Rio Vista searches for ways to avoid going bankrupt
By Rowena Coetsee/MediaNews Group
November 22, 2008
RIO VISTA - Facing a deficit in the millions of dollars, leaders of this small Delta city sought ways Thursday to avoid it becoming Solano County's second bankrupt town.
City Manager Hector De La Rosa said Thursday, "We don't see a solution in the immediate future." He added the city would only declare bankruptcy as a last resort.
Rio Vista has been hit particularly hard as sales and property tax revenues have dropped amid the state's faltering economy.
Unlike many surrounding cities, Rio Vista, with about 8,000 residents, does not have big-box retailers, De La Rosa said.
Compounding the problem is that most of the city's sales taxes come from its car dealerships -- a sector of the national economy that has fallen on especially hard times.
Meanwhile, income from building permits has plummeted as developers have backed off projects: Whe-reas Rio Vista once approved 230 permits during one 12-month period, it has received just 30 applications since July 1, De La Rosa said.
Acting Finance Director Michelle Mingay projected that if expenses and revenue remain stagnant, the city will be unable to pay for sewer service by January and no longer will have enough in its general fund to meet payroll by April.
City Council members met behind closed doors Thursday for an update on progress in negotiations with four employee unions.
The council was expected to freeze two more positions, one in accounting and another in the planning department, as well as to reduce the fire marshal's job to part time.
Since July 2007, the city has slashed $1.1 million in salaries and benefits from its budget through hiring freezes, pay cuts and layoffs, De La Rosa said.
During the 2007-08 fiscal year, the city cut the wages of four employees by downgrading their positions or reducing them to part-time status. In addition, it laid off six full-time workers as well as part-time ones.
But it's still not enough.
Now the city is considering cutting salaries by up to 10 percent, even though De La Rosa says that would amount to a modest savings of about $200,000. Workers also might have to take a mandatory day off every pay period and pay a greater share of certain benefits.
And the city is considering shopping around for a long-term contract with a wastewater treatment plant operator instead of paying higher rates under the month-to-month agreement it has now.
Rio Vista is saddled with an $816,000 deficit in its $5 million general fund -- discretionary money that the city uses for a variety of purposes, including employee wages.
