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Vero seen facing big staff cuts
BY LISA ZAHNER - STAFF WRITER (Week of February 25, 2010)

Two years into a recession, the City of Vero Beach may finally have to make serious cuts in staffing to keep property taxes low and to attempt to bring city electric rates closer to Florida Power & Light rates.  

While other local governments for more than two years have been making staffing cuts and other reductions as growth slowed and real estate values plummeted, Vero instead sought to hold on to staff.

And it did in a big way.  

Vero employs about 22 staffers per 1,000, compared to the more populous Sebastian which has a 5.7 per 1,000 ratio. Vero has an even higher per capita staffing rate than Indian River County, which inclusive of the fire department and Sheriff’s office, still employs only 10.1 employees per 1,000 residents.  

But in preparing the 2009-2010 budget, Vero managers and department heads clearly did not expect the utility issue to become so important in the mind of voters. Now, in an election year and with a new utility contract failing to produce promised reductions in electric costs, city leaders are grudgingly looking at making staff cuts.  

For a City Council that relies so heavily on the advice and work of staff, it was a hard realization. “I want to make sure that the employees know that we’re looking out for them and we’re looking out for the public as well,” Mayor Kevin Sawnick said at the last City Council meeting on Feb. 16.  

Sawnick seemed to be trying to soften the blow of statements he made a week prior proposing 10 percent municipal staffing cuts across the board. The upcoming budget year would have been tough enough with only the challenges known to City of Vero Beach staff prior to the Feb. 16 City Council meeting -- depressed property values, anemic state cost-sharing revenues, rising health care premiums and the skyrocketing costs of keeping a bloated pension plan afloat.  

Then Council members threw a wrench into the situation, demanding that the city do whatever it takes to match Florida Power & Light electric rates, during a meeting that saw Council members lament that current Vero Beach electric bills remain 35 percent higher than FPL’s after they promised far less.  

Receipts from the city’s 34,000 electric customers are estimated to be about $92 million this year. Reducing those charges by 35 percent seems impossible when you factor in the city’s operating expenses for the system, its 133 employees plus its debt service, which comes to about $84 million. And that doesn’t even include the $8 million that the utility contributes to the city’s general fund each year. “I’ve been looking at these numbers and frankly, we would have to get our power for free,” said Councilman Brian Heady.  

Vero has kept property taxes at an all-time low $1.94 per thousand of value the past few years, mostly on the backs of utility customers who fund the nearly $11 million transferred into the general fund -- in direct transfers and administrative charges -- from the electric, water and sewer receipts. “A lot of the things that we enjoy in Vero Beach right now are because of that electric system; that’s been the funding for parks and recreation, the police and on and on,” City Manager Jim Gabbard stated before the Indian River Board of County Commissioners on Feb. 16, in response to statements made by Heady.  

Eliminating this infusion of cash into the general fund would go a long way to getting electric rates down, but with the mounting budget pressures, 2010 is probably not the ideal year to eliminate the transfers.  

But something’s got to give.

“Clearly we’ve got a problem here, we’ve got to figure out a way to drastically reduce the expenses of the city,” said Heady, who last month challenged the city’s Finance Committee to brainstorm about the budget and come back to the Council with recommendations.  

What seems toughest to justify in the Vero budget is the number of city staff relative to the City of Sebastian or even to the much larger job of running the Indian River County government. Excluding the electric utility, the City of Vero Beach employs 22.4 per 1,000 residents. Including the electric utility, the city employs 28.4 per 1,000.  

Indian River County employs 4 staff per 1,000 residents if you don’t count the more than 230 members of the countywide fire department -- 5.7 per 1,000 if fire employees are counted. If you include all the county constitutional offices -- Sheriff, Tax Collector, Supervisor of Elections, etc. -- the tally still only comes up to 10.1 employees per 1,000 residents.

The city’s 28.4 employees per 1,000 residents would have been even higher, but according to Gabbard’s letter to the City Council on Sept. 15, 2009, 26 positions were deleted and 20 vacant positions frozen in the lead-up to the 2009-2010 budget.  

When he first saw these numbers, Mayor Kevin Sawnick got an earful from local residents who are hurting due to the economy. Faced with citizen complaints and media coverage about the high cost of government in Vero, he told members of the Taxpayers Association on Feb. 10 that a 10 percent cut in staffing seemed appropriate.  

