City Council Budget Study Speech - Creating a fair and prudent budget for Glendale

By Herbert Molano – May 21, 2009

Nationally and Statewide senior analysts in public finance and economics acknowledge that this is the worse economic crisis in eighty years. As such, the actions that you must take to correct our local budget can’t be just a band-aid approach.

We are faced with budget trends that are significant not only for today’s taxpayers and ratepayers in Glendale, but with trends that will impact our finances for decades to come.

In 2001 the city changed the pension benefits and contribution system so that now a large number of city employees can retire on huge yearly pensions that provide enrichment to retirees and an unbearable load on taxpayers. Those changes made in 2001 must be rescinded now to a more equitable and feasible structure. I recommend a similar structure to the one we had ten years ago.

Since 2004 salaries and other benefits have grown at an exponential rate. The Police budget has doubled. Though we’ve had a 20% increase in police personnel, we have not seen a commensurate improvement in crime statistics (According to the DOJ.) Salary increases without corresponding improvements in performance are a huge waste of resources.

The official start of this recession was in the Spring of 2007. The MOUs (Memorandums Of Understanding) should have had clauses that would have frozen all benefits, raises, promotions, or salary step changes at the then current levels if a recession was declared or if local unemployment reached 7%. Such a clause must be included in future negotiations and no MOU should cover more than two years. There is too much economic uncertainty.

Had such a clause been in effect, we would not have had millions in additional pay and benefit compensation increases, and we wouldn’t have to consider staff cuts today.

The only fair and practical solution to resolve the need for services and restore a prudent budget is to reduce salaries and benefits to the levels as of December 2006.

The solutions you are considering so far are primarily to cut services or cut staff. This city government must address the most glaring disparity and unfair practices – You must rescind the increases in pay since the start of the recession. Such action will automatically give you a balanced budget.