Short on Funds, but Long on Pink Slips

Helen Nenadal, who has worked for the city of Costa Mesa, Calif., for more than 30 years, was one of hundreds of city workers to receive a pink slip.

COSTA MESA, Calif. — To solve a looming pension crisis and budget gap, city officials here said, they needed to take drastic action. And everyone agrees on one thing: they did.

Nearly half of this city’s workers were told late last week that, come September, they would probably be out of a job. Nearly every city department will be eliminated. More than a dozen tasks will be outsourced, including graffiti removal, firefighting, building maintenance and street cleaning.

Unlike the drama that played out overthe last two months in Madison, Wis., the battle over public workers in this bustling suburb and upscale shopping mecca in the heart of Orange County is happening at lightning speed.

Layoff letters went out last week to more than 200 of the city’s roughly 450 workers, sending many of them into a panic as they scurried to look for new jobs. The move will, in one great swoop, reinvent municipal government here, and perhaps lead the way for other cities.

Emotions in Costa Mesa, already running high, grew more intense after one city worker, summoned to receive his pink slip, instead climbed five stories to the roof of City Hall and jumped to his death. A small side entrance to the building is now decorated with supermarket-bought bouquets and tall, white candles, a memorial to the 29-year-old man, who had worked for the city’s maintenance department for four years.

The layoffs have deeply divided this small city, just a few miles inland from Newport Beach. While Costa Mesa has long been a politically conservative enclave, much like the other wealthy suburbs that surround it, the move to privatize city services strikes many residents as a harsh political tactic that is meant to remake their community into a national model in the battle over public employee unions.

But the City Council, which moved quickly to approve the outsourcing and layoff plans, says the moves are the only way to solve a budget gap of as much as $15 million next year and to handle pension costs that grow exponentially each year, eating away at the city’s $93 million budget.

“We see the train wreck coming, and the only questions are how bad it will be and how quickly we want to try to stop it,” said City Councilman Jim Righeimer, who has led the push for outsourcing and has battled with public employee unions for years. “We have to stop blaming other people and start to solve these problems ourselves. These are hard-working people, but we know we cannot afford to keep paying what we have been.”

This is the Wisconsin labor battle in miniature — union officials and opponents of the layoffs say it is politics and not money that is driving the decision. City officials say they do not know how much money they will save through outsourcing, although Mr. Righeimer said he expected to cut labor costs by anywhere from 15 to 40 percent.

Mr. Righeimer, a real estate developer, fought a bruising battle against the unions in his bid for the City Council last fall. But few here seemed prepared for him to push such wholesale change so quickly. Several community leaders called this week for the city to rescind the layoff notices, although there were few signs that officials would back down.

“They should have been thinking from the very beginning what kind of cost saving they were going to get before doing this — not tell us now, ‘You don’t have a job, and we’ll get back to you later if we change our mind,’ ” said Helen Nenadal, who has worked in the city’s maintenance department for more than 30 years and who does not think the city will back down. “They are on their mission,” she said.

City officials say services could be outsourced to a mix of private firms and other municipal governments. The county’s Fire Department has indicated that it is willing to take over the firefighting duties in Costa Mesa, as it has in other cities. The department said it could cover the city with 15 fewer firefighters, Mr. Righeimer said.

Other city officials have not ruled out outsourcing the duties of the Police Department, one of the only departments not included in the first round of layoffs. Although other employees, like city planners and engineers, may have avoided the pink slips for now, few feel confident that they will not be laid off later as a team of consultants considers cost savings for the entire city.

Wendy Leece, the only one of the five City Council members to vote against the layoffs, said her colleagues were acting “recklessly.”

“We’re a nice, safe and clean city, and we need to make sure we stay that way,” Ms. Leece said. “I’m a lifelong Republican — nobody can out-Republican me. But I think we also need to be conservative on the front end and not rush into something that is going to alienate all our employees.”

“The sky isn’t falling,” she added, “but there is a real effort by some to exaggerate the crisis.”

The city has already been through a round of cuts. Last year, it eliminated or reduced the hours for 77 employees and cut programs. Tom Hatch, the city’s chief executive, said the city currently had the same number of staff members as it did in 1985, “with a much higher demand of services.” And employees have offered some concessions, including paying more toward their pensions.

But because so much of the budget goes to paying salaries and benefits, there has been less money to spend on services. Roads have gone unrepaired for too long, and it has been years since there has been enough money to buy fertilizer for city parks, said Stephen Mensinger, who was appointed to the City Council this year and supports the outsourcing plan.

“At some point we don’t have money for anything else except for labor,” Mr. Mensinger said. “That can’t go on. We’re not a poor town, but we’ve been spending money without regard to whether it’s for the best possible services at the lowest possible price.”