Sawnick said he hoped whatever cuts are made are based on some rationale about the critical need for the position and the actual work product that staffer produces. He even suggested the city bring in an efficiency expert to study the continued need for positions in city government.  

“We should know what this person is doing in 40 hours per week. If what they’re doing should only take 10 hours per week, we should know that when we’re making these decisions,” Sawnick told the Taxpayers’ group. Sawnick meets regularly with officials from other local municipalities, so he sees how relatively insulated Vero and its staff have been from the massive cuts experienced elsewhere this year.  

As a state corrections employee himself, Sawnick said he is both cognizant that these are tough times and has empathy for employees who haven’t received raises in several years.  

Sawnick -- voluntarily and unilaterally -- took a 5 percent pay cut in his own Council salary in solidarity with municipal employees. “It’s hard to have hope when you don’t hear much encouragement from your bosses,” Sawnick said. “We’re all concerned for our jobs.” The young, idealistic mayor-ofthe- people said he has suggested enlisting the employees as soldiers in the budget battle.  

He obtained from Commissioner Bob Solari and forwarded to his fellow council members the description of an employee idea program called SHINE which has saved the Polk County government $6.4 million over the past decade.  

Indian River County took a 22 percent budget cut this year, trimming $83 million in expenses and eliminating 41 positions, placing the county at a 30-year low level in staffing. The City of Sebastian instituted 5 percent furloughs, shut City Hall down one scheduled day per month to save on utilities and fuel, combined a few departments and cut at least five jobs, including the Deputy Police Chief position.  

The City of Vero Beach was behind the proverbial eight ball before the 2009-2010 fiscal year even started. During budget workshops, Gabbard estimated the city would have entered the year $3 million in the red, but that $1.3 million in mid-year cuts brought the city up to a $1.7 million deficit.  

At the time, Gabbard said the city had cut “dozens of jobs,” mostly by attrition as employees leave or retire. The Police Department, which employed 94 people in 2009 and still employs 94 people, did cut its overtime by $200,000 to help balance the books last year.  
Recreation took a large hit, with the elimination of five full-time and five part-time jobs, resulting in the layoff of three people. No further job cuts, other than non-replacement of open positions, were announced for the current fiscal year.  

Director Rob Bolton has told 32963 that he plans to include the elimination of six water and wastewater employees in a third quarter budget amendment next month.  

In the 2009-2010 budget cycle, Vero increased employee health premiums slightly and, on the job front, introduced 5 percent furloughs on a rotating basis so City Hall would not have to close, at an anticipated savings of $1 million.  

With more copious staffing than Sebastian, all departments can still function every work day, despite the absences of furloughed employees. During budget workshops last summer, Gabbard assured the council that he and Finance Director Steve Maillet would do everything in their power to prevent such budget surprises in the future.  

“We’re going to be monitoring our situation monthly and the only place we can go is layoffs,” Gabbard said. “You have made it clear that the reserves are off-limits and we’re actually in pretty good shape with the reserves. “We’re not going to get into a negative position again,” Gabbard said. “It’s positions and services that we’re going to be affecting going forward.”  

The City of Vero Beach’s high spending on basic services seems to be a part of the city government’s engrained culture, heritage and tradition. The question came up in the 1976 city council election and former City Manager John Little was quoted in December 1976 as saying.  

“If you want Cadillac services, you pay Cadillac prices. If you want Ford services, you pay Ford prices,” Little said.  

At the time -- prior to the influx of millions from the utility enterprise funds -- Cadillac services cost $3.52 cents per $1,000 of value, and that was down from the 1972 tax rate of $8.50 cents per $1,000 of value. This information was printed in a graphic in the Dec. 1, 1976 Press Journal, adjacent to a cartoon showing a Vero resident apparently sick in bed with a money bag on his head.  

The City of Vero Beach collected $1 million in property taxes in 1976 as opposed to $4.6 million this year, but property values have more than quadrupled from the home prices advertised in the 1976 paper -- $18,000 to $22,000 for a brand-new home on the mainland, $40,000 for a waterfront condo and $99,000 for a waterfront home on the barrier island.  

To get the millage rate down to $3.52 at the time, the cutline read, “John Little lopped out many expenditures asked by city department heads, but the cost of municipal government remains high in the city.  

Salaries, for example, have climbed dramatically, especially in the upper echelon of the administration.” With the current economy and 14 percent unemployment, many families in the mid- to lower echelon of the Vero Beach population can ill afford the Ford right now, let alone the Cadillac.