The Birmingham City Council has approved a plan to bring up to 132 furloughed city employees — mostly from the Birmingham Public Library and the city parks department — back to work.
The workers were furloughed in September due to budget cuts necessitated by COVID-19’s impact on city revenue.
The plan, described as a compromise between mayor and council, will be funded by $4.85 million borrowed from the city’s general fund reserve. That’s far less than the $7 million requested in Woodfin’s initial plan, which would also have restored two paid holidays for city employees and reversed some salary reductions to appointed staff.
Woodfin had maintained that the money would be offset by an expected injection of $9 million in Cares Act funding through the Jefferson County Commission, thanks to new federal guidelines making police and fire department payroll reimbursable under the act.
But councilors had expressed concern that borrowing $7 million would bring the city’s reserves below a “red line” and could hurt the city’s credit rating.
City policy calls for two months’ worth of operating expenses to be kept in reserves — which, according to the FY 2021 budget, would be about $69 million. After the county’s reimbursement, Woodfin’s proposal would have left the balance at $66 million; the new compromise, proposed by District 5 Councilor Darrell O’Quinn and District 2 Councilor Hunter Williams, will leave it at a little under $69 million.
A meeting with rating agencies is scheduled for mid-December, after which, Williams said, “if the ratings agencies before December 31 say that we need to reconsider this, it’s something we should do at that time.” But the impending deadline of December 4 — when furloughed employees would lose their health insurance — made a quicker decision necessary.
The plan was approved unanimously but not without trepidation. District 6 Councilor Crystal Smitherman warned that the measure might only be a temporary fix amid the ongoing COVID-19 crisis.
“My biggest fear is that this will just be a short-term solution,” she said. “In a few months, we’re going to come to this exact situation again, because the real question is, how are we going to sustain this? We’re going into the third wave of the pandemic. Once we take out this $4.5 million, that’s it, we can’t go back into the savings. In fact, we probably will need a plan to see how we can build back up this fund balance.”
District 3 Councilor Valerie Abbott expressed similar concerns about the plan during a committee meeting Monday night. “We’re getting back Cares Act money, but my goodness, that doesn’t mean we’re fixed,” she said then. By Tuesday morning, though, she’d reconciled herself to the plan — even though she maintained that she didn’t think it “is a good idea.”
“I can live with it as long as we meet the requirements of our fund balance policy,” she said. “(But) it does look suspicious that two months ago we had this austere budget that we approved that did furlough a bunch of employees, and then suddenly two months later everything’s fine,” she said. “I don’t believe that. There’s more to this than what we see.”