While 2004 was a successful year ending in the black at a higher level of profitability than in the preceding year, there are some ominous clouds on the horizon. As you are well aware, there was a work dues rate increase beginning in January 2004. This increase allowed the new administration to engage a public relations firm to pursue an aggressive campaign to support live music as well as fill some vacant staff positions to help better service our members.
The amount of work dues coming into the union for the first half of 2004 was slightly below expectation. However, during the second half of 2004, a significant reduction in the amount of work performed by some of our members resulted in work dues income down $300,000 compared to what had been budgeted for the year.
Once this shortfall in expected revenue became known (in December 2004), the officers advised — and the Executive Board immediately approved — a hiring freeze for any currently unfilled positions at Local 802.
We believed this action to be a prudent step commensurate with what the numbers were telling us. This early intervention allowed us to end 2004 well within the black and begin 2005 with a degree of confidence.
While the reduction in the amount of work offered to some of our members and the resulting decrease in work dues remitted to the union remains a very serious concern to all of us, it is left to be seen whether this is a trend foreshadowing things to come or merely an aberration.
Unfortunately the former is the more likely scenario and we will be addressing this issue and others during our upcoming strategic planning sessions.
Since incoming revenue is only part of the financial picture, it is important to understand Local 802’s performance regarding expenses. During 2004, expenses remained consistent with expectations. We ended the year within 2 percent of budget so spending was kept in check. Clearly our current financial caution is based on our concern over work dues revenues.
As we develop the budget for 2005, we will forecast future revenues taking into account the softening work environment. If this trend continues or worsens, we may be forced to take additional cost-cutting steps. All of our efforts will remain focused on keeping Local 802 financially sound, allowing us to remain an effective and strong union for all our members.