Facing possibly $10 million in estimated in revenue losses in the last few months of this fiscal year due to Covid-19, the city of Monterey is preparing to layoff 107 positions, City Manager Hans Uslar announced in a press phone briefing on April 16.
Twenty three of those positions are vacant, which means 84 people out of 450 people currently employed, could lose their jobs. It's nearly 20 percent of the workforce.
The proposal will be on the Monterey City Council agenda on April 21. Union contracts and city rules require advance notice of layoffs, which means they would not take place until June 1.
Uslar shared the news with employees in a teleconferencing call in the morning ahead of the press call at 11am. His downcast voice at the start of the call with reporters hinted bad news ahead.
"This was a hard decision in the making and it was a tough, tough teleconferencing call," Uslar said. "There are many tough days ahead of us."
Currently the city is estimating a loss of $1.1 million in sales tax in the last quarter of the fiscal year which ends June 30. The loss in transient occupancy tax (TOT) is estimated at $5.3 million. Tourism-related revenue makes up 28 percent of the city's annual budget, according to a press release sent later in the day.
Revenue normally brought in by the Sports Center and Conference Center, plus the loss of revenue from the parking garages, and fee-based programs, brings the total to possibly as much as $10 million, or 12 percent of the budget, if the city is unable to reopen facilities and programs in the months ahead.
Reducing the workforce now could provide the city with an annual savings of $11.47 million with a corresponding monthly savings of $956,000.
In its press release, the city said that although the city has a "rainy day fund" for economic uncertainty, the long-term impacts of the pandemic and resulting economic crisis is "highly unpredictable and keeping the economic uncertainty fund intact is critical to stave he city from insolvency and to maintain police, fire and other critical public safety services."
The employees most impacted by the layoffs include those that cannot open under shelter-in-place and therefore are bringing in zero revenue, including the Sports Center, the Conference Center and preschools at the city's community centers. Library staff members are also impacted, as are those from other departments.
Only enough staff as are needed to keep facilities safe and operational are being kept on at the Conference Center and Sports Center. Uslar said businesses are calling the conference center to book openings in late fall and beyond, so someone is staying to answer the phones, as one example.
Uslar said he will ask the council to give him the authority to hire back employees as programs reopen, without having to come back to the council for approval. "We hope this is one element to bring our employees who have served the city for many years to bring them back quickly," he said.
The uncertainty of what lies ahead with Gov. Gavin Newsom's stay-at-home order and the county's shelter-in-place order played into the management decision to start the layoff process. On Tuesday, Newsom said in a press conference that getting back to business as usual would look more like a dimmer switch, rather than a light switch. Monterey County Health Officer Edward Moreno did not give an estimate on when he could ease up on the shelter-in-place order.
Uslar said that since it appears "that this dimmer will go on slowly," there is no way for the city to predict how a phased in economy will impact the city and its financial future and plans had to be made for long term survival.
Human Resources Director Allyson Hauck said the city will engage in negotiations with employee unions to come to agreements on severance and other details. Under pension contracts under CalPERS, laid off employees will have health coverage through the end of July.
There could be more layoffs and cuts in the future if the situation does not improve, Uslar said, and the city will need to renegotiate union contracts.