Budget Briefing Wrap Up
WORTH THE EFFORT
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:
MONAHAN HURT?
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 ho
me 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.
FOLEY RE-ENGAGED
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 lear
ned 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.
BARTEL INTRODUCED
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 Larr
y 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.
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:
MONAHAN HURT?
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 ho
me 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.FOLEY RE-ENGAGED
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 lear
ned 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.
BARTEL INTRODUCED
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 Larr
y 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.
Labels: Bobby Young, Budget Woes, Jim Righeimer, Katrina Foley, Steve Mensinger, Tom Hatch, Wendy Leece
posted by The Pot Stirrer at 4/27/2011 11:32:00 AM
15 Comments:
$221 million pension short-fall. Start laying-off immediately. We need to save this City. We have Allan Roeder to blame for this mess. We need it cleaned up. I'm supporting our Council (minus Wendy) in this effort. Glad we finally have some financial thinkers on that dais.
Righeimer was right. People on this blog just can't stomach that idea. They're making tough decisions to get this City back into financial shape. Another thing people just can't stomach on this blog. Thank goodness none of the bloggers can vote in this City--we'd be doomed!!
The city essentially exists to provide retirement benefits to city workers.
I agree with the councilmen but have a couple issues: Steve, please stop texting !! you do it everywhere, it is an addiction. Jim, take out the part in your bio on city website about % of vote. I read many bios of government elected officials and have never seen anyone quoting vote %. No place for it, you do so many other great things you could include. Plus, I don't agree with your math on the vote %. Other than that, great job so far.
Did anyone happen to catch the public notices section of the Daily Pilot yesterday? The hate group "Repair Costa Mesa" you know, the one Communist teacher Joel Flores is part of, is run by the Orange County Employees Union. Their business statement is listed in there. What a surprise. These two groups are so awful. They deserve each other. Makes me ill!
Barry and Phil ( same person?) stop snorting the koolaid. Clearly you didnt pay attention yesterday, or your little GOP brains can understand that the Liability ( wont say unfunded because its a false term ) is spread over 30yrs.
A few cuts and a few changes can easily make that up and fix any issue. Its not the WORLD IS ENDING, like Riggy and Mensinger are shouting.
Also I have yet to see a plan cutting some of the Councils $40,000 compansation for a few hours of TEXTING.... ummm I mean work, a week. *** Side note, I think I saw Mensinger texting a few words over and over again, something like- MORE FIREWORKS= MORE MONEY, MORE FIREWORKS = MORE CASH FOR MY GROUPS.... I could be wrong but I looked like it. ***
Also, I noticed that when talking about the budget I noticed that With ABLE and the INCREASE IN TAX, the budget would be in Surplus if not for almost $300,000 in consultants and PR the council spent.
The cuts for recreation services to the residents $239,000, the added expenditures for consultants to outsource our services, $200,000 and growing. The Capital Investments monies that they keep complaining the city doesn't have for improvements....about $30 million in next years budget.
Getting the truth out of this group of miscreants: Priceless!
BTW Repair Costa Mesa isn't supporting a candidate or campaigning for a ballot initiative.....so it doesn't have to file any public disclosure forms. Get over it. Although , I will be looking through the Costa Mesa Tax payers PAC and see where all that money is going.Especially after the $250 dollar a plate Andrew Breitbart fundraiser for "Stand with Jim". Wonder how much Monahan recieved for services and if this creates a conflict of interest. Also, being a non-profit means that Planning Commisioner McCarthy, and Righeimer staffer and Parks and recs newbie appointee Ethan Temianka can basically pay themselves whatever they want in salaries.Couls get kind of sticky for them especially if Colin decides to run for a council seat. Action PACS can't have any contact with the candidates. We'll be watching the money...
Barry/Phil whatever your name is:
1. Did you attend the meeting last night? If you did you would notice the 221 million is paid off over 30 years. Do you know A-n-y-t-h-i-n-g about the Stockmarket?
