City faces job cuts

Department heads preparing 4 percent budget reductions

Public safety exempted

New hires frozen

mayor still hopes to avoid layoffs

November 14, 2001|By Gady A. Epstein | Gady A. Epstein,SUN STAFF

In a clear sign of the city's worsening financial problems, city department heads are drawing up plans for a 4 percent across-the-board spending cut that likely will include layoffs -- while also contending with a strict hiring freeze.

The spending cut isn't a reality yet, but without a windfall in new revenue -- such as federal reimbursement of terrorism preparedness costs -- it is possible the city would need to lay off workers as soon as the end of January.

"We have to prepare for every contingency, and there may indeed be layoffs. We hope not," Mayor Martin O'Malley said last night, emphasizing that he was still optimistic. "We hope that as quickly as things changed on Sept. 11, that they will change again. And we will be watching our revenues, watching our expenses, controlling our costs as best as we can."

City budget officials have projected a shortfall of $17.1 million for this fiscal year, which will end June 30. Revenues are projected to be almost $5 million lower than budgeted, and expenses related to terrorism security could climb above $10 million for the year.

O'Malley has made two trips to Washington in recent weeks to urge Congress to send money to cities in the fight against terrorism, and he has all but said that he will have to lay off workers unless the federal government helps.

City union officials, who have just agreed to labor pacts that include no salary increases this year, are angry with O'Malley for deciding to privatize the jobs of low-paid city custodians and security guards.

"If he's talking about layoffs, then this mayor needs to first of all look at how top-heavy his staff is," said Glenard S. Middleton Sr., president of Local 44 of the American Federation of State, County and Municipal Employees. "If he fires a deputy mayor, he can save six city workers' jobs with benefits. ... The departments have downsized and downsized, and they always downsize at the bottom, not at the top."

O'Malley responded by saying, "We have eliminated 25 percent of our deputy mayors," a reference to former Deputy Mayor David E. Scott, who left in September. "I really don't have any apologies to make. I have a good senior staff. They work very hard."

Middleton also took aim at O'Malley's spending on terrorism preparedness.

"The mayor has been penny-wise and pound-foolish," said Middleton, adding that the mayor needs a "reality check" on terrorism. "He's been focused on fighting terrorism instead of looking out for the betterment of the community."

O'Malley's responded: "Ah, more Kathleen Kennedy Townsend [talking] points," implying that Middleton was speaking as an ally of the lieutenant governor, who would likely be the mayor's opponent if he runs for governor next year.

The city's fiscal woes occur just months after the mayor pushed through the first significant tax increase in years -- a 20 percent income tax increase that takes effect Jan. 1 -- in large part to pay for his heavy investment in fighting crime. The tax increase provides $10 million or more in revenue this fiscal year, but that gain may well be more than wiped out by the national economic downturn and the impact of the Sept. 11 attacks.

And the state, facing its own budget difficulties, may not be of much help.

To ward off a fiscal crisis, O'Malley imposed a hiring freeze Nov. 5, except for police officers, firefighters and employees of the courts, the sheriff and the state's attorney. The city has also frozen $3.8 million in other spending, and is looking at deferring construction projects to save more money.

But even with these measures, officials anticipate that to balance this year's budget, all city departments will have to cut spending by 4 percent -- with the exception of the same public-safety-related agencies that are exempted from the hiring freeze. The deadline is Friday for managers to come up with spending-cut plans, and budget officials anticipate the possibility of layoffs as soon as Jan. 25.

City Finance Director Peggy J. Watson said she's still hopeful the city can avoid layoffs, but said that by asking for the 4 percent spending cut plans, she is preparing for the worst-case scenario.

"You don't want to cry wolf, you don't want to alarm people, but the truth of the matter is, you can't wait until the middle of the crisis to figure out what you're going to do," Watson said. "You just don't sit there sitting on your hands."

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