Simi Hit by Double Dose of Bad News on Economy : Finances: First Interstate Bancard will lay off 130. Due to a drop in sales tax revenues, the city imposes a hiring freeze.
Tough economic times hit both the public and private sectors in Simi Valley on Wednesday as a major local employer announced plans to lay off 130 employees and city officials moved ahead with an immediate hiring freeze because of a steep drop in sales tax revenues.
First Interstate Bancard’s processing center on Surveyor Avenue will lay off employees in several different departments in April, said Carl Herman, senior vice president of the center. The center now employs about 700 people.
The layoffs are the result of a decision by the company to cut costs by contracting with Omaha-based First Data Resources Inc. to take over some of its operations, Herman said. Some of those will include credit card production and the processing of billing statements.
“We’ve been considering this for a long time,” Herman said. “It’s just more sensible to move out some of our operations.”
Simi Valley Mayor Greg Stratton said he had talked with Herman earlier about the company’s restructuring and of possible layoffs.
“It’s unfortunate,” he said. “It’s not a major blow, but . . . we obviously don’t like it.”
Stratton said the good news is that First Interstate Bancard will keep the bulk of its operations in Simi Valley.
Meanwhile, City Manager Lin Koester issued a memo to department managers Tuesday announcing a hiring freeze.
“Because revenue is down we’re just taking some steps to offset those losses so we don’t have problems down the road,” said Laura Herron, the city’s budget administrator. No layoffs or cuts in services are planned.
Herron said the hiring freeze is effective immediately and will cover every area except the Police Department. Last January, the city imposed a partial freeze on hiring in some departments, but that action was subject to appeal by individual department managers.
Herron said the city currently employs 511 people but is budgeted for 542. The budget director said the city was recruiting 24 people to fill vacancies in such areas as public works and environmental services before Tuesday’s announcement. In addition to the job freeze, equipment purchases of $500 or more have also been put on hold.
“We felt it was better to tighten the reins,” Stratton said. “We felt we better act fast and head off the problems.”
Herron said the city collected a total of $2.4 million in sales tax revenue from July 1 through Nov. 30, compared to $2.9 million for the same period last year, representing about a 17% decline. Other cities this week also reported large losses in sales tax revenue, including a 19% drop in Camarillo, 13% in Ventura and 9% in Oxnard.
However, officials in those three cities said there are no plans at the present time to impose hiring freezes or to cut jobs. They said they plan to wait until the beginning of the new year to assess their financial status before deciding what, if any, revenue-saving measures to implement.
Taxes from retail sales are the single largest source of income for most cities, which use the money to pay for such things as street maintenance as well as police and fire protection.
Herron said income from retail sales taxes represented about 27.6% of the city’s $27-million budget for the 1991-92 fiscal year, which ends June 30. Despite the drop-off in revenue, Herron said the city is in good shape financially, with more than $12 million in reserves.
“This is more of a precautionary measure,” she said of the hiring freeze.
Councilwoman Judy Mikels, who owns an art gallery in Simi Valley, agreed.
“I don’t perceive us as being in trouble or in danger” financially, she said. “It’s just a case of us being conservative and sensible.”
Mikels said business at her gallery and frame shop on Sequoia Avenue has been down 40% in the last six months, compared to last year.
“Considering the economic trend, people are buying more practical this year,” she said.
Meanwhile, some Simi Valley business owners have taken steps to become more competitive and to lure new customers in light of the recession.
For example, Simi Valley Bank recently began opening from 11 a.m. to 2 p.m. Sundays.
“I think it’s a sign of the times,” said Diane DeNuccio, assistant vice president of the bank. “Service is the name of the game.”
DeNuccio said last Sunday was the first time the bank was open for the added hours. She said the bank opened two of its four offices, one in Simi Valley on Los Angeles Avenue and one in Moorpark on High Street.
“It went like gangbusters,” she said of business at both banks. “It went really well. I was not prepared to be that busy.”
DeNuccio said bank officials are hoping to attract new customers with the new hours.
“Hopefully, it will induce businesses in the area that would like to have Sunday banking to try it,” she said.
DeNuccio said Simi Valley Bank is the only one that she knows of in the county that is open on Sundays.
Another Simi Valley business, Chief Auto Parts on Cochran Street, has been staying open until midnight seven days a week since Nov. 1. Other auto parts stores in the city stay open until 9 p.m.
“Our manager thought it would be a profitable idea,” Jackie Hines, associate manager of the store, said of the expanded hours. “She wanted to see if we could bring more business in.”
However, Hines said, because of the holidays, business has been slow. For that reason, she said, it is hard to gauge whether the new hours will be effective.