The far-reaching impact of the state's decision to dissolve local redevelopment agencies could end up walloping Glendale, inflating the city's budget deficit to $15 million and forcing widespread layoffs.
In a two-page letter sent to city staff this week, City Manager Scott Ochoa mapped out the dire situation that includes the probability of layoffs in June before the start of the next fiscal year.
About half of the budget shortfall comes from the loss of redevelopment — a steady stream of incrementally higher property taxes that helped bring in the Americana at Brand and affordable housing. Redevelopment also paid for $6.6 million in staff salaries, benefits, maintenance and operations, according to a city report.
Glendale was one of nearly 400 local redevelopment agencies throughout California that were dissolved earlier this year, with the money redirected to fill the state's own budget deficit.
City officials expect to lay off 29 people from the Community Development Department, which once included redevelopment operations, but there may be even more jobs on the chopping block if various departments are restructured, Ochoa said.
The budget gap comes after Glendale cut back severely last year to close an $18-million hole.
“Our employees are going to have to continue tightening their belts,” he said in an interview.
If the city hadn't lost redevelopment, about $8 million in spending still would have needed to be cut, however, that would have been more manageable, Ochoa said.
“The $8 million from redevelopment is just a whack on the side of the head,” he said.
The 29 community development positions equal about $3 million, less than half the $6.6 million that had been covered by redevelopment. Officials expect to reap about $2.5 million in redevelopment revenues next year, but that still leaves a $1.1-million deficit.
Layoffs and other cost-cutting measures, such as early retirement incentives and rolling back service levels, will mostly hit non-public safety and non-executive employees, according to Ochoa's letter.
“Considering that it is highly unlikely that our residents and businesses will want to significantly and negatively impact public safety, the impacts on all non-safety departments will be that much more pronounced,” he warned.
And there are “few places left to cut” due to what he called “outstanding work” already done at City Hall to cut costs and secure concessions with employee unions.
While most of the budget shortfall is due to the loss of redevelopment, the other half is due to technology, equipment, liability and workers compensation costs.
In previous years, expenditures in these categories have been deferred, but Ochoa said in his letter to employees that those moves were no longer an option.