Josh Dulaney, Staff Writer
Posted: 02/21/2010 04:58:26 PM PST

RIALTO – The top manager believes the city could face a financial crisis in three years unless employee bargaining groups agree to sweeping concessions.

“It is a 36-month window,” City Administrator Henry Garcia said. “I don’t anticipate new revenue to occur of a significant nature.”

Garcia said the city’s General Fund budget is at $53 million with roughly $31 million in economic reserves.

But he wants city employees to extend millions in concessions given to fix last year’s deficit, and push back enhanced pensions set to kick in next year.

Garcia said because of rising costs passed on from the state’s public employees retirement system, the city’s retirement costs starting next year add up to $12 million, of which roughly $5 million is wrapped in retirement packages for public safety and general employee unions that were sweetened by a 3-2 City Council vote in 2008.

Garcia said it would be speculative to say how much the city could save through concessions because officials are in negotiations with the employee groups.

Mayor Grace Vargas and council members Ed Scott and Joe Baca Jr. voted for enhanced retirements, citing the need to attract and keep quality personnel.

Councilwoman Deborah Robertson and former Councilwoman Winnie Hanson voted against the enhancement, citing cost concerns.

While the other council members – including Ed Palmer, who defeated Hanson in 2008 – could not be reached for comment, Scott said he intends to fulfill the city’s obligations with all bargaining groups, which include a management group and a middle-managers group.

Still, the city needs cooperation from all of its employees, Scott said. If so, and if the economy turns around, the city should be able to pay its bills without depleting the reserves, he said.

Officials also have said they are looking at leasing the Water Department to save costs and bring in revenue.

“I think Henry’s gloom and doom is a little bit premature right now,” Scott said.

But it was Scott who said recently that the city is staring at bankruptcy if it can’t get the concessions it needs from its employees.

The city is on a three-year time clock until its reserves are depleted and officials are forced to look at how to contract out services, Garcia said.

Doug Johnson, a fellow at the Rose Institute of State and Local Government at Claremont McKenna College, said city governments are grappling with similar decisions throughout the state as California’s budget woes and the national economy are striking at local coffers, while pension costs for city employees are spiking.

Johnson said bankruptcy could have a variety of consequences.

“It could mean simply renegotiating contracts. It could mean a judge in charge of all city services, deciding who keeps their jobs, what services continue and what services are cut.”

One union official said talk of bankruptcy is premature as the economy could recover in the next couple of years.

“I’m not insensitive to the economy, but recessions do not last forever,” said police Sgt. Richard Royce, head of the Rialto Police Benefit Association.

The union last year gave up roughly $2 million in salary and benefits to help close a $4.8 million deficit. Royce said the concessions in some cases hit member compensation by up to 30 percent.

The city faces a shortfall of more than $8 million, and Garcia has met with police, fire and the general employees unions to discuss extending last year’s concessions.

And not just into next year.

“It’s foregone at this point,” Garcia said. “It really changes when the groups see the problem and are willing to help, and my definition of help is, it is not a 12-month help. I don’t see the economy turning around (until) 2014 and 2015, with foreclosures to houses and light industrial.”

Garcia said talks have gone well with the fire union and the general employees, but the police union hasn’t been as open to the idea of concessions.

Union officials for fire personnel and the general employees could not be reached for comment.

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