News Release - Mayor Richards Closes $50M Budget Gap with Spending Cuts, Retirement Incentive that Restructures Workforce

City of Rochester

News Release

Five-year contract reached with police and fire unions

(Friday, May 20, 2011) – Mayor Thomas S. Richards presented the City Council with a Fiscal Year 2011-12 proposed City budget today that closes a $50 million shortfall through spending cuts and an unprecedented retirement incentive that is aimed toward restructuring the City workforce. The budget maintains the City’s longstanding focus on Public Safety, Education, Neighborhood and Business Development and Customer Service.

“This has been a challenging budget, but it has also been an opportunity for all of us in government and all of our customers and citizens to have an honest and frank talk about what is truly important and fundamental for a city to provide for its residents and businesses,” Mayor Richards said at the budget presentation held in City Council Chambers. “I have said there is nothing like running out of money to focus one’s priorities. And that is exactly what this budget proposal is – a statement of priorities and philosophies.”

The $467 million budget keeps spending roughly equal to last year’s budget despite absorbing millions of dollars in mandated cost increases, including a jump in pension contributions and health insurance costs. The proposal would cut the City full-time workforce by 140 employees, bringing the total to 2,719.

Seeking to restructure the City’s workforce to preserve recent gains in minority and diversity hiring, Mayor Richards is proposing the creation of a first-ever retirement incentive for senior employees. The incentive includes a one-time $15,000 payment for eligible employees. A wave of retirements over the next several months would mitigate the need for layoffs of newer hires.

The Mayor also announced a new five-year agreement with the City’s police and fire unions that includes a 1 percent wage increase for the two upcoming fiscal years and settles the last three years during which those employees were working without a contract.

The budget calls for eliminating 28 firefighters and 51 police officers, which includes a total of 52 over-hire positions. It is hoped that the retirement incentive would offset layoffs of police officers and firefighters.

“At a time when it seems fashionable to attack public employee unions for causing and failing to recognize their role in addressing the financial problems of government, it is gratifying to see the City police and firefighters unions step up to take their share of the responsibility,” Mayor Richards said.

“Their cooperation has not only helped to mitigate the employment impact on their members, but to preserve the services provided across the City,” he continued. “I look forward to this as a new beginning where we all recognize that our individual success depends on the overall success of the City.”

The budget calls for a 2 percent increase in the property tax levy, which falls within Gov. Andrew Cuomo’s proposed tax cap. The tax levy increase, combined with the state-mandated “shift” results in an overall increase in the homestead rate of 2.8% and an overall increase in the non-homestead rate of 1.3%. Revenue increases from taxes and fees total $5.5 million. About $16.2 million would be realized in cost savings through departmental reductions and efficiencies.

Mayor Richards emphasized the need to reform many of the factors that are out of the City administration’s control but have tremendous impact on the City budget. These include state-mandated pension costs, which total $33.5 million this year and are expected to continue growing at a dramatic pace. Other factors impacting the budget include the state Maintenance of Effort law that directs 71 percent of the total tax levy to the City School District before any other services can be funded; and a state-aid formula that gives Rochester $40 million less in per capita aid compared to Buffalo.

Mayor Richards, who took the oath of office just 35 days ago, thanked the many city residents, merchants and other customers who participated in four Voice of the Customer sessions to help him set his focus on the priorities.

“Lopping off services such as closing fire houses and libraries looks to our citizens like the City is retreating – pulling out of neighborhoods and circling the wagons,” he said. “This administration is not about retreating. We will not give up our hard-earned advances and our mission to grow and improve. We cannot cut our way to greatness. This budget will give us a structural solution that starts to address the root of the problem and not just react to the yearly shortfalls by annual retrenchment.”


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