Henderson budget shrinks, but city avoids layoffs

As other local governments gut services, fire department workers and wage public warfare with their unions, Henderson has quietly hammered out a trimmed-down budget for the coming year without a single layoff or nasty contract negotiation.

So what gives?

City officials and labor representatives credit planning ahead, working together and spending conservatively, even at the height of the growth boom, for helping Henderson to weather the financial storm so far.

"It's kind of a group effort as we move through this," said Richard Derrick, the city's acting finance director.

"It really comes down to leadership on both sides," said Dan Pentkowski, president of Henderson's firefighters union, which just reached a tentative agreement on a new two-year contract that eliminates a series of cost-of-living increases the city's 185 union firefighters agreed to defer less than a year ago.

"It's kind of a different dynamic than goes on in other localities I guess," Pentkowski said.

But that's not to say Henderson has escaped unscathed from the worst economic downturn since the Depression.

In the past two years, the city has cut $90 million and left 184 positions unfilled, including 119 jobs that have been permanently eliminated.

The budget approved by the City Council Tuesday night includes a $21 million shortfall that city officials initially plan to plug with reserves as they seek other cuts and continue negotiations with employee bargaining units.

The new budget calls for the city to spend a total of $528.9 million during the fiscal year starting July 1, $19 million less than the current budget.

Next year's spending plan includes $216.6 million to cover the city's operating costs, including salaries. That's
$6.3 million less than the general fund approved last May.

On the revenue side, Henderson has seen the same sharp declines in tax money as other local governments. Those hits will keep coming next year when the city expects to see a $16 million drop in property tax revenue alone.

Yet through it all, only two city workers have been laid off, and no additional layoffs are planned.

Most of Henderson's staff cuts have been achieved through a voluntary employee severance plan. More than 100 workers took the buyout, saving the city more than $326,000 every pay period.

City officials hope to trim the staff by another 40 to 50 people through another round of buyouts approved by the City Council on Tuesday.

Derrick said he can't speak to the practices of other local governments, but he thinks Henderson's ability to respond to the economic crisis began with prudent planning and spending more than a decade ago.

"We were efficient coming into this," he said. "We were used to doing more with less. We were lean and mean to begin with."

Added city Budget Manager Jill Lynch, "We were very careful about not looking at this as if this growth was going to continue forever."

The city created a financial stabilization fund in 1996, which is being used to help bridge the budget gap. Roughly
$4 million from that fund is slated to be used during the coming year.

"It's doing its job," Derrick said.

When the economic downturn began, the city responded with communication and transparency, Derrick and Pentkowski said.

It started in the fall of 2008 with a mass briefing of all city workers, and it continues with financial updates e-mailed monthly to everyone working for Henderson.

"There's been a lot of good will built up because of that transparency," Lynch said.

Pentkowski said the city has been holding regular meetings with union leaders -- quarterly at first and now monthly -- to open the books and discuss the budget troubles as they have evolved.

Thanks in part to such open communication, Pentkowski said, the tentative agreement on the firefighters' contract was struck with "no posturing" or distrust on either side.

He said giving up the 1.25 percent cost-of-living raises over the next two years seemed like the obvious choice when the alternative was closing a fire station or risking the emergency service equivalent of "rolling brownouts."

"First and foremost to us, we're public servants," he said.

The new contract is expected to be ratified by union members next week and approved by the City Council in June.

Similar contract talks are under way with the city's other bargaining units, all of which previously have agreed to reduce negotiated pay raises or eliminate them until the economy improves.

Contact reporter Henry Brean at hbrean@reviewjournal.com or 702-383-0350.