Outsourcing proposed to trim Lodi budget

With the City of Lodi already struggling to balance budgets, local leaders are exploring ways to make sure the city stays solvent with soaring pension costs expected to eat up bigger chunks of the general budget in the coming years.

Back in June, when the City Council approved the 2017-18 budget, Councilman Bob Johnson suggested that the city consider outsourcing some of its services to save money, and he reiterated the idea at a recent council meeting.

“What I proposed was hiring a consultant who could come in and look at all of our departments and find out if any of them made any sense for outsourcing,” Johnson said.

Johnson suggested that if work is contracted out, that a consultant handle the outsourcing because staff would have emotional attachments to fellow employees.

“By having an outsider do it, it becomes very objective and the sensitivity may be lessened,” Johnson said.

Johnson noted that the city already outsources the GrapeLine transportation services and added that street maintenance in Downtown Lodi is contracted out to United Cerebral Palsy along with the landscaping maintenance at Hutchins Street Square.

“What else could be done,” he asked hypothetically. “I don’t know. That’s why I’m making the request. There has been talk internally about outsourcing parks maintenance. Does that make sense? I don’t know. Somebody’s going to have to come in and look at the dollars and look at the bodies and look at the contract and say ‘yeah, having a private contracting firm do your park maintenance makes a lot of sense.’ ”

Johnson also questioned if some parts of vehicle fleet maintenance should be sourced out to local garages.

“These are the things I think we should look at, and if they make sense, then we begin to find out how we could implement the outsourcing with the least amount of confusion and pain,” Johnson said.

By outsourcing some of its services, Johnson suggested that the city could possibly save by not taking on pension costs.

“Are the opportunities out there?” Johnson questioned. “I’m suggesting they are. I’m suggesting we have somebody come in and impartially look at those opportunities, and if they make sense, this person could began to impartially implement them and save us money.”

Johnson also pointed out that the city had a discussion about outsourcing work at the water treatment plant a few years ago, but the council voted 3-2 to keep the operations in house. Councilwoman JoAnne Mounce voted in the majority and she said her stance still hasn’t changed.

Mounce referenced Stockton’s experience with outsourcing its water plant when explaining her decision.

“You compare it to the City of Stockton. When they outsourced their water service, the city of Stockton plummeted, and the water was horrible and it took forever for them to get it back,” Mounce said. “So why in the world would the citizens of Lodi invest $42 million in a plant and turn it over to someone who is a profit-making company? They are not going to look out for the best benefit of the citizens of Lodi nor take care of the asset the citizens of Lodi invested into.”

Johnson says that despite the slight increases in sales tax revenue the city is experiencing, the revenue pales in comparison to the city’s pension liability, going up $1 million annually.

“We are heading into a hole that there is no getting out of, unless we take some drastic steps,” he said.

While he feels the city will benefit from outsourcing, Johnson said there are a few negatives.

“The obvious negative is the impact upon personnel and employees of the City of Lodi, some who may have worked here for years, many of whom live in the city,” he said. “That will cause some grief, maybe considerable grief, but when I hear the city manager continually say to the city council we could be insolvent in five years, that means people have to make hard decisions in order to push that off.”

With the exception of outsourcing operation of the water treatment plant, Mounce said she would be open to discussing outsourcing if she was presented with companies that are reputable and that will treat the City of Lodi as if it was their own.

“Outsourcing of citizens’ assets have never proven to be a good move in the past,” she said “Show me a city that has been successful with it, and then maybe I’ll consider it.”

As of now, she is still not convinced that outsourcing is the best idea for the city to solve its financial issues.

“Outsourcing of citizens’ assets have never proven to be a good move in the past. Show me a city that has been successful with it, and then maybe I’ll consider it.”

“The League of California Cities is actively working with CalPERS and our state legislature to try to find a solution. Now granted, do we have to do some things that are going to help? Absolutely, but I don’t think outsourcing at this point in the game is the way to go.”

Mounce said people shouldn’t be quick to dismiss the work that the city manager and the League of California Cities is doing to combat the pension problem because she believes there is a solution there.

“I guarantee you the State of California is not going to let 482 cities go bankrupt, and that’s exactly what will happen if they don’t change the pension,” she said. “The city can’t change that, so all of the preparations that we may make won’t do a hill of beans unless the State of California jumps in and makes some changes to the pension.”

According to City Manager Steve Schwabauer, if the state doesn’t tackle pensions then local government in California will change for the worse.

“If the state doesn’t change pension law, I think a number of communities are going to suffer badly in ways that will hurt the state,” Schwabauer said. “So I’d be stunned if the state doesn’t finally come to the realization that they need to do something, but the state legislature won’t do anything until the dam is broken open. I believe 100 percent that the state will not act to fix the PERS problem until the flood waters start rising. Once the flood waters are rising I think they’ll realize they have to fix it. It’s just a matter of who drowns in the meantime.”

According to Schwabauer, it’s too early to consider outsourcing. He said if the city does explore that option, it’s a political decision that will ultimately rest with the council.

“There is a whole lot of research that has to be done to figure if anything would be outsourced, and if so, what that would be and without going through that process, I can’t identify anything,” he said.

JOANNE MOUNCE, COUNCILWOMAN FOR LODI CITY COUNCIL