By Jane Smith
Delray Beach commissioners sent staff back to find more cost savings at an Aug. 11 budget workshop, even though the interim city manager advised that additional cuts could lead to layoffs. Commissioners were against using reserve money to cover the entire $9 million budget shortfall.
The commission was opposed to balancing the proposed $151.1 million budget by raiding the reserves by about $4 million to pay for ongoing operations. But they did agree to take about $4.6 million from reserves to pay for one-time expenses, such as the proposed $1.05 million software purchase that will allow the city to begin doing online permitting.
City staff had found $4.6 million in possible cuts, interim City Manager Jennifer Alvarez told commissioners, and suggested dipping into the reserves to cover the additional $4.4 million in operating costs to make up the difference.
“We went back to the departments and asked them to cut more,” Alvarez said. “We have a hiring freeze, trimmed contracts and reduced travel and training budgets.
“We may have to cut jobs to get it down (more),” Alvarez added. “It is what it is.”
The reserves fund is expected to hold an estimated $39.3 million at the start of the next budget year, Oct. 1.
The commission, though, insisted more cuts could be made.
“We still don’t know all of the COVID effects on our economy,” said Mayor Shelly Petrolia. Delray Beach and other cities statewide shut down on March 13 with gradual reopenings. Palm Beach County has a mandatory mask ordinance as part of the reopening, with restaurants and shops limited to 50% capacity during Phase 1.
“The timing is wrong to raid the reserves, which should be about 25%” of the general fund, Petrolia said. “We do not have to have that level, but it is proper to carry that much because we are sitting along the coast and subject to hurricanes.”
She pointed out that the city has been waiting nearly four years for reimbursement for Hurricane Matthew expenses. The hurricane brushed the coastline in October 2016.
Finance Director Marie Kalka said the coronavirus has cut into sales tax revenue by at least 15% during the current budget year, with impacts continuing into next year’s budget. Parking revenue is down by $960,000 this budget year, she said. The fee for metered parking was eliminated during the initial COVID-19-related closings, but the commission is considering charging again.
Commissioner Adam Frankel suggested that staff go line-by-line through the budget to determine “what is necessary and what is a luxury.”
Deputy Vice Mayor Shirley Johnson said a $1 million economic development fund, not used since 2012, could be diverted to the general budget.
Commissioner Juli Casale applauded the Police Department because it is asking for only a 3.1% increase.
But she was unhappy that the Fire Department wants 12.8% more for the next financial year. Casale said cuts could be found in that department.
She compared Boynton Beach to Delray Beach in terms of size — both are approximately 16 square miles. Boynton Beach has 10,000 more residents. To make her point, she cited the number of battalion chiefs and captains each fire department has. Delray Beach has 42 battalion chiefs and captains, while Boynton Beach has 17 total.
Then, Casale launched into a critique of the SAFER (Staffing for Adequate Fire and Emergency Response) grant from the Federal Emergency Management Agency. She called the grant “flawed and deceptive. We traded our hiring authority for five years for a $1.6 million grant.”
The grant covers partial salaries of eight firefighter-paramedics and expires in three years. But the grant requires the city to maintain the firefighter staffing level for five of the eight for two years beyond the grant period.
That’s one reason Casale and Petrolia voted against accepting the grant retroactively in May. At the time, they were told four of the hires would be assigned to the Highland Beach station.
But the town of Highland Beach did not want the four extra firefighters because it could not afford the increased cost, Casale said.
Kalka told commissioners that FEMA gave them a one-year reprieve from not hiring five of the eight positions, saving the city $305,000. But the city will be required to retain the positions the following year.
Both health insurance and pension costs are rising in Delray Beach, which has a large impact on budget planning.
Health insurance will increase by $1.35 million, Kalka said, and union negotiations would be required to change how insurance plans are structured.
“To increase employee contributions, the extra cost would have to be negotiated by our unions,” she said.
Pension costs are another big-ticket item in the budget. Pension costs for police and fire went up $2.03 million because of reduced rates of return on investments, Kalka said. The city is funding only about 60% of its retirement funds, she said.
Even so, the forecast for the next budget year is not entirely gloomy.
The city will still put up its 100-foot Christmas tree, Alvarez said. But the surrounding events may be canceled because of COVID-19 restrictions on crowd size.
In July, the commission approved using $2.3 million from the reserves to cover unexpected shortfalls in the current budget year that ends Sept. 30. Most of the expenses were from coronavirus-related impacts.
The city’s revenue was also reduced by franchise fees that it had to reimburse.
By Jane Smith