May 15, 2012 | Hayward’s $14 million budget shortfall became much more manageable last week after its city employees agreed to salary cuts that will lower the funding gap to $4.5 million. The City Council will discuss erasing the remaining amount through additional fees and further cuts.

City Manager Fran David called the sometimes contentious negotiations with city employee union, “a labor of great intense effort.”

“Sometimes we fight. Sometimes we argue, but ultimately we know where we’re going and we got there together this time and I’m very proud of our employees for doing that,” said David.

She believes the fiscal budget for 2013 due by the end of this June will be balanced without the use of one-time budget measures, such as employee furloughs. The number of city employees have dropped from 729 four years ago to 620. Although, worker efficiency is high, she speculated how long staff can continue a high level of service with so few employees. “I’m not sure how long staff can continue doing this,” she said.

David again stressed the city’s structural deficit must be tamed and said it is the first time in recent memory Hayward has “directly tackled” rising health care costs and unfunded liabilities. Her zeal for balancing the budget on the back of labor unions, who initially balked at 15 percent cuts in salary, may have not made many friends on the current City Council, of which, three members are running for re-election this June and another running for the assembly in a deeply union-friendly region.

Tracy Vesely, Hayward’s finance director, also called the budget “a difficult process” made worse by ever-changing data that forced her department to cram four weeks of work into one, she said. As in other years, Hayward continues to face budget deficits due to a precipitous drop in property tax and transfer revenues.

A return to higher property tax revenues won’t come anytime soon, says Vesely, who called the previous housing bubble an “anomaly” and believes those type of property tax dollars “will never get back to that level of revenue in our lifetime.” On the bright side, the city will begin collected revenue from Calpine’s Russell City Energy Center when it comes online sometime next year.

In the meantime, Hayward still has to whittle away nearly $4.5 million in cuts in the next month. A series of budget hearings begin Tuesday with a target for adoption on June 26, said Vesely, but getting there will be difficult, she added. “We run very lean. There’s not really any fat to cut out in this budget.”