THE VIRGINIAN-PILOT
Copyright (c) 1997, Landmark Communications, Inc.
DATE: Thursday, February 13, 1997 TAG: 9702130314
SECTION: LOCAL PAGE: B1 EDITION: FINAL
SOURCE: BY MAC DANIEL, STAFF WRITER
DATELINE: CHESAPEAKE LENGTH: 89 lines
City Manager John L. Pazour on Wednesday ordered a partial hiring freeze and a halt to spending on new city projects.
Pazour gave the news to department heads at a meeting Wednesday morning. On Tuesday, Pazour told the City Council that the projected shortfall in the five-year budget has risen from $14 million to $19 million and predicted a decrease in future city revenues.
The shortfall includes both the city's long-term spending plan for major construction items and a separate budget for day-to-day operations.
The hiring freeze will be on a case-by-case basis. Positions will be reviewed weekly by the city manager and his staff. Pazour said he will make the final call as to which positions will be filled.
It is not known if the school staff will be included. Pazour said that decision rests with School Superintendent W. Randolph Nichols, who met with Pazour and Mayor William E. Ward Wednesday afternoon.
The city has 2,666 full-time budgeted positions, said Carolyn W. Darden, city personnel director. There are 144 vacancies for full-time employees, positions that range from clerical jobs to dispatchers to public safety positions and community services workers.
The city also has 350 regular part-time positions, of which 81 are vacant.
After several months of optimistic projections, city officials are predicting a decrease in revenues of about $1.5 million this year, one of the main reasons Pazour called for the freeze.
``If there is a real problem there, by the end of the year it's going to be too late to adjust,'' Pazour said Wednesday. ``This is a `Let's play it safe' type of action.
``It's not the kind of thing where you run up a red flag,'' he said. ``This is done to prevent a serious problem. If there is a problem there, we've started to manage it.''
The prevailing theme, Pazour said, is to not have the freeze affect services. City officials will monitor complaints from citizens to evaluate the impact.
Large projects will continue, but smaller items in each city department may suffer. Pazour asked the department directors to find out which projects can be held off ``until we know how the end of the year looks,'' he said.
Chesapeake is the only city in South Hampton Roads with a hiring freeze.
It is the first hiring freeze in Chesapeake since 1991. Former City Manager James W. Rein announced an immediate and total freeze after council members became alarmed over a growing city payroll and dwindling state revenues. That freeze ended in April 1992.
Before Rein's total freeze, the city had been operating under a modified freeze similar to that announced by Pazour.
At a work session Tuesday night, Pazour revealed that the previously expected $14 million shortfall had gone up to $19 million. That figure is predicted to grow as the city faces costs not reflected in the proposed budgets, including millions needed to fund changes in the state pension system.
In addition, Pazour announced that city revenues may decrease in the next several years before possibly rebounding in 1999.
Pazour said the growing shortfall was a ``semantic mistake'' that occurred when former budget director Claude Wright revealed the figures to the council.
Wright did not say that the first $5 million in shortfall was repeated in the second year, creating a total of $19 million. Adding to the mistake, Pazour said Wright assumed both $5 million shortfalls would be eliminated at the same time, which is not correct.
Despite finding more than $1.63 million in unallocated stormwater funds, a $2.02 million surplus from existing public works projects and $31.6 million in uncommitted funds, these amounts have limited use in offsetting the shortfall.
City officials have suggested an array of various fee and tax increases to help erase the shortfall, including an increase in the local cigarette tax, creating a cable television fee and increasing fees for emergency medical service.
The council is scheduled to adopt the proposed $564 million capital budget in two weeks.
Despite the growing shortfall, the city's overall financial situation is fine, according to city officials. The city has an adequate amount of money in reserves, and it has maintained its double-A bond rating, which allows it to pay lower interest rates on borrowed money. ILLUSTRATION: The situation
A $19 million shortfall is projected in Chesapeake's five-year
budget, and a $1.5 million decrease in city revenues is forecast for
this year. Still, the overall financial situation is fine, city
officials say.
The solution
As a precaution, City Manager John L. Pazour has ordered a partial
hiring freeze and a halt to spending on new projects. ``If there is
a real problem there, by the end of the year it's going to be too
late to adjust,'' he said.