Some say they've found the solution for Lodi's future deficit

The Lodi Professional Firefighters and Councilwoman JoAnne Mounce say they have a solution for next year's budget woes: The city should borrow from the Lodi Electric Utility's almost $13 million in reserves.

"The benefit of having such an asset is to use it," union secretary Brad Doell said. "It befuddles me that they would cut jobs to save a bond rating."

Drawing from the utility's reserves is one of the suggestions the firefighters union have brought up in negotiations with city staff over the best way to cut $373,000 from the fire department's personnel costs, union President Peter Iturraran said.

The firefighter and the department's mid-management union could see three firefighters and one battalion chief laid off if an agreement with the city is not reached by Wednesday's Lodi City Council meeting. The unions are the final two that have not reached an agreement with the city.

Late Tuesday afternoon, Iturraran said an agreement is on the table "in principle, but it's not signed, sealed and delivered."

City spokesman Jeff Hood said the results of negotiations will be announced at Wednesday's meeting, and he could not comment further.

While the union would like the reserves to be considered, George Morrow, the utility's director, said using reserves could have consequences for the utility.

Lodi City Council special meeting

The issue: The union representing Lodi's firefighters wants the city to consider using money from the Lodi Electric Utility's reserve to balance the city's budget. Council members worry if they borrow the money, it could lower the utility's credit rating.

The Lodi Professional Firefighters and Fire Mid-Management also have agreements on the table with the city, and the result of negotiations will be announced at the meeting. The unions are the final two that have not reached an agreement with the city.

When and where: 7 p.m. tonight, Carnegie Forum, 305 W. Pine St., Lodi.

News-Sentinel staff

The utility already transfers money every year to the General Fund because utilities are not subject to federal or state income taxes. Utilities with lower transfers have better bond ratings. The transfer this year will be $6.98 million, which is about 9 percent of the utility's budget. The credit rating is essential to the city's well-being because it helps the utility buy power at lower prices on the market and gives the utility lower interest rates when borrowing money, Morrow said.

It is premature to consider using additional electric reserves, Mayor Larry Hansen said.

"After we have done everything we can do, then maybe, and I stress maybe, we can look at doing that. ... We know the state is going to get us again. Where we find the funds to deal with that remains to be seen," Hansen said.

Hansen is referring to Gov. Arnold Schwarzenegger's proposal to borrow cities' property taxes to help close California's deficit. If he goes through with borrowing the money, the city of Lodi could be out more than $1.2 million.

If this happens, the city will face another deficit. At that time, Hansen said it might be appropriate to study if the city should use some of the utility's reserves, but he is still worried about the bond rating dropping.

"We've trimmed this budget; there is not going to be a lot left," he said. "Then, the bonding agencies might be a little more understanding if we can show all that we have done."

City staff did not bring forward a plan to take money from the utility's reserves because the council has voted in the past to gradually decrease the transfer, Hood said.

Another $1 million from the utility will be transferred next year to bring the reserves total to almost $14 million, Morrow said. While the original goal was $13 million, it will need to keep growing to meet the standards that the bond agencies set.

As the only council member to support transferring money at the council's June 3 meeting, Mounce said the employees have already given up enough.

"The citizens of Lodi are the owners of the electric utility company and have been paying extremely high rates," she said. "A one-time transfer from the reserves would be in order, instead of depleting services."

The utility reserve is one of several areas that the city has not explored making cuts, Mounce said. She also mentioned reducing staff take-home vehicles, cell phones, council pay and upper-management as ways the city could save money.

Even though he is not in favor of taking additional money from the utility, Councilman Bob Johnson said the city did use General Fund reserves during this fiscal year to balance the budget.

"The council as a whole a while back said that we needed to boost up the (utility) reserves for a variety of reasons. ... I don't know whether there is any compelling reason to deviate from that strategy," he said.

Contact reporter Maggie Creamer at maggiec@lodinews.com

Reader Feedback

Gator wrote on Jun 11, 2009 8:04 AM:

" Say oriley if the LFD cut 600,000 what is your problem?? You say over paid, they are paid less than a lot of other Fire departments in the state…You are typical of a lot of Americans anymore who complain and moan on how tough life is, you don’t know what bad times really are!! I
Don’t know if the LDF has a Volunteer section but if the do give it a shot
It’s called putting your money where your mouth is or are you just talk!! "

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