What's at stake:
Hiring expansions and employee raises required by labor contracts, including for police officers and firefighters, are the largest increased expense for Fresno as city leaders attempt to cushion the blow of a looming deficit year.
Fresno’s deficit projection could grow to as much $37 million if nothing is done to keep the city out of the red next year.
Attention fell on the city’s hiring expansions and employee salary increases for the city’s police and fire departments — which have both received at least a $50 million budget expansion since Mayor Jerry Dyer took office.
In a mid-year budget presentation during a March 21 city council meeting, Dyer told councilmembers that he needs to figure out ways to cut expenses for the 2025 fiscal year, which begins this July and ends in June 2025.
“We’re gonna be scrutinizing this budget much more closely as we go into FY 25, making sure we are meeting not only our revenue projections but we’re controlling our expenditures.” Dyer said.
Dyer largely focused on rising PG&E costs for the city — about $5 million — and a few other increased expenses, including retirement contributions, public safety communication upgrades and inflation costs.
However, Councilmember Miguel Arias confirmed that the biggest increase in expenses contributing to Fresno’s deficit was employee raises required by labor contracts — although it was the only increased expense without an actual figure in the mid-year budget presentation.
Neither Dyer nor City Manager Georgeanne White were able to put an exact figure on how much more the city is paying employees.
“I just wanted to re-emphasize that the single largest driver of this deficit budget is an increase of staff and personnel cost that we all approved,” Arias said.
“A hundred percent,” Dyer said.
Earlier in the meeting, Dyer noted that he will be meeting with the city’s police and firefighter unions to negotiate cost-saving measures, which is on top of ordering department heads to cut their own budgets by 3%.
Dyer also said that future labor contracts will likely be negotiated for one year at a time, instead of three years, and that labor unions are already aware of that upcoming shift. He added that dipping into the city’s cash reserves to offset Fresno’s deficit would be a last resort.
“I would like for us to look at what it’s like to ramp up property tax and also whether or not we could expend any ARPA dollars to offset the deficit,” Dyer said, adding that dipping into the city’s $47 million in reserves could only be done after each city department instates the 3% budget cut.
A tense moment during the budget presentation was when White, the city manager, said her office had been freezing unused funds for specific city departments without council approval.
That caught most councilmembers by surprise. Some said they did not know that city departments’ unused funds were frozen and set aside separately in what White called an attrition savings account within the same department. That includes $1.9 million from the City Attorney’s Office, $83,000 from the City Clerk’s Office and $18 million from the police department.
“The way it was explained to us was you had already budgeted for those savings, not that you were going to capture the savings by sweeping people’s money on a monthly basis,” Arias said. “That, for me, is completely new.”
Dyer said the city made similar budget moves during the so-called Great Recession of 2008. He added that carryover funds of all city departments are taken from the department to address the city’s financial needs as they appear.
Arias explained that the city attorney’s office funds should not be swept on a monthly basis, especially as it takes on new litigation. Dyer acknowledged the miscommunication during last year’s budget negotiations — which happened in meetings held privately — something Fresnoland exposed and the city is now getting sued for.
Dyer said he would unfreeze funds for the city attorney and city clerk offices, but that would increase the city’s looming deficit to $39 million for 2025.
“Thank you, Mayor, for unfreezing our money,” Arias quipped at Dyer.
In May, Dyer is expected to unveil his proposed budget to the city council, which will be the first public look at how and where he intends to make cuts to city departments.
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