City of Corona employees are threatening to strike after the City Council approved across-the-board cuts and a small raise to help the city out of financial straits amid a recall effort and a plan to ask voters to approve a sales tax increase.
Due to an impasse after 18 months of contract negotiations, the council voted 3-2 on Nov. 14 to impose a plan with 2 percent raises, healthcare coverage reductions and elimination of a medical differential paid to employees.
The plan, which doesn’t cover sworn police or fire personnel, was proposed by City Manager Darrell Talbert to help cut spending amid mounting costs that include a $254 million unfunded pension liability and the looming exhaustion of the city’s emergency contingency reserves.
The plan impacts pay and benefits for all other city employees, supervisors, management and the executive team. Talbert, who makes $287,504 plus $113,284 in benefits a year according to Transparent California, will not get a raise.
Corona General Employees Association members rallied outside City Hall last week before the council OK’d the plan. Negotiations with that union and the Corona Supervisors Association have failed to reach an agreement. General employees, whose attorneys made a counter-proposal last week after the council vote, are considering a strike.
“We’re at the point where we’re trying to use every avenue we have to try and get a contract with the city. So we’re still open to negotiating,” said the union’s First Vice President Nathan Devlin, a Corona police forensic technician.
The new terms will remain in effect until a contract is negotiated, said Talbert.
Early next year, Talbert plans to propose an austerity plan with service cuts that could be implemented unless voters pass a .5 percent to 1 percent sales tax increase the council would first have to put on the November ballot. The council itself can’t enact a tax increase.
“All the council can do is let the public decide,” Talbert said.
Corona shoppers currently pay a 7.75 percent sales tax rate. Corona only gets $1 for every $7.75 in sales taxes collected for the state, according to Talbert. Although Corona is expected to see $3.6 billion in taxable sales this fiscal year, the city would get only $39.9 million of that.
Schools and county government get much more of the property tax revenue than the city, Talbert added.
City officials have begun negotiations with police and fire personnel, whose public safety service is reimbursed with pay and benefits that make up 70 percent to 80 percent of the budget. Corona is working toward similar compensation models and benefits for all employees and wants to bring that in line with nearby cities, Talbert said.
City administrators used about $2 million in budget-balancing contingency reserves for the fiscal year 2017-18 general fund budget of $144.9 million, with $101.9 million of that personnel costs.
In four years, annual operating costs are projected to exceed general fund revenue by $15.6 million. Even with the new cuts, Talbert said, a $19 million budget-balancing contingency reserve and a $30 million emergency contingency reserve will be used up. New revenues from sales taxes and construction won’t be enough to replenish city coffers.
Corona resident Joe Morgan, a Riverside City College teacher who once worked for a Riverside mayor, and other residents are collecting signatures in an effort to recall Corona Mayor Dick Haley, Vice Mayor Karen Spiegel and Councilman Eugene Montanez.
Organizers say mismanagement caused the city’s financial problems. They’ve said they’re also seeking a special recall election because the council members want to raise taxes and are considering raising south McKinley Street over railroad tracks. Morgan and the recall attorney could not be reached.
The council has approved only a cost study for options to solve traffic and safety problems at the crossing, said Montanez. He, Haley and Spiegel agreed a railroad bridge would be better than losing businesses with a car overpass.
But Talbert said the city’s financial problems are mainly due to three expenses: CalPERS retirement contributions that increased 304 percent since 2002-03, a 95 percent increase in healthcare costs and a 100 percent increase in workers’ compensation insurance premium rates.
Since 2006, the city has cut 250 full-time positions.
Employee unions said the medical differential loss is the most devastating and consider that a pay cut. That was paid in lieu of retirement healthcare benefits and raises to spare the city from increased CalPERS pension fund contributions based on higher salaries, said Devlin and CGEA board of directors member Wayne Bristol, a police department jailer.
Talbert said employees did not give up retirement healthcare benefits or raises to get the medical differential.
Until now, employees could get additional pay known as a medical differential or “difference” for not putting their spouse or children on a city healthcare plan, or an “opt out” amount for opting out of healthcare coverage altogether and choosing instead to be put on a spouse’s insurance plan, a parent’s plan or getting private insurance. Single employees could also get the differential.
Currently, 266 employees get medical difference payments and 67 employees opt-out. Employees got an average of $840 but up to $1,600 a month in medical differential payments that cost the city $2.5 million a year compared to $572,000 for opt-out, for which employees were paid less.
“Opt-out” payments will increase from $3,552 a year for one employee and $9,240 for an employee with two relatives to $5,400 and $12,000, respectively.
The city’s share of healthcare coverage is now set at a rate that won’t increase.