South Lake Tahoe rolls out plan to eliminate deficit
By Kathryn Reed
To wipe-out an ongoing $3.4 million annual deficit, South Lake Tahoe staff members are proposing getting rid of positions, freezing wages, raising the hotel tax, and revamping employee pension and health care options.
Some of the proposals brought forth during the City Council’s workshop Tuesday afternoon need to be vetted and approved by the bargaining units. But it was noted, if they don’t agree to them, more layoffs are probably the only other solution.
The council on March 15 is slated to vote on the reorganization plan and five-year budget proposals presented to them March 1 by City Manager Tony O’Rourke and Finance Director Christine Vuletich.
South Lake Tahoe Finance Director Christine Vuletich on March 1 goes over the five-year budget plan. Photo/Kathryn Reed
Eliminating positions, reclassifying jobs, early retirements and shifting things around would cut the annual deficit in half. That proposal was released last week.
Besides those proposals, the city is also looking at revamping what it contributes to employees’ pensions and health care plans.
“In most organizations salaries and benefits are about 65 percent (of the general fund). In ours it is 78 percent,” O’Rourke told Lake Tahoe News. “In the private sector it is closer to 45 percent.”
In the current budget the city is paying $3.1 million to CalPERS, the Public Employee Retirement System, for the nearly 200 employees. Pension costs are projected to increase by 5 percent per year for the next five years.
That 5 percent equates to about $900,000 during the next five years. Today, 11 percent of the general fund goes to employee pensions.
Councilman Tom Davis asked about the city’s unfunded liability. Vuletich said today it is about $26 million, whereas a few years ago it was at $42 million. The city is paying about $400,000 on that each year.
It wasn’t until last year that any employee in the city contributed a dime to his or her own retirement. Police officers now pay 6 percent of the 9 percent employee contribution.
If employees start paying their share – or the full 9 percent, this would save the city about $800,000 a year.
Lake Tahoe News, before the presentation to the council, asked O’Rourke about the possibility of having a flat fee the city would contribute instead of a percentage plan. Lake Tahoe Unified School District does this with its employees in regards to health care.
“There are some strong arguments to go to a defined contribution so you know each year your exposure,” O’Rourke said. “So then the risk is shifted to the employee.”
At this time, that is not being proposed.
When it comes to health care costs, the city doles out about $18,500 per employee and $14,900 per retiree — each year.
“On average, employees are contributing 4 percent, and retirees 12 percent, respectively, to the city’s annual health care cost,” the staff report says.
O’Rourke wants to revamp the system to “generate at least $550,000 annually in savings.”
After repeated questioning by Davis and Councilwoman Angela Swanson if the wage freeze is really that, Vuletich acknowledged the step increases built into the agreements with the bargaining units for employees who qualify would in fact get a raise. However, all cost of living increases are gone.
The pay freeze will save about $350,000 a year.
This year’s budget has $13.4 million allocated for salaries, which includes $1.4 million in retirement payouts.
The other way employees will be receiving more cash in their pocket is by eliminating furlough days. This equates to a 13.4 percent pay increase because workers have not legally had to be at work during that time. For those who were, it means actually getting paid for the work they are doing; for those who took the day off, it means being paid to work a full week.
Property tax is the city’s largest source of income at 23 percent of the general fund revenue. With revenues from the Stateline or Project Area No. 1 taking a 15.7 percent hit, it means $1.2 million less for the city. This is because the county reassessed the values on the property in that area.
Projections are for property taxes to decline next year, with increases for the following four years – the most being a 1.6 percent uptick in fiscal year 2016. The county Assessor’s Office is forecasting a 4 percent assessment decline for this fiscal year.
Hotel taxes are the second largest moneymaker for the city at 15 percent of general fund revenue. Today a rate of 10 percent is charged to people staying in most areas of town, while a 12 percent tax is added to a room in the redevelopment areas. Staff is proposing 12 percent throughout the city. This would have to go before voters, but is not likely to happen until 2014.
O’Rourke would like the $900,000 a year cash infusion from raising the TOT to be used on upgrading the roads.
Another way to bring in money is to ask the voters about creating a 5 percent amusement tax. This would be levied on recreation equipment rentals like bikes and skis, as well as ticket sales for the Tahoe Queen.
An agreement made by a prior council prohibits a tax on lift tickets at Heavenly Mountain Resort.
The forecast is a half million dollars a year could be generated from an amusement tax.
