Newest articles on The Sacramento Press tagged as "terry schutten"

Szalay prepares to say good-bye to top county spot

2011-06-30T00:58:46Z

As Steve Szalay prepared to hand over the reins to the top spot in county government, he talked about his experiences as interim county executive and sent a message to his successor: “Don’t screw it up.”

Szalay came on board with the county in December of 2009 when County Executive Terry Schutten retired. It was a temporary assignment that would bring Szalay out of retirement just long enough to put the county back on track while the Board of Supervisors recruited a permanent county executive.

With more than 40 years’ experience in California government, including work in the administration of four counties and as executive director for the California State Association of Counties, Szalay was ready for new challenges.

“(Sacramento County) was in bad shape, and it needed to be ‘repositioned,’ ” Szalay said. “We’re not ‘recovering,’ we’re positioning in a different direction. This is what I enjoy most. I’m happiest when there are problems to solve.”

He wanted problems to solve, and he got them.

For starters, the county budget was in need of a serious overhaul.

Sacramento County has a budget of $3.5 billion, Szalay said, and the general fund makes up $2 billion of that amount.

When the county supervisors approved the 2009/2010 budget, it was balanced with $80.2 million of one-time resources and internal borrowing – which damaged the county’s credit rating.

“When I walked in the door, they’d had a budget in place for five months, and they already knew they were about $15 million out of balance,” Szalay said. “The consistent one-time fund use took (the county’s) credit rating from A-minus to triple B-plus.”

The previous year, the budget gap was smaller ($123.7 million), but the board used more one-time resources that year ($103 million) to plug the hole.

“They were in denial about the recession and getting further and further behind,” Szalay said.

In addition to a runaway budget problem, the county was working with labor contracts that created havoc with the balance sheet.

Szalay said Schutten and the board entered into five-year labor contracts in 2005/2006, when times were good – contracts that included cost-of-living increases and equity increases for every bargaining unit for every year.

“While revenues where going down, expenses were going up,” Szalay said. “What wizard decided that was a wonderful thing? I don’t know what they were smokin’ when they came up with the idea.”

Despite the continual downturn in the economy since 2006, the labor contracts stayed in place.

The first order of business as “ICE” (the acronym-turned-nickname was effective almost immediately, Szalay said) was to set up a plan focused on four key areas of improvement: budget/fiscal, labor, debt and efficiency.

“You want current revenue to pay for current services,” Szalay explained, “and then you want a small contingency to take care of unexpected things that happen in the year, and you want managers on top of things to make adjustments quickly when it’s needed.”

To solve fiscal challenges, Szalay said he worked with management and the board to make “reasonable and necessary” cuts and to reduce the amount of one-time funds used to fill budget shortfalls.

Through those efforts, county supervisors cut more than 1,000 positions, streamlined some services and reduced the budget gap by almost $130 million over two years.

“We’re now within $19 million of having current revenue pay for current services,” Szalay said. “That’s huge.”

Next, he worked to negotiate labor contracts that didn’t undermine the budget.

What the county ended up with were new labor contracts that had no increase the first year, no increase the second year, and the third year, “we’ll talk,” Szalay said.

The new contracts also included lower-tier retirement for new employees and stopping heath care stipends previously given to retirees.

“All 26 unions agreed to the terms,” Szalay said. “That was a real accomplishment.”

Of everything he has worked on as interim county executive, though, the work that really ignited a fire in Szalay was what he calls “new efficiencies.”

“This is the fun stuff,” Szalay said. “This is where you get things done.”

The “new efficiencies” are composed in a list of 56 projects that Szalay and county management worked on for the past 21 months to save money, increase revenue and enhance services throughout the county.

Some projects changed policy to direct new revenue into the general reserve fund every year and not pull from the fund to fill budget gaps.

Other projects created new contracts with private nonprofit and corporate entities to take over services previously operated by county staff.

“This county has one service delivery policy: Hire a bunch of civil service workers and put ’em to work,” Szalay said. “What we need is a mix. We should (also) have some contracts with the private sector, some contracts with (the) nonprofit sector, some joint services with the city.”

Reorganization projects were also part of Szalay’s plans.

Szalay took the “three-legged stool model” of county services that includes municipal services, countywide services, and internal support operations, and looked for ways to combine operations or reorganize to eliminate redundancy.

Szalay estimated that the changes will save the county between $10 million and $13 million each year in operating costs.

When asked if he feels he’s accomplished what he set out to do for the county, Szalay was emphatic.

“Yes. Definitely.” he said. “We’ve adopted two budgets, gone through negotiations of labor contracts, worked on 56 efficiency plans and started working on marijuana permitting,” Szalay said.

