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Mayor's plan: furloughs, layoffs
Mayor Kim Wolfe gives his State of the City address on Saturday, Feb. 13, 2010, in Huntington.
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HUNTINGTON -- Hampered by recession-weakened revenues, Huntington Mayor Kim Wolfe on Saturday released a proposed budget for the 2010-2011 fiscal year that includes civilian layoffs in the police and fire departments and furloughs for all city employees.
Huntington City Council's chairman, however, says there will be a push in the coming weeks to adopt either an occupation tax or sales tax that would eliminate the need for layoffs and furloughs.
The city already has trimmed nearly 10 percent from this year's $44.6 million budget, which ends June 30, because of anticipated shortfalls in a key business tax. But with the brunt of the recession still on the horizon, Huntington officials are faced with some drastic decisions to get through next fiscal year, Wolfe said during his State of the City address.
"It must be clearly stated that the successes we've seen over the past year are in jeopardy if a collective solution is not found as it relates to this proposed budget," he said. "Dramatic cuts may have to take place with the intent to save jobs and deliver basic service."
Wolfe's $39.5 million proposed budget shows an 11 percent reduction in spending in comparison to this year's original budget. The business and occupation tax, the city's largest revenue source, is estimated to bring in $1.9 million less in 2011 than it was budgeted to bring in this year. The user fee, a $3 weekly charge on everyone who works in the city, is projected to bring in $400,000 less than this year's estimate.
Wolfe is proposing to offset the revenue losses with 20-day rolling furloughs for all city employees. Elected officials -- Wolfe and City Council's 11 representatives -- would be exempt. The proposal would save the city approximately $1.1 million, he said.
The furloughs would begin in September or October. The forced, unpaid time off would be taken over the fiscal year as it best suits the employee's department or the employee, said Brandi Jacobs-Jones, the city's director of administration and finance.
The Police Department would lay off eight civilian employees, leaving only one civilian for the entire department. The Fire Department is faced with laying off all three of its civilian employees.
Police Chief Skip Holbrook said the layoffs would result in police officers being pulled off the street to work desk jobs.
"That would dramatically affect our ability to deliver the quality of service that I expect and the quality of service that the citizens expect," he said. "It doesn't matter how you dress it up. That will occur."
Laying off civilian employees also could jeopardize several state and federal grants the Police Department receives, Holbrook said. Those grants are contingent on maintaining certain staffing levels, he said. He declined to say what the grants pay for or the amount of money at stake.
Holbrook said he has assured his department that no sworn officers will be laid off, but Fire Chief Creig Moore said he is reluctant to make the same promise to his firefighters.
"We'll have to see how the budget process evolves," Moore said. "It's an absolute last-ditch measure."
City Council has the final say on the bottom line of the budget. It will schedule hearings with Wolfe and his department heads over the next several weeks to go over the budget and make any needed changes. The city must submit a balanced budget to the state Auditor's Office by late March.
Council Chairman Jim Insco said Wolfe's proposed budget shows what will happen if council members can't find additional revenue. Based on conversations with other council members, support is building for either a sales tax or occupation tax, Insco said.
"The members of council I've spoken to are in favor of making sure the fire and police departments are not reduced in number," he said. "The only way to do that right now is to increase revenue. What I'm saying is that I can get a majority to pass either a sales tax or occupation tax.
"The budget that this council adopts and sends to the state next month might look similar to what the mayor is proposing now, but I would be highly surprised if it takes effect."
Insco said the West Virginia Legislature gave Huntington the authority to adopt a sales tax in 2005 under legislation that was adopted to help the city deal with its police and fire pensions. The city's plan to fix the pension system at the time fell apart, but the sales tax remains an option, he said.
Much of the focus recently has been on a 1 percent occupation tax. Huntington is the only city in West Virginia that has the authority to adopt one because it was included in the city's home rule pilot program that was approved by a state panel in 2008.
An occupation tax is applied to a worker's gross salaries, wages, commissions and other earned income. In Huntington's case, it would only be imposed on people who work in the city, Insco said.
When Huntington officials presented the city's home rule plan to a state panel for review in 2008, they pitched the occupation tax as a "revenue-neutral" proposal. Officials went so far to say that the impetus was not to place an additional tax burden on citizens, but to create a fairer taxation system.
Officials also told the committee at the time that the city would repeal the user fee and reduce the business and occupation tax if an occupation tax was adopted.
Insco said the user fee must be repealed if an occupation tax is adopted, but he acknowledged that the occupation tax would be a significant source of revenue for the city.
The user fee is supposed to bring in $4.3 million this fiscal year. Marshall University's Center for Business and Economic Research projected two years ago that a 1 percent occupation tax would generate between $8 million and $11 million.
The hope is that an occupation tax would put the city on stable ground, Insco said. The city then could reduce the business and occupation tax, which would help fuel business and population growth, he said. The business and occupation tax is imposed on a business's gross sales and has been cited as one of the major impediments to attracting companies to West Virginia's cities.
City Council's Finance Committee will look into the hurdles that come with implementing an occupation tax as the full council works on the budget, Councilman Steve Williams said. The committee will seek advice from the city of Ashland, which has had an occupation tax for several years.
"I'm of the opinion that we can find a way to restructure things so we don't have to face the massive cuts the mayor has proposed," Williams said.
Wolfe never mentioned a sales tax or occupation tax during his State of the City address, but at one point said that "turning back and returning to the status quo is not an option."
After his State of the City address, Wolfe said he would listen to council members' ideas on the tax options and offer assistance in any way possible.
"It's one of those things that I expect we will work together on and come to a mutual agreement," Wolfe said.
