Expenditures And Real Objectives Revealed
GETTING CLOSER AND CLEARER
Things became a little clearer Tuesday evening as the Costa Mesa City Council continued to discuss the Fiscal Year 2011-2012 budget. Following a thorough discussion of the Revenue side of the ledger last Tuesday, tonight they were prepared to dive into the Expenditures - how we actually spend the money we take in.
YOUNG GUIDES THE DISCUSSION
Budget and Research Officer Bobby Young again guided the discussion, using a PowerPoint presentation to present highlights and other bits of relevant information - he did not try to go over the Preliminary Budget line by line... we' be there until next Friday if that was the case.
ALMOST A BALANCED BUDGET
CEO Tom Hatch provided a memo that was, literally, hot off the presses this afternoon that outlined additional cuts in the budget not reflected in the original document, which had projected the need to use $3.3 million of Fund Balance to produce a balanced budget. This new letter reflected an additional $2.4 million in savings, leaving a balance of $900,000 to be found to end up with a balanced budget without the use of the Fund Balance - something that has not happened in years.
CHOPPING THE "RENT"
Among those items Hatch included in that memo was a $1.9 million reduction in the amount charged to "Internal Rent - Replacement" charges. He also reduced from $500,000 to $300,000 for consulting support for a General Plan update. Part of the assumption here was that this process will be a long one, so the remainder could be budgeted in the next fiscal year.
USING DRUG BUST CASH
He also reduced t
he allocation for a new computer-aided dispatch system by $283,000 by planning to use funds from the Narcotic Asset Forfeiture fund instead of General Fund dollars.
AQUATICS SLASHED
He also cut almost $40,000 from the Aquatics programming for the winter months, primarily impacting lap swim hours and swim lessons. Combined with the loss of revenue from the pool of around $10,000 the savings is right at $30,000.
TIPPING THEIR HANDS
A few things ca
me into sharper focus last night as the four council members - Gary Monahan was a no-show, but Eric Bever finally showed up after having been AWOL the past two meetings - discussed this segment of the budget. For one thing, Mayor Pro Tem Jim Righeimer tipped his hand when, during the discussion of equipment replacement costs, he impatiently instructed the staff to "come up with the head count reductions and let's get on with this". Near the end of the meeting he said, "I will never vote for anything that will increase crime.", and yet he's already done that by voting to dissolve the ABLE helicopter program and creating the atmosphere that is chasing highly skilled and trained police officers to other cities like they were running out of a burning building.
LEGAL FEES UNDER-BUDGETED?
Several speakers, once again, made excellent points and asked some to
ugh questions. Budget watchdog Judi Berry asked why the budget for legal costs was $703,000 when we are presently being billed at the rate of over $100,000 per month? Hatch replied that they were looking into it and that he hoped we wouldn't see those kind of charges into the next fiscal year - even though he already added $100,000 to the budget beyond their original estimate. This was an interesting counterpoint to the memo released last week that told us we were saving tons of money by using a contract City Attorney.
RDA FUNDS AND STAFF LEVELS TODAY?
Perry Valantine wondered about the reasoning for refusing to use the $1.4 million in Redevelopment Agency Funds and also brought up the Business License Fees. He also asked just what the head count was for the city staff today. Young replied that we currently have 30 vacancies, 9 of which will not be in the new budget, leaving 21. The authorized head count in the proposed budget is 486, so that means we've got only 465 staff members at this moment in time.
TAX MEDICAL MARIJUANA?
Speaker Sue Lester, former council candidate and a medical marijuana dispe
nsary operator, asked if the City had considered some kind of a tax on the sales of her product as a revenue source. The answer was no, but that staff would look into it. She also mentioned increasing the Business License Fees and suggested that a comparison of Nordstrom's Costa Mesa license costs to other stores in the chain might be enlightening. She implied that she might have access to that information and would provide it to the council.
