Friday, April 03, 2009

Budget Decisions Looming

LEADERS IMMERSED IN NUMBERS
The staff and elected and appointed leaders of the City of Costa Mesa have been immersed in numbers for the past couple months, trying to figure out what to do about two budgets - the current fiscal year 08/09 budget and the next one for FY 09/10.

FUND BALANCE
WILL COVER 08/09
From
what I can glean from published information available and conversations with senior staff members, it looks like there is enough cash left in the fund balance account to balance this fiscal year through the end of June. Last year it was anticipated that $6.5 million from that account would be necessary to balance the budget. Now it looks much more like $14-15 million will be necessary. From that point forward the world gets a whole lot more complicated.

TAPPING THE "UNTOUCHABLE"
Based on a recent conversation with a senior staff member, there is money in the fund balance to cover this anticipated shortfall. However, unless there is a change in council policy and a modification of their normal conservative business practices, there will not be enough left in that account to come close to balancing the FY 09/10 budget. Significant cuts in staff levels will be necessary to balance that budget.

REVE
NUE STREAM IS DRYING UP
In a rece
nt article in the Daily Pilot suspicions were confirmed that the sales tax revenue for the Christmas season was way, way down. This was anticipated, but the extent to which it was down was not - at least not openly - acknowledged. Now the picture becomes clearer. Sales tax dollars are down in the area of 14-15% and property tax dollars are also going to be way down because of the declining value of homes in our city. The Orange County Tax Assessor recently unilaterally reduced the valuations of every home sold since 2004, which effectively reduced the property tax revenue to the county and, subsequently, to the cities.

DUG-IN HEELS + LAYOFFS

I've b
een outspoken about the need for our four employee unions to meet with city officials BEFORE audited returns for fiscal year 08/09 are typically available - in the fall - and try to come to an agreement about what part the unions are willing to play in the budget-balancing process for the next fiscal year. If they hold their ground and insist on waiting until the fall, the new budget will have been in place for months and will almost certainly include reductions in staffing levels. If the unions are willing to cast aside some of their own by digging in their heels now, only to find in the fall that further cuts are necessary that would be a real shame.

BUDGET CONFAB ON APRIL 14TH

The recently-publis
hed agenda for the Tuesday, April 7, 2009 City Council meeting includes a reference at the very end to an adjournment to a meeting on Tuesday, April 14th. I have it on good authority that the meeting on the 14th will be a single issue meeting - the budget. The staff is preparing details of their proposals to dig our city out of this financial hole. They will present their solutions to the council and look to them for direction.

THE DEADLINE IS APPROACHING

It is none-too-soon. In normal years they would be preparing the budget for the next fiscal year. This year is not normal by any stretch of the imagination. Based on the direction the council provides on the 14th, the staff will move forward with plans for whatever cuts are necessary to produce a balanced
budget by the effective date of July 1, 2009.

OUT OF RABBITS AND HATS
These recommendations will alm
ost certainly deal with issues well beyond more creative use of the fund balance. Not only is City Manager Allan Roeder and his staff out of rabbits to pull from hats, they're out of hats, too.

KEEPING MY FINGERS CROSSED

I look forward to the meeting on April 14th to see how our elected leaders perceive and
handle the choices presented to them by their professional staff. I'm keeping my fingers crossed that they understand the choices and move forward in a positive way to keep our city financially secure.

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