City To Furlough, Cut Hours For 750 Employees

The COVID-19 pandemic will cut revenue to the City of Milwaukee by $26.5 million through August, according to a budget office estimate, and city officials are scrambling to react.

Department heads have submitted staffing plans that will cut spending by $3.3 million through the end of July by furloughing 258 employees and placing 514 on workshare plans that will reduce hours. The city has over 6,000 employees and a $1.6 billion budget.

“Today is somewhat of a surreal day for all of us,” said Finance & Personnel Committee chair Alderman Michael Murphy Wednesday morning in gaveling in the first public meeting of the council’s 2020-2024 session.

Much of the revenue loss is from the city’s parking operations, including permits, tickets and revenue from structures, said city budget director Dennis Yaccarino. The city had projected to take in approximately $40 million from parking in 2020 and use $16 million of that to fund other city services. Other revenue losses come from the publicly-shuttered Municipal Court, and a drop in Department of Neighborhood Services (DNS) permits and inspection fees and the temporary suspension fees for dumping at the two drop-off centers.

“The furloughs will mainly affect the libraries which are closed at this point,” said Yaccarino. The library, which reopened for curbside pickup at a single location this week, will realize almost $1 million in savings by furloughing 114 employees and cutting the hours of 50 employees by 10 to 60 percent (referred to as a work-share arrangement). Other departments seeing staffing savings in excess of $250,000 include the Department of Public Works, Milwaukee Water Works, Department of City Development and DNS. Mayor Tom Barrett requested each department come up with a staffing plan to reduce expenses.

The Milwaukee Police Department, Milwaukee Fire Department and Milwaukee Health Department were not asked to participate. “Those are the frontline response to the virus,” said Yaccarino.

The individuals being furloughed all make less than $50,000 a year, a strategic move by the city that is intended to preserve their earnings. Individuals impacted will be able to receive unemployment compensation from the state, including the $600 per week federal unemployment bonus. Department of Employee Relations director Maria Monteagudo said all employees impacted would be made whole, if not paid more, by unemployment payments. She said the city is working with the state in advance to expedite the unemployment claim approval process.

But the cuts are only the first phase of what will be a multi-step plan. Yaccarino said other plans are in development, including extending the number of vacancies in different city departments. DPW alone has 270 open, funded positions. The city also is seeing a savings at the pump with gasoline costing less than expected. Other department expenses will be cut. “Some of those plans are still in development and we will come back to you with further information on that,” he said.

The city received $103 million directly from the federal government through the CARES Act, but that funding cannot be used to replace lost revenue. “We are going to try to use the grant as creatively as we can to mitigate the impact on 2021 as well,” said Yaccarino. Part of that mitigation includes reassigning employees to the health department. Monteagudo said the health department has identified 312 roles in other city departments where employees are qualified to support its operations. The grant can be used to pay salaries of individuals working to support the health department’s work on the pandemic.

Yaccarino said the city is also looking at the possibility of using the funding for employees that contracted the virus or needed to quarantine. “It is likely that departments will not need all of the $103 million, so there are other plans that we will be presenting as time moves on,” he said.

Murphy said his reading of the guidelines suggested greater flexibility. But the budget director pushed for caution. “My understanding is that the federal government is going to come out with more detailed guidelines, I’m hoping it’s fairly quickly,” said Yaccarino.

“I can guess some other cities are not showing as much caution as you are,” said Murphy. He said the city should explore using the funding to address equity issues.

Alderwoman Milele A. Coggs pushed for DPW and other departments to ensure that their cuts did not have a disparate impact on disadvantaged neighborhoods. Singling out a plan to continue to plant flowers in the city boulevards because otherwise $250,000 in flowers would be lost, she said DPW needs to continue to provide cleanup to areas impacted by illegal dumping. She pushed for the departments to report on how their cuts would impact different aldermanic districts and said this would be important as future cuts are proposed.

The committee unanimously endorsed the proposal, allowing departments to finalize their plans and Monteagudo to begin work with the state.

Who Should Make Cuts?

Beyond the public health and safety departments, other departments aren’t currently impacted by the cuts. Port Milwaukee does not foresee a drop in shipping traffic currently and as a result is not proposing any cuts.

The Employees’ Retirement System also wouldn’t make any cuts, in part because it is not directly funded by city property tax dollars and because the cuts would not benefit the city’s current fiscal situation, said executive director Jerry Allen. He said the eight-member board would examine ways to participate. “We have to be careful about how we do this and we will be,” said Allen.

Ald. Nik Kovac, one of the eight board members, said he would like to see some opportunities for work sharing identified. “The pension and the city are very much interrelated,” said Kovac.

But the Treasurer’s Office, run by an independently-elected City Treasurer, drew most of the scrutiny for proposing no cuts. The office is responsible for collecting funds, primarily property tax payments, but not expending money. Kovac said he interpreted the opening line in its letter as the office declaring itself essential. “The next line was not ‘go away’, but it might as well have been,” said Kovac. “I find it hard to believe that there is no ability to work share or furlough.”

Kovac and Murphy asked for the office to respond. Numerous department heads were participating via video chat. But no response came.

“Maybe they didn’t log in on purpose,” whispered an off-camera female voice into a hot microphone.

Monteagudo said they were on their way, and Treasurer Spencer Coggs and deputy Jim Klajbor did join the call. The latter said a plan to work from home didn’t work. “When this first started I think everyone thought it would just be a few weeks, so we gave it a go, and there was just no way we could keep up with everything,” Klajbor explained. He said the team is now back at City Hall, dealing with a backlog.

Coggs said the office is dealing with a surge in calls related to Wisconsin Act 185, the state’s COVID-19 relief bill that waives interest or penalties on property tax installment payments. The council members pushed for the office to explore ways to reduce staffing once things stabilize.

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Related Legislation: File 200020