The other new source of revenue is via metered parking, especially near beaches. O’Rourke said most waterfront communities charge to park close to that body of water. The anticipation is this could bring in $450,000 a year.
The summary statement of the staff report says, “The strategy reflected in the Five Year Financial Plan allows the city to ensure long-term financial success and sustainability, Moreover, the strategy will allow the city to continue to provide essential, outstanding cost-effective service and capital improvement to our residents and businesses.”
Once again Kathryn Reed has done an outstanding job of breaking down complicated public issues and making them comprehensible to the rest of us.
What is surprising is that there are no cutbacks to the city airport, or endeavors to seek additional funding partners like the Stateline casinos or Heavenly, or attempts to turn its operations back over to the county or the feds.
Heavenly and the casinos are getting quite a free ride on the airport.
Finally, a logical common sense approach to facing the issues, cutting back yet looking toward future possibilities. 3/4 of our tax dollars going to salaries and benefits? Come on folks if you can’t take a pay cut in these wicked times, you deserve to be cut.
How much of that 78% is public safety? Kae, any chance you can clarify?
How about that 5% amusement tax going on ski and snowboard rentals, boat rentals, bike rentals and parasailing? How about a surcharge on ski resort, cruise and snowmobile buses.
An agreement made by a prior council prohibits a tax on lift tickets at Heavenly Mountain Resort.
Two of the current concil members were part of that and I think they should change it. Memorandums can be changed or better yet, HV should step up to the plate and volunteer to be included in the Recreation tax. They are allready trying to buy up most of the ski related Tahoe business as evident of vacation rentals, ski shops, retail shops and just recently tried to push out Sports LTD buy taking the lease.
I still do not understand what Kae wrote about furlough days; especially the last sentence.
Snowbum
Heavenly will never agree to voluntary taxes. The best way to tax Heavenly ( Sierra, Kirkwood and Squaw) customers is via the buses the resort runs and the rentals they earn revenue on. Maybe there is a clause that allows taxing lessons too.
Heavenly won’t volunteer to pay extra taxes and the casinos at Stateline are not even in California, so why should they pay into SLT’s coffers?
As far as Heavenly trying to take over LTD, sounds fine by me. I won’t even go in that shop anymore. At least if Heavenly owned it, they might clean up the employees a little.
If we tax the resorts they’ll only pass it onto the public via higher rates. We are already a high priced recreational destination for skiers…do we want them to chose another location?
The state of Nevada is in a tough spot because they always relied on taxes from gaming revenue to support them. Now with gaming revenues down there is less for the state to run on.
Reducing expenses is about the smartest way to go for the immediate fix. In this day and age, everyone (states, cities, citizens) must look for new revenues. Those new revenues need to come from other sources that more taxes though.
An easy answer? never
Hey dog,
I’ve worked at Sports Ltd. for most of the past 20 years. You’re gross generalization and unfair characterization of the mostly
fine people I work with has offended me and you’ve done the equivalent of crapping on the rug. Now I’m gonna have to grab a rolled-up newspaper and verbally smack your snout for your uncalled for and snarky comment.
Sports Ltd. has been a succesful business and part of this community since 1984. You don’t garner a loyal following of repeat local, regional, national and international customers unless you provide good to superior service and products at a fair price. We’ve also donated many thousands of dollars in products and service to many local fund raisers and community events.
Over the years, there have been a few less than ideal employees, but they get weeded out sooner or later. I challenge you to find any business that’s been around that long that hasn’t had a few bad apples.
Additionally, we enjoy a working environment and wage structure that exceeds what similar, local businesses offer and that engenders loyalty and a sense of “family” amongst the crew. Wanna bet that would change if corporate interests take it over?? Ironically, we are also dog friendly…but will make an exception for you.
It’s been my policy to refrain from personal attacks when defending a position against a dissenter—but you crossed the line this time dog face. If it were up to me, you’d be banished to the dog house where you can whine and wimper and scratch your mangy, flea-bitten coat. You won’t be missed at Sports Ltd. Bad dog…..baaaaaad dog!!!
Tom, you’re entitled to your opinion, as am I. I’ll leave it at that.
The City of South Lake Tahoe does NOT need more revenue!! There’s still plenty that can be eliminated or cut! For instance why is there still NO effort to consolidate services with the County??
Whatever taxes, fees or surcharges are being floated or thought about to charge the ski resorts, marinas or tour boats may be a question of equity? Maybe some of the proposals would make things fairer? Or not? That’s a separate issue!