“The time is good for a hand-off,” he added.

As Szalay returns to retired life, he said he and his wife, Diane Cummins, a special advisor to Gov. Jerry Brown, will spend time relaxing with family in the days to come, and they are planning a month-long trip to Italy in September.

After that, Szalay said, he will probably do some independent consulting work or focus on projects for the county on a contract basis.

The new county executive, Brad Hudson, is expected to take over on Aug. 14, and Szalay said he has every confidence in Hudson’s abilities.

Hudson’s background is in economic development, Szalay pointed out, so when the county experiences new growth – “and it will,” Szalay assured – Hudson will have plenty of opportunity to “show his stuff.”

“I’ve had the pleasure of being able to make some changes at the top of this organization, and there’s an excellent management team that I’m turning over to the new guy,” Szalay said.

Does he think Hudson can keep things going in the right direction?

“He’d better,” Szalay said. “He knows that, for the next few years, fiscal stability has to be the No. 1 goal.”

Szalay said he’ll have two days to brief Hudson about the position before stepping down, and he’ll have one last comment before handing over the keys to the office:

“Now, don’t screw it up! I’ll be watching you!”

County: New budget gap on top of $68 million shortfall

2009-09-17T03:15:43Z

On top of its current $68 million shortfall, Sacramento County has a new $8.1 million budget gap from falling sales tax revenues, Sacramento County officials told the Board of Supervisors Wednesday.

The new budget gap means that layoffs — in addition to the 382 currently proposed — are a definite possibility, which is unfortunate, said County Executive Terry Schutten in response to a question from The Sacramento Press.

The Board of Supervisors was scheduled to make final decisions today to balance its 2009/2010 budget. However, the situation changed in light of new information that the county’s sales tax revenues are plummeting again. The board now plans to make its final budget decisions on Tuesday.

Planned budget cuts include the 382 layoffs and shortened work schedules for about 7,000 employees, according to the most recently updated information available Wednesday from county spokesman Zeke Holst.

Schutten said that county executives met on Monday and nearly balanced the supervisors’ final budget priorities.

“However, at 4:45 p.m. ... on Monday afternoon, our chief operating officer received notification from our tax consultant that, for the last quarter, our sales tax were down 26 percent. And for the entire year-to-year, our drop was approximately 14 percent,” Schutten told the supervisors.

Those figures create a $4.1 million gap, he explained. The county lost another $4 million in revenues from sales taxes that are collected statewide and then delivered to local governments for public safety programs, Schutten said. The loss of the sales tax money that goes to public safety programs will affect the Sacramento County Sheriff’s Department, Probation Department and District Attorney’s office.

Meanwhile, the vice chair of United Public Employees Local 1 told the supervisors that the union would make concessions on retirement benefits if the county drops its proposal to shorten the work schedules for about 7,000 employees represented by unions.

“As a show of good faith yesterday, UPE is willing to defer the Retiree Health Savings Plan accounts that we have, which potentially saves the county millions of dollars," said Beverly Kearney, vice chair of UPE Local 1. "We’re hoping that this will save jobs and mitigate layoffs.”

But Schutten told The Sacramento Press after the board meeting that UPE’s proposal would not garner the savings the county needs. UPE’s “main concern was the retirement health care account, and that’s for $8 million,” Schutten said. "Of that $8 million, only $1.9 million is local dollars. So it’s not near enough to cover the shortfalls that we have. It was a good suggestion. We certainly appreciate it, and look forward to working with them.”

Photo of Supervisor Roger Dickinson by Kati Garner.

Photo of presentation on sales tax by Anthony Bento.

Kathleen Haley is a staff reporter for The Sacramento Press.

County's layoffs/reduced hours plan is "illegal," union alleges

2009-08-28T01:20:24Z

A union that represents Sacramento County clerical workers and social workers is alleging that the county government’s plans to cut 360 positions and reduce employee hours are illegal. In response, the county’s labor relations director said the county’s plans are “perfectly legal.”

The United Public Employees Local 1 is fighting county management’s planned cuts to positions and hours. County Executive Terry Schutten outlined county management’s proposal for the layoffs and cutbacks in an Aug. 24 memo that can be read here.

Schutten’s memo says the county now has a $54.5 million deficit. Plus, $7.8 million will need to be cut from the county’s budget because building activity is poor, Schutten wrote.

The county has proposed to cut 360 positions on Sept. 27. County management is also planning to take 16 hours per month out of the work schedule of county employees who are represented by unions. A new schedule with the decreased work hours is planned to start Nov. 8.

“We believe Mr. Schutten’s proposal is in direct violation of our contract in many ways,” Ted Somera, executive director of UPE Local 1, told The Sacramento Press Thursday. “We will fight this. We believe, like I said, it’s illegal.”

