The staging-live.lbpost.com has obtained a copy of the letters being sent out to businesses that asks them to accept a 5% reduction in their City contracts. The letter – signed by City Manager Pat West – explains that the move aims to assist in the City’s budget crisis that currently stands at a $43 million deficit and could reach $60 million or more if the State follows through on discussions to take money from cities.

The letter was sent to 2,784 businesses on Tuesday. As of yesterday, according to West, 111 have responded positively while some have even offered a voluntary 10% reduction.

“The goal is to reach out to the companies doing business with us and seeing if they can help us out in this financial situation,” West told the staging-live.lbpost.com this afternoon. “It’s not in our interest to threaten any contracts.”

He added that the City’s campaign is based on a similar one used by the Port of Long Beach last month. During their campaign, the Port sent letters to 174 businesses and received 122 positive responses, netting them around $3 million, according to West (though Port of Long Beach financial director Steve Rubin was unable to confirm that figure).

“So far the program has worked better than expected,” said Rubin, who said that the campaign began in anticipation of leaner times in the future. “We’ve received positive responses at an exceptionally high rate.”

We have provided the City’s full letter below:

West also mentioned that the city of Ontario recently enacted a similar strategy with positive results. He indicated that the practice is quite common in the private sector but is rarely used by cities or public companies. There is no current estimate amount that will be returned to the city, although West sounded optimistic about a successful campaign.

“If we get even partial compliance, it will be a significant amount,” he said.

He said that the voluntary request was not a part of his original budget proposal outlined in May, and was only recently research and implemented.

The Long Beach Area Chamber of Commerce President Randy Gordon issued the following statement this afternoon:

On July 14, 2009, Long Beach City Manager Pat West sent a letter to
2,784 vendors under contract with the City of Long Beach requesting their
voluntary participation in reducing their invoices to the City between July
1, 2009 and June 30, 2010 by five-percent (5%). After speaking with the
City Manager about this request, the Chamber understands that it is the
right of any vendor to decide to voluntarily participate in the request.
However, if a vendor does not want to participate, that is their right as
well.

The City is in dire straights, and this is the first time that a strategy to balance the upcoming budget has been felt outside of City departments. With the Police and Fire departments still negotiating their deals with the City, it is unclear whether or not they will be held to the 5% budget reduction that other departments have been held to. Do you think asking businesses to accept a 5% contract reduction is the right thing to do?

Disclosure: staging-live.lbpost.com co-founder Shaun Lumachi is a government affairs advisor to the Long Beach Area Chamber of Commerce.