The day of reckoning came Tuesday for city workers targeted for layoffs; their hopes of being spared from the first mass job cuts in city history were not realized.

Milpitas City Council voted 3-2, with Vice Mayor Pete McHugh and Councilwoman Althea Polanski dissenting, to finalize adoption of the city's estimated $145-million 2009-10 fiscal year budget, triggering the unprecedented layoffs of 21 full-time City of Milpitas employees to help close next year's projected $8.7-million shortfall.

"I think this has been a fair budget process," Mayor Bob Livengood said, prior to the council's divided vote.

The mayor's comments came after an employee union representative backed by 20 city employees who received pink slips in recent weeks stood silently in Milpitas City Hall's Council Chambers spoke out against City of Milpitas' determination to reduce its nearly 400-member full-time work force by 5 percent in order to save the city about $1.8 million next year.

"Eliminating individuals in service to the public will invariably impact the public," Dave Ritchie, a labor relations representative with United Public Employees of California Local 792, said.

UPEC represents the interests of Milpitas Employee Association, Milpitas Professional and Technical Group, the Milpitas Supervisors Association and Mid-Management and Confidential Unit. Since mid-May, various city employee union groups like UPEC as well as the Milpitas Police Officers Association had proposed ways


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to stave staff cuts. Plans offered to City Manager Tom Williams ranged from temporary one-hour per week work furloughs to 2.5 percent retiree pension contribution givebacks. However, despite talks between various unions and City of Milpitas, no formal agreement was ever reached prior to the council's decision. Layoffs to city workers are set to take affect by June 30.

One member of the council tried to create a plan to save city jobs. In a related but separate agendized item Tuesday, Vice Mayor McHugh advanced a proposal requesting all represented employee groups agreeing to pay 2.5 percent of their monthly retirement cost for fiscal year 2009-10 be spared from layoffs.

As proposed, if unions agreed to do so the council would rescind the issued layoff notices for permanent full-time city employees. McHugh's proposal would have saved the city $930,000. The deadline for employee commitments to participate was noon June 2.

Despite reports that most city unions had offered concessions, McHugh's proposal died for lack of support from his council colleagues. The vice mayor's nixed proposal came before his outright rejection of next year's budget.

"I cannot and will not support this budget and I am not pleased with the process that got us here tonight," McHugh said.

Councilwoman Polanski appeared conflicted on what stance she would take prior to her "no" vote on the budget.

"I'm very confused... I don't want to see anybody laid off," she said.

However, Polanski also noted her unwillingness to tap into the city's $28-million budget uncertainty reserve to fix the city's ongoing structural deficit as some city employee unions had previously argued the city do to solve its multi-million dollar budget gap.

"I don't want to see any employees go, but I'm not one for going for reserves," Polanski said.

Mayor Livengood said tough measures had to be taken during tough economic times. He also stated that union groups had not been "clear on a consistent basis" with the city over what concessions they would be willing to commit to.

Moreover, Livengood said unionized city workers were using "tortured logic" to say how the city should spend its money in next year's budget.

"It's clearly a responsibility that rests with the city council," he said.

Ultimately, the mayor asserted that trimming city employees from the payroll would be the only way for City of Milpitas trapped like the rest of the country in a historic recession to properly balance its expenditures and revenues.

"There are only two ways to do that: raise revenues or cut expenses," Livengood said. "We need to trim expenses."

Although union representative Ritchie as well as resident Arzhang Kalbali who spoke during the public comment portion of the budget item both argued the city had not explored options to job layoffs, the mayor claimed City of Milpitas had for many years been doing things to save city jobs. Livengood noted since the terrorist attacks of Sept. 11, 2001 and resulting slump in the nation's economy, the city had downsized and held vacant numerous city employee positions.

"The city has 100 fewer full-time positions since 2001," Livengood said. "We have been trying many other options."

Full-time city employees were paid a gross wage that averaged $102,000 last year, with about 48 percent of the workforce in excess of $100,000. The city's rising pension and medical costs have ballooned to be better than half as much as an employee's salary.

Besides job cuts, City of Milpitas plans to close next year's stated $8.7-million budget gap by using a $5-million loan payment from Milpitas Redevelopment Agency and $300,000 through cost cutting of city supplies and contract services. Staffing cuts would also include 10 vacant funded positions eliminated through attrition, saving the city $1.4 million, and laying off nine temporary employees, saving the city $200,000. No cuts to city-funded programs or services used by residents were planned, city officials indicated.

But state impacts may still be felt.

On Tuesday, in an address to the California Legislature, Gov. Arnold Schwarzenegger stated "California's day of reckoning is here" as the governor noted the state's $24-billion budgetary shortfall and the potential layoff of 5,000 state workers.

During the council meeting, Mayor Livengood echoed the governor's message saying the state's dire situation would come down squarely on all cities in the state. Milpitas officials recently claimed a potential state grab of an additional $1.8 million in property taxes would balloon the city's deficit next year to $10.5 million.

The mayor said in coming months he hoped to convene an employee review panel, which might be comprised of one council member, the city manager and employee unions, to explore options as City of Milpitas faces threatened state cuts.

"Hopefully, over the next few months, we can work with groups to minimize further reductions by the state," Livengood said.

By the council's first meeting in August, the mayor said he hoped to flesh out more details on the employee review panel's composition, especially the inclusion of employee bargaining units.

"They certainly would be included in that," Livengood said.

Others at the meeting were not in agreement with city officials over the path taken to reduce the city's work force. That night resident Kalbali, himself laid off from a private sector job last November, expressed fears over what city layoffs meant for Milpitas as a whole.

"It does affect the people that you let go, it does affect their families, it does affect the community, it does affect all of us," he said.