The union notes on its website that UPE members currently hold roughly 238 of the positions that are proposed to be eliminated.

Though Somera said UPE Local 1 is fighting Schutten’s proposal, he also noted that the union is open to holding talks with county management.

“We’re not even interested in entertaining their proposal,” Somera said. “What we’re interested in is what we can do collectively to mitigate layoffs, as well as to continue to provide those services to the communities.”

Sacramento County Labor Relations Director Steve Keil said he appreciates Somera’s willingness to meet with county managers. The county has sent an invitation to meet with UPE Local 1, as well as all other county employee groups to discuss how the proposal would be implemented and alternatives that may come from the unions.

In response to Somera’s allegation that the proposal is illegal, Keil said, “Obviously, we disagree.” The cutbacks of positions and work hours would be made through a process that is “perfectly legal,” Keil said.

The layoffs of county employees will create “a hardship in terms of our ability to provide services,” Keil said.

Kathleen Haley is a staff reporter for The Sacramento Press.

Read Schutten's memo on hundreds of planned county layoffs

2009-08-26T21:42:01Z

The Sacramento Press is publishing a memo from County Executive Terry Schutten on hundreds of new planned layoffs for county employees. Read Schutten's Aug. 24 memo to county employees here.

The county’s latest general fund deficit figure is $54.5 million. Plus, $7.8 million will need to be cut because building activity is poor, Schutten wrote.

The county is planning to cut 360 positions Sept. 27. In addition, county officials are proposing to cut 16 hours per month from the workload of county employees who are represented by unions. The cuts in work hours are proposed to start Nov. 8.

Kathleen Haley is a staff reporter for The Sacramento Press.

County finances still in trouble

2009-07-28T03:34:10Z

Sacramento County continues to be hammered by the failing local and state economy and now faces a $17.8 million hole in its budget because the county is receiving much less money from sales taxes, property taxes and vehicle license fees, according to a letter County Executive Terry Schutten prepared for the Board of Supervisors’ July 28 meeting.

The $17.8 million gap is only part of the county’s budget mess and does not account for funds the state may take or borrow from the county. Taking and borrowing funds from local governments is part of the state’s budget package. Gov. Arnold Schwarzenegger may sign the state budget Tuesday.

The Sacramento County Board of Supervisors also wants to find a way to put $10 million toward hiring 70 deputy sheriffs.

“Instead of a piecemeal approach to making corrections for the above shortfalls and the additional funding for the 70 sheriff’s deputies, the county executive is recommending that all these issues be dealt with during the final budget hearings,” Schutten wrote.

The Board of Supervisors is scheduled to approve a final budget Sept. 29.

Schutten’s letter breaks down the county’s latest figures for property and sales taxes and vehicle license fees. The $17.8 million gap comes from the following sources:

*$5.3 less in estimated sales tax collections.
*$2.3 million less in estimated property tax collections.
*$4.8 million less in local public safety funds, which come from sales taxes.
*$5.4 million less in “realignment revenue,” which comes from sales taxes and vehicle license fees.

Read Schutten’s letter here.

Kathleen Haley is a staff reporter for The Sacramento Press.

County officials address sour economy, "structural deficit"

2009-06-10T05:06:04Z

Sacramento County officials began budget hearings Tuesday with an explanation of the county's poor financial state, noting that the county is expecting an ongoing pattern of poor sales tax revenues, among other problems. The county is also facing criticism about its budgeting practices from credit rating agencies, said Nav Gill, chief operations officer for the county.

The Sacramento County Board of Supervisors is addressing a $180 million budget gap in budget hearings this week. Supervisors may approve a proposed budget next week. The county’s proposed overall budget is $4.3 billion for the 2009/2010 fiscal year. The proposed general fund budget is $2.03 billion.

“This budget is the most difficult one I have faced in my professional career,” said Sacramento County CEO Terry Schutten on Tuesday.

The poor economy has meant that county revenues from sales taxes and property taxes have fallen, Gill explained. He noted that the county has seen its revenues from sales tax dive, noting that the trend of poor sales tax returns “continues into the future.”

While the economy’s condition has meant decreased revenues for the county, credit rating agencies are launching criticism at the county's budgeting practices. Credit rating agencies have downgraded the county's credit rating, Gill said. The agencies are saying the county has a “structural deficit” because it has used one-time funds to balance budgets in the past, Gill said. They expect the county to balance its budget without using one-time funds, he also said.

The board will hold a hearing on county public safety budgets at 2 p.m. Wednesday.

Kathleen Haley is a staff reporter for The Sacramento Press.