Like many other municipalities across the nation, Alhambra faces budgetary constraints. Due to budget cuts, the city, in order to avoid layoffs, recently proposed shifting the salaries and responsibilities of several employees whose positions are funded by general tax revenues. The plan would transfer them to vacant positions in the utilities department that would be funded by separate water fund revenues.
As first noted in the Pasadena Star News, Alhambra officials stated this move will not increase water rates, as there is sufficient cash flow in the water fund to absorb the additional $700,000 in salary costs. However, this cost shifting does not result in an actual spending reduction. Alhambrans still pay for the positions through their water rates.
Distinct from a general tax, most taxpayers understand that a water bill is for water service in the same way a satellite television bill pays for satellite television. You pay for what you use, with water revenues used exclusively for water services. But in the instance of the position transfers, available water revenue would be used to remedy a budget imbalance that is not specifically related to water issues.
In a time when Alhambrans are absorbing salary cuts and losing their jobs, the city should more clearly explain the reasons why the vacant positions in the utilities department had not been filled in the past, as well as the impact on water service if the proposed employee transfers do not occur.
While it is laudable that the city is acting to preserve its employees’ jobs, the relative ease by which water revenues are able to absorb the additional salary expenditures from this year, as well as last year, raises another question. Since water revenues have subsidized employee transfers in the past two years, there is an appearance that water revenues may exceed expenses in providing the water. Clarification on water revenues and expenditures would be helpful in understanding an inherently opaque budget process, and determining whether water rates need to be adjusted to better match water expenses.
As an alternative to layoffs and cost shifting, the city can consider other strategies to help alleviate budget shortfalls. Furloughs and increased employee contributions for pension benefits are some of the options that have been widely implemented in other municipalities as an alternative to job losses.
Budget reductions in other areas can also offset potential staff reductions. For instance, the proposed budget for the 2011-12 fiscal year considers eliminating the subsidy for the annual Rose Parade entry. This would save the city $100,000. This is an excellent example of the city recognizing that a shrinking revenue stream means that it must rethink its priorities. Further examination of the budget may reveal additional expenditures that can be reduced or delayed until the city’s financial status improves.
City officials are to be commended for proactively balancing the general fund budget and maintaining a significant reserve fund. Alhambra residents are fortunate to have fiscally responsible leadership. However, additional clarity regarding the rationale and funding for the employee transfers would be helpful. It would continue to demonstrate that the city is actively maintaining a balance between the needs of the city’s dedicated workforce and the financial realities of its citizens.