City of Willits Prepares for Layoffs as Bankruptcy Looms
Confronted with a $2.23 million deficit, the Willits City Council will consider proposed budget scenarios at its Sept. 10 meeting, including options that involve staff cuts.
“If we continued the city of Willits budget the way we’ve done it for the past five years, in less than two years the city would file for bankruptcy,” Mayor Tom Allman warned at a council meeting last week.
Councilmember Gerry Gonzalez pointed out that staffing is the biggest cost driver. “We can sit there and say we’re going to cut cell phones, we’re going to cut paper clips, but the reality is the biggest cost is staffing,” he said.
Rising payroll, new positions
At a budget workshop last month, discussion focused on the rapid expansion of staff, significant payroll increases, and past financial maneuvers that have left the general fund in a precarious position.
The proposed general fund budget stands at $6.8 million in expenditures against $4.6 million in revenues. The city already logged a $2.2 million deficit in 2023-24.
City salaries have grown from $2.9 million five years ago to an estimated $4.5 million in 2025-26 — a 55% increase. Between 2019 and 2025, the city created nine to ten new positions, including an assistant city manager, additional planning staff, administrative positions in the police department, facilities and parks staff, and multiple streets maintenance positions.
Contentious budget talks
At an Aug. 20 budget meeting, councilmembers debated freezing noncritical vacancies, limiting training, travel and capital improvements, imposing wage cuts on nonunion staff, and halting pay raises.
Councilmember Bruce Burton suggested cutting the council’s $49,000 health insurance benefit, outsourcing police dispatch, and eliminating specific positions. He called the council’s health insurance coverage “a big ticket item.” Allman disagreed, calling it “a pittance” and an important incentive for serving on the council.
The proposal to outsource police dispatch, currently budgeted at $851,000, drew more serious discussion. Fort Bragg contracts with Ukiah for dispatch for roughly half that amount. Gonzalez, a former Willits police chief, warned that Willits dispatchers also provide records management services.
Enterprise funds under strain
Enterprise funds, particularly water, wastewater and the airport, also came under scrutiny. Previous councils reassigned salary costs to those funds, masking the depth of the general fund deficit. “Without casting stones, it appears as if people have been trying to justify positions by reallocating their responsibilities to funds that had more money,” Allman said.
The wastewater fund became a flashpoint due to the need for a $3.7 million one-time transfer for a solar project at City Hall and the sports park. Councilmembers expressed concern about draining the fund’s $4.2 million working capital and directed staff to pursue a loan.
The airport fund also raised alarms when it appeared $700,000 in the red. Allman pressed Interim City Manager Rod Wilburn for clarity. Wilburn acknowledged that much of the expense “didn’t go up there and work on the runway,” and should have been general fund costs. “In essence, we’re just digging a deeper hole,” Gonzalez added.
Limited options ahead
The $2.2 million deficit discussed Aug. 27 reflects staff reallocations back to the general fund.
Some had pinned hopes on Measure K, a 0.75% sales tax passed in 2020 to support essential services. After a $2 million transfer, the fund holds about $1.7 million. Gonzalez dismissed it as a long-term solution. “I don’t think that’s realistic. I think we need to make some cuts,” he said.
Allman floated tapping roughly $1 million from a defunct successor agency fund. Burton opposed using either Measure K or successor agency dollars.
Wilburn warned that continuing to operate with a deficit leaves the city unable to handle emergencies or economic downturns. He cautioned against relying on Measure K to preserve staffing, noting the tax sunsets in 2031.
He urged the council to set a goal of building a $2.5 million general fund balance within five years. “For that to happen, there has to be a $500,000 average annual surplus,” Wilburn said.
“This is a very, very difficult situation to manage with not very much money to manage it,” he added.
Excellent reporting.