Hatch to chamber: City must restructure

COSTA MESA — Economic reality, not political ideology, is driving the city’s dramatic restructuring, city CEO Tom Hatch said during a Chamber of Commerce breakfast Thursday morning.

In his talk, “Costa Mesa: A Renaissance in Progress,” Hatch told attendees at the Costa Mesa Country Club that the city’s swollen payroll needed to be reduced, which is what led to the City Council’s most controversial move in years: approving the potential layoff of more than 200 city workers and replacing them with outside services.

“It’s such a fundamental change we’re going through in government,” Hatch told the audience of small-business leaders, city department leaders and Assemblyman Allan Mansoor (R-Costa Mesa). “It’s a renaissance of change going on at the local level … it’s a course that’s not going to be reversed.”

When times were flush leading into the early 2000s, Costa Mesa, like so many other cities, failed to set aside money for a rainy day, Hatch said.

The city’s payroll climbed to 611 workers.

“We’re an economic power,” Hatch said, pointing to South Coast Plaza, the nation’s second-largest shopping center by sales. “With economic power comes economic downturns.”

Over the last three years, the city has cut hundreds of jobs as sales-tax revenue — 40% of the city’s economic engine — fell dramatically. In July, payroll was down to 470 employees.

But more reductions are on the horizon, the first-year city manager said.

“We will emerge from these difficult times,” Hatch said. “We’re going to fundamentally change. We’re going to be different.”

Based on the portrait painted so far by council actions, that change includes far fewer employees contributing more to their own pensions, and many city services being covered by regional contracts with other cities.

Costa Mesa will also pay more than the minimum amount it owes to the state pension fund in an effort to reduce the city’s deficit in the long term.

It’s something all cities will have to go through, Hatch said.

Hatch pointed to Santa Ana’s massive budget deficit and proposed outsourcing of more than a dozen city services, including its police and fire departments, as proof that it’s the economy, not ideology, that’s dictating the cuts to public employee levels.

Hatch also said more money needs to be allocated toward infrastructure improvements, such as repairing aging streets, and away from high employee costs.

Critics of Costa Mesa’s plan have said that conservative ideology, which leans toward outsourcing and fewer government employees, is driving the agenda — not economic need. There is no “crisis,” they say.

joseph.serna@latimes.com

Twitter: @JosephSerna