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.
REVENUE STREAM IS DRYING UP
In a recent 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 been 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-published 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 almost 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.
Labels: Budget Woes
Housekeeping, The Mouth Adds Ears & Vallejo's Bankruptcy Budget Choices
First, a little housekeeping...
I've decided to purge some of the links over on the right side of the page. You've just glanced over there and will no longer find the following links:
Byron de Arakal's Itchingpost.com - Byron has taken an extended hiatus from blogging. I kept the link in place, hoping he would return with his own, special brand of humor and style - he didn't. If he decides to jump back in I'll post a link immediately.Sandy Genis' La Femme Wonkita - Former Costa Mesa Mayor Sandy Genis has, apparently, decided blogging isn't for her. She's not posted anything since last October. If she decides to resurrect her blog I'll provide a link.
CM Watchtower - The anonymous author(s) at the CM Watchtower posts something about once a quarter - and then it's not particularly relevant to anything.
The Irvine Tattler Blog - The Irvine Tattler, which was a fascinating look at our neighbors from a good vantage point, is defunct.
Don't despair, though, because I've decided to add a few, too. As you scroll down the list on the right you will find the following new entries:
OCWeekly.com - A more than slightly edgy view of the world here in the OC.
LAObserved.com - Kevin Roderick's excellent daily summation of news important to Southern California
The Illustrated Conservative Blog - Judge for yourself
***"THE MOUTH" APPARENTLY HAS "EARS"
In case you had not noticed, beginning with his post #650 our old nemesis over at the CM Press is now apparently permitting comments to be posted on his blog. I've not attempted to post any - they'd probably be "moderated" out in any event. It will be very interesting to see if anyone cares to post comments and, if so, will they be other than fanny-kissing entries by his loyal band of sycophants. I have no expectation that he will engage in anything resembling a serious debate on issues - he already has his mind made up on every issue.
CITY OF VALLEJO TEARS UP UNION CONTRACTS!
Of much more importance, on Friday the 13th of March, 2009, U.S. Bankruptcy Court Judge Michael McManus ruled that the City of Vallejo can reject its contracts with its fire and electrical workers unions, allowing the city to begin negotiations from scratch.
BANKRUPTCY A LAST RESORT
Vallejo declared bankruptcy in May 2008 after failing to close a $9 million deficit in its $83 million general fund budget. This year Vallejo, a city of 120,000, faces a $12 million deficit.
POLICE UNION SETTLES
Last month the city settled with its police union, removing it from the bankruptcy proceedings.
OTHER CITIES CONSIDERING BANKRUPTCY OPTION
This move is sure to have far-reaching repercussions across California as other cash-strapped cities deal with a worsening economic reality.
COSTA MESA RUNNING OUT OF CHOICES
As Costa Mesa attempts to balance its budget using what's left of the fund balance account, it looks into the future to see what options are available to balance the 2010 budget. Based on earlier comments from senior members of the finance staff, there will be little left in the fund balance account from which to draw to supplement the declining sales and property tax revenue available. We should know more in the next couple of weeks.
As I've said many, many times, I think it's critical that our leaders and union officials sit down and discuss modifications to the current union contracts. The city will have few alternatives except to lay off workers and many of those will almost certainly come from public safety positions. No one wants that to happen, but unless our city somehow figures out a way to mint its own currency, negotiations must begin immediately.
BALBOA ISLAND TO GO "WIRELESS"?
Our good neighbors over in Newport Beach are all in a tizzy over the possibility of getting rid of all those unsightly wires and placing utilities on Balboa Island underground. As might be expected, factions on both sides of the issue are lining up to vent their respective collective spleens on the subject.
OLD NEWS IN COSTA MESA
Some will recall that a couple years ago our young jailer/mayor, Allan Mansoor, tried to foist off a similar scheme for the entire City of Costa Mesa. I guess he was looking for a legacy issue besides turning our city into a bastion of intolerance. As it turns out, his scheme would have cost something like $1.5 billion (yes, that's a "b") and would take the best part of two generations to complete.
PROJECT COSTS ONLY A PART OF THE TOTAL COST
In addition, it would have cost each individual property owner, including many seniors living in our city on fixed incomes, a pile of money to get the services from the street to their homes.
DUMB IDEA DUMPED
That dumb idea was dropped once the light of day was shined on it.
BALBOA PROJECT EVEN MORE COMPLICATED
Back to our pals on Balboa Island... The same kind of issues exist, plus they have the engineering complication of placing the utilities in vaults that will, in some cases, be below the water line of Newport Harbor. That nasty salt water plays havoc with electrical connections.
MORE $ MEANS IT CAN BE DONE
Now, I know that our buddies in Newport Beach have a lot more money than we here up on the bluff in Goat Hill. I also know that there have been utility districts created in other parts of Newport Beach to accomplish undergrounding. And, in all the newer areas, utilities have been placed underground as a matter of course and was folded into the cost of the new homes.
WHAT ARE THE REAL COSTS?
However, Balboa Island is a special place. It's occupied by an eclectic mixture of older, long-time residents dating back to the days when the island was dredged up from the harbor and brand-new residents who came later with pockets full of cash. The proponents of undergrounding utilities try to sway the opponents by telling them that the cost can be attached to their property tax bill and paid off over decades. They're not telling them how to come up with the out-of-pocket cash to pay for getting the utilities from their street (or alley) to the house.
SAFETY VS. MAINTENANCE
Another issue is safety. I've read that wires on poles are not as safe as underground utilities. Maybe, maybe not. I do know that the folks from Southern California Edison told us here in Costa Mesa that above ground wires are much, much easier to maintain. We do hear the occasional story about exploding electrical vaults - underground wire connections - so more credible information would be helpful.
ONE PROPONENT HAS NO VESTED INTERESTED
An interesting sidebar to this issue is that one of the most strident proponents of Balboa undergrounding is a guy who writes in a couple of local blogs, doesn't live on Balboa Island and is, in fact, a renter, with no financial stake in this issue at all. He's more than ready to burden his home-owning neighbors with the costs while bearing none of it himself. Now, I admit that I have no dog in this hunt, but do have an opinion based on some similar recent experience.
BITING OFF MORE THAN THEY CAN CHEW?
No one will deny that wires on poles are ugly, and that placing the utilities underground would make the island look nicer. However, like everything else in life, this is basically an issue of money. As we found here in Costa Mesa, you can't always have everything you want. Oh, wait! I forgot! We're talking about Newport Beach, where many people CAN have everything they want. I think the honest facts of this issue should be made available to the property owners before they bite off this mouthful, because they may not be able to swallow it later.