not going to be a safety risk, because the [fire] chief can take people out of the administration and put them on the trucks. There's a good chance this is just personnel shuffling."
Sosbe, however, said the city has budgeted this year for the firefighters now laid off.
"We know House Bill 1001 is coming up, but the big cuts don't take place until 2010," Sosbe said, adding that the city could consider raising user fees or local income taxes to replace lost property tax revenue.
But city officials indicated Monday they intend to take budget measures proactively.
Controller Jim Brannon told council the city is expected to break even this year, spending as much revenue as it takes in.
But he warned the city's cash flow is low, particularly in the city's general fund.
The general fund, which comprises about 67 percent of the total city budget, pays most city salaries. About 73 percent of the general fund comes from local property taxes.
Brannon said he expects the city to end the year with about $1.8 million in the general fund, which he said is not enough of a cushion. The city can also draw on $2 million from a no-interest state loan the city obtained to make up for Delphi Corp.'s non-payment of property taxes.
"We've got real challenges paying our bills and remaining a viable city," Brannon said. "If we have any kind of an emergency, we're going to be in trouble."
Goodnight has insisted the city will do what it needs to do, in order to deal with property tax caps. And Goodnight has said the city will make those cuts without dipping into other funds to bolster the general fund.
In particular, Goodnight has been critical of the use of economic development income tax revenues by Howard County government.
County officials now use the majority of EDIT funds they receive to help pay salaries; Goodnight's position is that the city should retain EDIT funds for economic development purposes.
Monday, Goodnight reiterated his recent statements that the city "is not broke," but said he is concerned about cash flow.
Brannon said the late arrival of an expected $10 million in city property taxes - a problem caused by tax bills going out late - has forced the city to borrow from the city's wastewater utility to pay bills. That money will be repaid when the city receives its overdue tax draw.
"The city's not broke, but the city is borrowing from other funds, and that's why we need to make these adjustments. I don't have a choice," Goodnight said.
Negotiations stalled?
One of Goodnight's biggest challenges in cutting city spending is happening behind the scenes, as all three of the city's employee unions were expected to negotiate new contracts by July 31.
Meeting that deadline doesn't appear likely however, and Kokomo Fire Chief Scott Kern confirmed Monday the firefighters' union and city negotiators have taken steps toward arbitration.
Firefighters Local 396 president Rick Daily said Monday the two sides haven't met since prior to June 11, and both sides have chosen a representative to sit on a panel of three arbitrators.
Both the city's police and firefighters' unions went to arbitration over health care issues during the last round of negotiations.
But Kern said Monday the spirit of the negotiations is different this time around. The last contract was negotiated under former Mayor Matt McKillip.
"The last time, neither side cared about going to arbitration. This time neither side wants to go," Kern said. "Hopefully we can get this resolved. This isn't good for anybody."