Bethlehem Council votes for city hiring freeze due to $4M budget deficit

City faces $4 million deficit in 2015

BETHLEHEM, Pa. - With Bethlehem facing a budget deficit of nearly $4 million next year, City Council Tuesday night voted to impose a freeze on hiring non-emergency city employees for the rest of this year.

Mayor Robert Donchez said the hiring freeze is not necessary.

"We're not on a hiring spree," said the mayor after the vote. "It's not like we're out there hiring people.

Donchez said every open position in his administration has been critically evaluated to determine if it needs to be filled.

"We recognize we have to reduce our work force," said the mayor. "In the future, the work force will be smaller than it is today."

While acknowledging that every little bit helps, Donchez predicted the hiring freeze is not going to make a big impact on the impending budget crisis.

No one was predicting how much the freeze may save the city this year, but both the administration and the council member who first proposed the freeze agree it will not come close to averting a $4 million deficit.

"It's a start," said council member Michael Recchiuti, who sponsored the hiring freeze resolution. "If we can save a couple hundred thousand dollars, that's something. It should be able to save a significant sum."

The vote to approve the freeze was 6-1.

Council member Eric Evans, who voted no, made the strongest case against it.

Evans said it is not council's role to be involved in an overall hiring freeze. He suggested what council was doing "is almost like a power grab."

Evans said determining whether positions should be filled is the job of professionals in the administration. By establishing a hiring freeze, he said council is trying to do the job of city administrators. He said that shows a lack of trust by council.

Council member Bryan Callahan strongly disagreed with Evans, saying:
"It is our number one priority, our number one role. The number one job of City Council is to be the gatekeeper of the purse."

Callahan said when businesses are in the red, the first thing they do is initiate hiring freezes.

Said Callahan: "You can't cut enough paper clips and pencils and paper to cut $4 million out of the budget. So where are we going to get this
$4 million five months from now? If we don't start now, everybody in here knows where will be five months from now."

After the meeting, Recchiuti actually mentioned the T-word, saying the hiring freeze is a first step to stave off a possible future tax increase.

Administration position

Both Donchez and David Brong, the city's business administrator, addressed the issue before council voted.

The mayor, who calls himself a fiscal conservative, did not flat-out oppose the hiring freeze in his remarks to council, but diplomatically made his case why it is not needed.

"From day one, this administration has taken a very conservative approach to spending," said Donchez, who took office in January.

"We are reviewing every aspect of spending. We're looking at how we can do things more efficiently. I made the directive that we would have to be fiscally conservative and we would have to do more with less."

Brong "strongly" suggested that council is missing the big picture by focusing on tactics – such as "let's freeze hiring" -- rather than evolving to focus on strategy.

Brong indicated other tactics are being considered, such the administration submitting city contracts to council for review and approval.

After Brong and Donchez spoke, council member Karen Dolan commented:
"I'm not hearing a strong plea against this resolution from the administration. I'm not hearing the administration saying ‘this is a terrible thing'."

While the administration did not agree with council on the need for a hiring freeze, both sides stressed they want to work together to solve the problem.

"The administration is looking at some difficult times ahead, there's no question," said Brong. "We can't do it alone. We have to do it together."

Donchez said the hiring freeze is not necessary because both council and the administration recognize there's a problem and want to work together to solve it.

Evans said the administration is not going to hire anyone unless it's a necessity. "To come and ask us to rehire a position that was approved by us in December is an unnecessary step and not our role."

Evans said in the past a hiring freeze was done in Bethlehem, but it was imposed by the administration and later lifted by the administration, which he added is how it should be done. "Ultimately that responsibility resides with the administration."

But Dolan said hiring freezes and pay freezes have been initiated by the legislative branches of local government in the past, including by Bethlehem City Council. "It's not outside of our purview."

Freeze can't be enforced

Because the hiring freeze was approved in a resolution, not an ordinance, it does not have the teeth of a local law. A resolution is more of a formal expression of the will of council.

Elaborating after the meeting, Recchiuti confirmed a resolution doesn't have the weight of law behind it. "We can't legally enforce it."

Recchiuti told his council colleagues that was done deliberately, because his intent was to get a "cooperative exchange" with the city administration.

Council president J. William Reynolds said, by having the freeze as a resolution rather than an ordinance, "it allows the administration a lot of leeway as far as filling these positions."

Chop through the freeze

In addition to the hiring freeze not applying to openings among police, fire and EMS personnel, positions filled by contract also are excluded from the freeze.

The administration also can chop through the freeze by asking City Council to approve filling other open positions.

"If there's an opening that needs to be filled, just come to us and tell us why it needs to be filled," Recchiuti told the administration.
"I have no doubt that we would fill it."

Evans questioned the point of imposing a hiring freeze if positions will be filled anyway

Evans also suggested the savings will only be temporary if the city plans to eventually fill open positions "to make the city run" -- unless the city plans to eliminate those positions forever.

Half of the city's 614 employees are emergency personnel, according to figures provided by Donchez. He said that includes 154 police officers, 44 part-time and full-time paramedics and about 112 firefighters.

Freeze continues until Dec. 31

The hiring freeze resolution originally was slated to end on July 1, but council voted to amend it so it will continue until Dec. 31.

Council member Adam Waldron he would not support the resolution if it only continued until July 1, because it would only involve keeping a few positions unfilled until then and not much money would be saved.

Evans indicated there currently are only three or four open positions.

Even Brong said having the freeze continue only until July 1 would be inconsequential and a waste of time.

Recchiuti said when he first proposed the hiring freeze back in February, the city had about 10 open positions and not filling them would have saved Bethlehem about $250,000.

But he did not know how many of those positions have been filled.

Why now?

"Our expenses next year are approaching $4 million more than they are this year," said Recchiuti, who chairs council's finance committee.
"That's something we have to start talking about now."

He said the only way Bethlehem can get significant savings is by reducing its personnel costs.

"It's better to start now than to have that discussion in November and December," said Recchiuti. "If this freeze is a driver toward that discussion, it's going to fill its purpose that way. And if it saves some money, it's going to fill its purpose even more."

He said next year's deficit originally was projected to be $2.5 million but has increased to $4 million.

The mayor indicated to City Council that deficit will be created by rising pension and health care costs.

"We don't know for sure yet what the deficit finally is going to be,"
said Recchiuti. He explained some unknowns remain, such as the possible cost of pay raises in police and fire union contracts that must be renewed next year.

Recchiuti said he's not hearing many ideas on how the city is going to address that $4 million deficit.

The mayor said sometime in June his administration will present an updated five-year plan for the city as well as a six-month fiscal update.
Donchez indicated that update may include specifics his administration will be implementing during the second half of 2014.

Freeze not to pay for freezing weather

The hiring freeze initially was proposed in February to recover hundreds of thousands of dollars in cost overruns for winter snow removal, but the city is using capital funds to cover those costs.

During the meeting, council passed another resolution transferring
$432,100 from a non-utility capital budget into other accounts to make up for snow removal overruns. That resolution was passed without discussion.

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