Budget Briefing Wrap Up
Things I learned at the Costa Mesa City Council Special Study Session/Budget Briefing last night. Kudos to CEO Tom Hatch and the staff for providing this opportunity for us all to get just a little bit smarter. The streaming video is up and available for viewing, HERE, and the meeting can also be viewed on CMTV,Channel 24 on Time Warner Cable and Channel 99 on ATT U-verse on the following viewing schedule:
Right off the bat I learned that Mayor Gary Monahan was "got a little injured today, but he's fine" from Mayor Pro Tem Jim Righeimer, who ran the meeting last night. No additional information was forthcoming, so the dais had a small hole in the center.
BIG COMMUNITY INTEREST
I learned that, even though only a handful of people stood to speak last night, more than 100 people found time to come to the City Council chambers at an early hour - 4:30 p.m. - for this first-of-its-kind event, and that more than 40 remained until the very end nearly four hours later. Looks like this "transparency" thing might actually work.
PILOT FIRST, REGISTER MORE THOROUGH
I learned when I got home that Joe Serna of the Daily Pilot got there first with the local media coverage, HERE, but that Jon Cassidy of the Orange County Register gave us more data, HERE. However, a more potent assessment of the meeting last night can be found HERE, in an entry at the Orange Juice Blog posted by Major Quimby this morning.
SCHEDULE OF EVENTS
I learned that Hatch has the rest of the fiscal year's events charted out in great detail and that this schedule of events will soon appear on the City web site:
May 3rd - A budget update at the council meeting
May 10th - A budget study session (without any information on the Orange County Fire Authority proposal because the analysis is incomplete)
May 17th - A presentation of the Preliminary Budget and Detailed Presentations of Sales Tax, property Tax and TOT revenue
May 24th and, possibly May 31st - A Detailed Discussion of CEO Recommended Reductions
June 7th - A Five Year Financial Forecast with Capital Reinvestment Plan
June 14th - Departments will provide details about their budgets
June 21st - Follow-up budget items with possible budget adoption, with June 28th as a backup date.
July 1, 2011 - Fiscal Year 2011-2012 Budget is due for adoption
CURRENT BUDGET HOLE
I learned that the current year budget is in the hole for $1.6 million, which will have to be plugged using Fund Balance if revenues for the last half of the fiscal year do not increase dramatically. On the positive side, recent information indicates that Sales Tax revenue is up significantly for the last quarter of the calendar year.
FUND BALANCE DOWN
I learned that of the total $41 million in Fund Balance only $27 million is not restricted to a specific use and available for budget purposes.
MORE CONSULTING DOLLARS
I learned that Hatch has contracted with the consulting firm Management Partners to the tune of just under $25,000 to help with the assessment of the CMPD and also extended that contract for another $25,000 for help in other areas - like picking up the slack caused by the recent departure of Administrative Services Director Steve Mandoki.
PRIVATE FINANCING MAY SAVE ABLE
I learned, in response to a question asked by resident Greg Ridge, that there may be a privately-financed move afoot to salvage the ABLE helicopter program, and that Hatch has been in contact with Newport Beach City Manager Dave Kiff on the issue. It's still too soon to tell if this is going to pan out.
FINANCE DIRECTOR SEARCH
I learned that the recruitment effort for a new, permanent Finance Director is underway - finally.
LESS TENSE ATMOSPHERE WORKS
I learned that the larger venue and the relaxed atmosphere, providing for a more "conversational" exchange of questions and answers with the public, worked pretty well. Righeimer had a light touch on the timer and no body seemed to abuse it. The result was a more civil, productive meeting.
LISA'S LAUGH LINE
I learned that resident and former City Council candidate Lisa Reedy can still deliver the best line of the evening. As she rose to thank the council for this opportunity she expressed her gratitude for being able to get this information at City Hall instead of Monahan's pub.
I learned that Katrina Foley still finds time to deliver excellent questions to the council, as she did a couple times last night. It was good to see her back asking difficult questions, trying to help the public understand the issues.
SLOW LEARNER STEVE
I also learned that Steve Mensinger has NOT LEARNED to stop texting from the dais. It must be a great imposition on him to actually listen to the speakers. For all in attendance, and those who took the time out of their busy lives to stand and speak to the council, I sincerely apologize to Mensinger for being such an inconvenience to him. Geez!
BEARER OF BAD TIDINGS
I learned that Rick Santos, the actuary from CalPERS, is one informative dude, but he was the bearer of bad tidings - in great detail, at that. His fourteen years with CalPERS has prepared him to deliver numbers with such skill that most of us actually understood a few of them. Unfortunately, the numbers were mostly not good news. His presentation lasted almost 90 minutes, but the time just seemed to fly by. I did learn that trying to absorb all the numbers makes my head hurt. The PowerPoint presentation Santos used to guide his discussion is available on the city web site, HERE.
WHEN IT'S GOOD, IT'S BAD. WHEN IT'S BAD, LOOK OUT!
I learned from Santos that, among other things, even when the PERS investment performance is good that doesn't guarantee lower rates for the municipalities it serves. We also learned that $130 million, the number recently being tossed around as our "unfunded pension liability" is off... the number is actually around $119 million - mere chump change. Only kidding - it's serious, but not the-world-is-coming-to-an-end serious.
QUITTING CAL PERS COSTLY
I learned that, although this dance we're doing with CalPERS is a very expensive polka, dumping CalPERS has severe financial consequences and that even suspending the program (which requires laying off the people involved) can be very costly - a fact that the runaway train we call the council majority apparently failed to consider.
NEGOTIATION POSSIBILITIES LIMITED
I learned that it's not permitted to "negotiate back" a lesser retirement plan - to revert to 2% at 55 years of age instead of the current 3% at 50 for some groups, for example.
SPOUSAL BENEFIT FAIR GAME
I learned, though, that it is possible to negotiate the elimination of the 50% spousal retirement segment of the plan. Righeimer's eyes lit up when he heard that news.
I learned that the most recent consultant hired to help our city navigate through the pension part of our current budget deliberations, John Bartel, has only been on board less than a week, but he will be prepared to present some options to the City Council within a couple weeks. I got the impression from his brief introductory presentation last night that we're not going to like those options much. And, as an aside, he has this interesting affectation - he wrings his hands as he speaks which, considering the subject, may not be a good sign...
CURRENT FINANCES DIRE
I learned from new Interim Finance Director Larry Hurst and Budget and Research Officer Bobby Young that the City has, indeed, drawn down its reserves to the tune of more than $30 million in the past 3 years. They also reaffirmed that we will likely begin the new fiscal year with at least a $5 million shortfall, but won't be able to provide specifics until all the departments have completed their budget submissions. It's curious that the $5 million number keeps getting thrown around, yet nobody is willing to quantify how they got to that number. We are told all will become clear early in May, when the draft version of the 2011-2012 budget is available for council and public scrutiny.... guess we'll see.
NAVIGATING THE SWAMP
Finally, I learned that the vagaries of municipal finance can be treacherous turf, especially when some of the decision-makers have a political agenda that doesn't necessarily track with the well-being of the community. Trying to navigate through it can be a little like maneuvering through a swamp following instructions of a guide who speaks in tongues while avoiding the occasional poisonous snake, hungry alligator and the infrequent plots of what appears to be solid ground, but are actually little patches of quicksand.
COUNCIL MEETING 5/3/11
Next stop is the Council Meeting next Tuesday, May 3rd, where a budget update will occur. I'm taking some aspirin before the meeting to get a jump on the throbbing in my skull those numbers cause.