If something does come along that’s a better way to raise revenue, then it should be revenue neutral and used to reduce the business license tax and/or the sales tax!
Even Pres. Obama agrees now is not the time to raise taxes! The City of SLT has a spending problem not a revenue problem. And we need to be doing everything we can right now to stimulate our town’s moribund economy!
Kae, research some facts on this, during the 1990’s Calpers was “Superfunded,” meaning their investments were doing so well that they did not require the city to make any payments on employee pensions, the unions asked the city to set the money aside for a rainy day, but they didn’t. How many years were pension payments waived by Calpers. This will be interesting???
THis whole thing is agonizing for the families of those that are being discarded, thrown aside, like trash, to balance the budget when those that are being thrown out are actually the very people that have worked their hearts out to try and cut spending in thier respective divisions to save money to avoid this atmosphere. It’s really shameful of the people that pretented to want to pull together city employees to try and put together a “budget task force” to try and hammer out a solution, when all the while it is obvious it was just a means to cut people. Not manage spending but people, real people. Folks you see every day at Raley’s or now the ever popular Grocery Outlet. I frankly can’t afford to spend money at Raley’s, even though I draw a City salary. Shame on you, shame, shame, shame. God hates a liar, as do most people.
And Tom W.–I agree with your viewpoint. Just wish I could have penned it the same way.
Let’s see if I follow the “hole in the ground” logic. To get it built, the developers promised to pay 2 per cent more in taxes. Now that they have gone bust, and the assesser has devalued the property, the request by the City is for every other business in town to pay another 2 per cent in taxes. So the City caused the problem with their use of eminent domain without any guarantees from the developers and want to fix it on the backs of the legitimate businesses in town who have survived the great recession. Somehow this solution does not ring right with me. If anything, the City should be working on filling up that hole in the ground and in the tax base with a new project to bring extra revenue into the city and jobs to locals. Just thinking out loud!!!!!
Ski resorts don’t pay sales tax on tickets sales because of state law, 1968 or so. The city agreement is not the same. That agreement came from threats from the ski industry to move the gondola to nv. but the city didn’t know that wasn’t possible, so they caved in, ask Hal and Tom. The city has not and is not reporting unfunded sick days and vacation days that have not been used, which are required by federal law. Check Sarbanes Oxley. This could be over a million.
Tom Wendell, I can find at least one business.
Well don’t keep us in suspense Lou…
What business are you refering to??
I can too…lol
500.00 an hour and there’s no state taxes or fed taxes removed,Tom you need to stop pumping your bike so hard break a sweat for some real pleasure,it make you cheeks Rosy.
Deb Palmer says: March 3, 2011 at 6:21 am..Let’s see if I follow the “hole in the ground” logic.City should be working on filling up these holes.
So can I deb,I understand perfectly that we need to fill those holes up,It make us all feel so much better.Open unfilled holes are a eye sore,they tend to get rusty,crusty, need some lube to remove the decaying hard metal.
@sick who says they draw a city salary must also be one of the laid off given all the venting and spewing all over this site, which means you are using this site to trash-talk the very place you demand should be giving you a job, kinda dumb wouldn’t you say? You’re only proving its a good thing they’re letting you go, I wouldn’t want to run into you at the city treating people the way you do here. It’s obvious who you are since you’ve given so many clues on this article and all the others. I’d say you oughta start brushing up that resume and see if the real world companies will let you dump all over them while demanding a paycheck.
KinkyLover,
Can you elborate?
I LOVE pumping my bike. It’s not just sport—it’s transport (thanks for that phrase Garry Bowen).
Breakimg a sweat keeps me fit (beats taking B.P. and cholesterol meds.) Also produces endorphins…natures anti–strass pain killers. Talk about pleasure, endorphins are 600x more potent than heroin but you have to earn them naturally. Doesn’t hurt that I can still wear the same size waist in pants as in High School and I’ll be 60 next month.
So what’s your point???
Tom Wendell Mine. I’ve been voting here starting 1973 in business with licence here starting in 1982. Lake Tahoe Coin Jewelry and Loan 3452 lake tahoe blvd.
lou pierini, are you saying you vote in the City? The pawn shop is in town but are you a City resident? Just for clarification…..
no. My house is on the county line with SLT, and I pay all city taxes because my business is in the city. FYO if you live in the city your are an ElDorado county resident also. regards