2. If this is too hard for you to read I can ask my 8 yr. old to help you.
3. Mensinger can't control his texting like he can't control his temper. Long "documented" CRIMINAL history of abuse not to mention the incident with throwing away flowers meant to honor Huy Pham at City Hall last Friday.
4. GOP having a little fundraiser? Hmmm. yah, I did get that notice. You can't hide your fundraising efforts for the UNFAB 4for too long.
You don't pay your entire mortgage in one day, you spread it out over 30 years. It seems the same logic goes for pensions. Righeimer, Monahan, Bever and Mensigner are trying to tell us the entire balance is due today. It's not.
You refi your home to lower your total debt in the long term. These dudes can do the same by renegotiating with the unions.
I was informed that several Newport Coast residents were not happy with the Newport Mayor for not letting Newport citizens know about ABLE being dumped. They had recently found out about the outgoing program and told the mayor to take care of it. They then asked what it would cost and supposedly are donating money to help fund the program.
On another note... When is the sky falling???
From an update at the OJ blog, the real lesson is that the savings from outsourcing needs to be discounted by what happens when you follow the math that the actuary presented.
Update: Now that the presentation is online, you can actually use the actuary's rough estimates to show the cost of outsourcing departments other than sworn police and fire.
Reducing the payroll by 25%, from $30 million to $25 million would only reduce the city's cost by $6.8 million, not by $7.5 million, because the employer's share of the pension contribution for the remaining employees would increase from 22.7% to 26%. (Or using the scenario four numbers, which appear more likely, from 20.3% to 23.6%).
Cutting half the payroll wouldn't cut the budget by $15 million, but instead by $13.6 million, because the rate would go up from 20.3% to 30.2%, a 49% increase in the pension rate.
That unfunded liability doesn't just go "poof".
Barry,
I strongly disagree that former City Manager Allan Roeder is to "blame for this mess".
Mr. Roeder's viable revenue-generating suggestions to the previous City Councils (late 80's-2010) were systematically & repeatedly ignored. The Councils could never reach a consensus regarding Mr. Roeder's prudent fiscal recommendations for nominal tax increases because the Council thought that SCP & the car dealerships' sales-tax were adequate enough... WRONG! Their burgeoning political careers were more important than their fellow CM neighbors' long-term best interests.
He persistently encouraged appropriate nominal increases in both the business license & TOT fee schedules for well over the past 25+ years. There's plenty of inter-office memos, staff reports, and council-meeting minutes to support this. Look it up.
Fortunately, the last Council FINALLY AGREED with him to increase the TOT, and it successfully passed last November. I'm very confident that the upcoming TOT Report will reveal a substantial increase in City revenue. (Thanks Mr. Roeder for all your tenacious efforts in securing this item with the last Council after all those previously futile attempts!)
So Barry, please direct the blame on all the previous City Council Members that repeatedly have chosen NOT to increase the $200/year business-license fee schedule for well over the past 25+ years. And blatantly ignored Mr. Roeder's prudent fiscal discipline throughout his management era.
FYI: $200 in 1985 vs. $200 in 2010 = $410.16 in today's money according to dollartimes.com inflation calulator.
So the City is actually collecting less than half of the value ( i.e $410.16 current value - $200 current fee = -$210.16 devalued amount) from when this original business-license fee schedule was implemented!
So just how is the City ever going to replenish the "Fund Balance" with those miniscule numbers?!
Has steve paid his property taxes yet?? 10 k would help the city and the county. Maybe his texting is a new form of remote control. His panel of advisors Argosy,wife, costa mesa united, sherrif carona, sun cal ect.
@ RC, Steve doesnt pay $10K in taxes, Riggy showed him how to assess, reasses, appeal and re-appeal his taxes to get them down below market value with phony valuations and comps. Riggy bragged to me how he got his taxes down almost 50% from 16K to 8K.
Ladies and Gentlemen... Your distinguished Costa Mesa City Council!
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