Surprise drops employee retirement benefit in cost-cutting move

Surprise City Manager Randy Oliver has suspended a retirement benefit for all city employees as part of an ongoing cost-cutting initiative in this flailing economy.

The move is part of a 5.5 percent reduction to the city's operating budget. Other announced cuts have included reductions in travel, training and consulting as well as limits in making new hires.

Starting Jan. 1, city employees will no longer receive the city's 1.5 percent contribution to their deferred compensation accounts, Oliver stated in a letter recently sent to City Council members. The city contributions go toward post-employment healthcare or a retirement plan, Oliver said.

The suspension of this program should save $334,000 for the remainder of this fiscal year, and $700,000 on an annual basis. It does not impact the take-home pay for any of the city's 850 employees.

Oliver described the move as "prudent."

"We are making every effort to maintain services and positions and keep employees involved as we navigate through these challenging times," Oliver stated in the letter.

Oliver said he considers the move one of the "less painless" ways to cut. While the city could delay capital improvement projects to save money, Oliver said, the city has not chosen to do so.

Those only provide one-time savings, he said.

"You can use capital money one time to fill operating expenses," he said. "But the problem becomes that if your economic slowdown lasts longer than a year, you get yourself into a tremendous hole."

This retirement benefit has not been around long. It was established in July with the start of the new fiscal year, before Oliver became city manager.

Oliver plans to give an overview of the recent cost-saving measures at Thursday's City Council meeting. The public meeting begins at 6 p.m. at City Hall, 12425 W. Bell Road.

Overall, the city plans to shave more than $4.5 million off the city's nearly $90 million operating budget.

Sales tax collections - a key revenue component of the budget - have fallen below projections. From July to September, the city received $8.15 million in collections when it had anticipated $9.2 million. By June 30, the end of the fiscal year, the city still hopes to reach a total of $26.4 million.

Whether this is attainable will not be clear until January, when results from the holiday season are available.

The city has considered the possibility of future cuts. An additional 5 percent would result in layoffs, Oliver has said.