Mayor: Fresno bankruptcy possible without action

FRESNO, Calif. (KFSN) -- Mayor Ashley Swearengin is warning the city that the financial future of Fresno could be devestating unless immediate action is taken.

Fresno faces a $15 million budget deficit by the end of next year and a staggering $66 million hole in the next five years if immediate action is not taken.

The mayor is proposing a ten year plan to fix the problem and she's asking city employees to help out again.

Speaking with City Manager Mark Scott, Swearengin said that her administration plans to fund core services while working to improve the city's credit rating, increasing reserve funds, and identifying areas where savings can be achieved, according to a press release issued by the mayor's office Monday morning.

Swearengin and Scott said employee costs, including retirement and health benefits, currently account for 80 percent of the city's General Fund expenditures. Scott said employee compensation itself has risen more than 10 percent since 2009, while overall employee costs have risen 25 percent over the same period.

In an effort to reduce costs, Swearengin said her administration plans to negotiate with employee bargaining groups on salaries, medical benefits, retirement benefits and other contract elements.

Specifically, Swearengin said the city will immediately initiate a review of all pension obligations in an effort to reduce costs legally, while also examining options to reduce costs associated with health and other benefits for staff.

Labor groups will be asked to reopen their existing Memoranda of Understanding with the city, or begin negotiations with the City Manager on new agreements. Several unions, like the Fresno Police Officer's Association have renegotiated their contract several times over Swearengin's administration.

Swearengin said the city has already dealt with about $100 million in lost revenues and increased expenses, in part by cutting the city's workforce by more than 20 percent. Despite these efforts, the city still faces a $2.1 million projected deficit in 2012. Fresno's credit rating has been downgraded three levels by multiple bond rating agencies.

The City Council is expected to consider the mayor's proposals at a meeting on March 29.

Stay with Action News and ABC30.com for the latest on this developing story.

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ashley swearengin, fresno city council, budget cuts, local

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