Irvine leaders are looking to shrink their staff size and increase a slew of fees in an attempt to avoid a structural deficit in the city’s budget that could reach $47 million by 2030.
The city’s budget is estimated to reach an annual $37 million deficit by July 1, 2028 – the beginning of the next fiscal year – that could increase to $47 million by the end of the decade if spending doesn’t slow down.
City staff is recommending long-term budget adjustments that decrease spending by $27 million and increase revenue by $10 million by 2028.
To accomplish that, the city would eliminate vacant
To accomplish that, the city would eliminate vacant positions as employees retire or resign and shuffle employees around to make sure essential services are still covered. Staff said they also plan to increase a series of fees and increase cost-recovery for certain services.
The plan is dubbed “Target ‘28” and aims to eliminate the city’s projected structural deficit by June 2028 – right before the next fiscal year starts.
“When I learned about this (deficit), I immediately went into cost-cutting mode,” Councilmember James Mai said at Tuesday’s council meeting.
When I asked for the structural deficit analysis,
“When I asked for the structural deficit analysis, it was because I believed we had a structural problem that needed to be addressed before our choices became more difficult. Unfortunately, this report confirms that concern.”
Councilmembers voted 5-2 to direct staff to continue studying the budget plan and return at a meeting in October with more specific details.
Councilmembers Mike Carroll and Mai voted no after they supported a different motion that included reducing city council member stipends and eliminating office budgets. That idea was rejected by a majority of the council members.
While staff’s Target ‘28 plan doesn’t include any
While staff’s Target ‘28 plan doesn’t include any tax increases, Carroll said that fee increases will still bring additional costs to residents who are already struggling.
“What we have had presented to us is a three-year bandaid,” Carroll said. “Sure, there’s a technical difference between a tax and a fee, but this is a $10 million tax on our residents, and residents are living through a severe affordability crisis.”
Since 2019, 276 full-time positions have been hired at city hall, according to staff’s presentation at the special meeting that started at 1:30 p.m.
Staff said that full-time positions increased by 28%
Staff said that full-time positions increased by 28% over the past few years while population has only increased by 3% during the same years.
City Manager Sean Joyce, who recently returned to the city after retiring in 2018, said there’s a need to “right-size” the city’s staffing numbers over time.
“I also believe the organization has become too tall and too wide over those six years or so,” Joyce said at the meeting.
We have an opportunity through Target ‘28
“We have an opportunity through Target ‘28 to look more closely at our organizational structure — including reducing layers of management, spans of control and how functions are organized — and determine where we can streamline and right-size the organization, while continuing to protect core services.”
Since 2019, costs for salaries and benefits have nearly doubled, increasing by 79%.
Salaries, benefits and overtime also take up about 69% of the city’s general fund budget – the most flexible pool of money available to municipalities.
“I sit before you confident that we can reduce the number of positions without materially reducing the terrific services that we have historically and will continue to provide,” Joyce said.
Staff said the city can save up
Staff said the city can save up to $17 million in just payroll savings, primarily through natural attrition — as employees retire, resign or are terminated — and the elimination of certain vacant positions.
“As vacancies occur, we would continue to evaluate operational needs, workload, service impacts and opportunities to reorganize or approve efficiency,” Joyce said. “It’s not a hiring freeze. We would be selective (and) very thoughtful about every vacancy as it occurs.”
He said vacancies would be reviewed on a case-by-case basis rather than rolling out across-the-board reductions or implementing a hiring freeze.
City staff said the city already has 66
City staff said the city already has 66 vacancies for full-time positions, a total that’s estimated to reach 123 vacancies by June 30, 2028.
Staff is expected to monitor results and will return to council in February with updates about how the city ended the year in terms of sales tax revenue, property tax revenue and updates about the numbers of retiring employees and if targets will be met.
If targets aren’t met, staff could be forced to use one-time budget transfers from funds like the city’s reserves to patch up gaps.
Joyce said some city events are being duplicated,
Joyce said some city events are being duplicated, creating another opportunity to cut down spending.
“I would humbly suggest we’re doing too much,” Joyce said.
“We’re duplicating events with the new district system, and I respect that we have districts and you have to represent yours, but there are ways that we can more effectively communicate with residents and engage residents.”
Mayor Larry Agran requested that staff give periodic status updates as they continue to study the city’s long term budget and structural deficit.
I think it’s a good plan, Agran said
“I think it’s a good plan,” Agran said. “Are there areas where we can make suggestions to strengthen it? Improve it? Make it work better? Yes.”
City Manager Joyce said previous city leaders weren’t proactive enough to address the budget issue.
“When previous city managers waited too long, it was already too late to make the adjustments necessary to not rely on reserves,” he said.
Angelina Hicks is the Voice of OC Collegiate
Angelina Hicks is the Voice of OC Collegiate News Service Editor. Contact her at ahicks@voiceofoc.org or on Twitter @angelinahicks13.
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