The “800-pound budget gorilla” is in the room for both Riverside and San Bernardino Counties, which is putting their respective employee unions in a critical dilemma.
Push wage and benefit concessions on their members or trigger layoffs. Layoffs cause reductions in union member rolls thus affecting revenue that supports operations.
In mild economic downturns, wage deferrals or not filling vacant positions can be a viable band-aid to get through the problem.
Not this time.
The current collapse in property and sales tax revenue in both counties is devastating, and will continue for some time. San Bernardino County, which has not been as aggressive as Riverside County in reducing its property tax rolls, took a 6% hit last year and is likely to take another hit of at least 9% this year. That’s 15% over two years.
In Riverside County the hit has been greater.
For the past six months, Riverside County has been taking various actions to deal with its budget problems, and it’s still getting worse. In San Bernardino County it’s just the opposite. Silence.
San Bernardino County has been resisting challenges to commercial and industrial property value reductions forcing thousands of appeals. Appeals that will be adjudicated over the next few years, and likely to cause additional reductions in property tax revenues. The pending appeals will cause retroactive reductions in property tax revenues as they are settled.
Revenues to both counties aren’t expected to recover for years and will lag the private sector by at least two years, when and if it does happen.
Thus, the problem for the unions. Permanently sacrificing cost of living adjustments in exchange for “possibly” minimal layoffs causes permanent long-term damage that may never be recovered from. Affecting the purchasing power and standard of living of thousands of employees, instead of using layoffs to re-balance budgets at some point becomes a less viable solution.
Why? Because no recovery in revenue is expected and the budget needs to be permanently rebalanced requiring a reduction in positions. The key word in the sentence being “permanently”.
When a ship has a hole in its side and is taking on water, do you plug the hole or turn on the pumps?
Layoffs plug the hole. Turning on the pumps is more wage concessions. The only problem with the concessions is when the hole gets bigger the pumps can’t keep the water out.
I’ve been told the San Bernardino Public Employees Association (SBPEA), the county’s largest union, is telling its members if they cancel a 6% salary increase due this June, there will definitely be a 3% increase for them next year. Promise!!!
Yes, there’s swamp land in Florida waiting for you, if you believe it.
The 6% figure includes a carry-over wage deferral from last year.
The San Bernardino County Safety Employees Benefit Association (SEBA) is currently taking a “reduce the workforce” stance.
Doing more or less, with less, may be the only viable decision.
The difference between the county and a corporation is the county is only a spender of tax dollars to provide services, where a corporation is geared to generate profits.
Make no mistake. Have no misconceptions. Inflation will not disappear. Medical premium increases of 8-9.5% slated for later this year prove this.
No part of what is happening now is temporary.