ABLE HAS THE CASH
Robin Leffler wondered why it was necessary to dissolve ABLE when it apparently has enough cash on hand to operate for two years. She also brought up the need to consider an increase in the Business License Fees. Later Steve Mensinger pointed out that Nordstrom's and Nordstrom Rack combined are number 5 in sales tax revenue in the city, and that we shouldn't be hasty in trying to increase their Business License fees and risk the sales tax revenue. Does he really think Nordstrom's would pull out of the city if their Business License cost them $1,000 instead of $200? C'mon, Steve!
HEAPING PRAISE - AND MORE WORK
In his comments at the end Mensinger heaped praise on Young and the staff
for the work they've been doing on the budget. I had to smile because just in the course of this brief meeting he continued to pile more demands on them, causing shifting priorities while the staff is attempting to produce a balanced budget within the next 30 days. Hard as it may be to imagine, but he just keeps throwing "little" assignments at them like he was instructing Pop Warner footballers to run some wind sprints. He actually seems to be oblivious to the demands he's putting on the staff. Heck, maybe he just doesn't care...
NEW LA TIMES ARTICLE TONIGHT
Another interesting development occurred while I was at the meeting. The Los Angeles Times, via reporter Catherine Saillant, published an article that will appear in print Wednesday titled, "Republicans promote Costa Mesa as a pension-slashing leader", which you can read HERE. It's an especially interesting piece when you consider that the ONLY way the focus of the article, Jim Righeimer, can actually affect pensions in Costa Mesa is by firing many of those who will eventually receive them. His frustration about that fact was evident at the meeting tonight.
BAUGH - "COSTA MESA IS GROUND ZERO"
Saillant quotes Orange County Republican Party Chairman Scott Baugh as saying, "Costa Mesa is ground zero for cities." That observation is not new to those of us following things here in our city, but Baugh uses it in the much broader context of national and state difficulties with pensions. Our city is the tip of the lance in the national pension battle, even though nothing of substance can be accomplished during Righeimer's tenure on the council. All he can do is throw folks out the door and pound his chest. He cannot affect pension reform unless the bargaining units agree to sit down and discuss it. So far, he doesn't seem interested.
SCHEDULE OF EVENTS ANNOUNCED
Hatch announced the schedule for the remainder of this fiscal year - June - for the budget. It is anticipated that the council will have a balanced budget ready for a vote on June 21st, with the 28th as a backup, drop dead date. There will be scheduled meetings every Tuesday from now until the 21st.
Things became a little clearer Tuesday evening as the Costa Mesa City Council continued to discuss the Fiscal Year 2011-2012 budget. Following a thorough discussion of the Revenue side of the ledger last Tuesday, tonight they were prepared to dive into the Expenditures - how we actually spend the money we take in.YOUNG GUIDES THE DISCUSSION
Budget and Research Officer Bobby Young again guided the discussion, using a PowerPoint presentation to present highlights and other bits of relevant information - he did not try to go over the Preliminary Budget line by line... we' be there until next Friday if that was the case.
ALMOST A BALANCED BUDGET
CEO Tom Hatch provided a memo that was, literally, hot off the presses this afternoon that outlined additional cuts in the budget not reflected in the original document, which had projected the need to use $3.3 million of Fund Balance to produce a balanced budget. This new letter reflected an additional $2.4 million in savings, leaving a balance of $900,000 to be found to end up with a balanced budget without the use of the Fund Balance - something that has not happened in years.CHOPPING THE "RENT"
Among those items Hatch included in that memo was a $1.9 million reduction in the amount charged to "Internal Rent - Replacement" charges. He also reduced from $500,000 to $300,000 for consulting support for a General Plan update. Part of the assumption here was that this process will be a long one, so the remainder could be budgeted in the next fiscal year.
USING DRUG BUST CASH
He also reduced t
he allocation for a new computer-aided dispatch system by $283,000 by planning to use funds from the Narcotic Asset Forfeiture fund instead of General Fund dollars.AQUATICS SLASHED
He also cut almost $40,000 from the Aquatics programming for the winter months, primarily impacting lap swim hours and swim lessons. Combined with the loss of revenue from the pool of around $10,000 the savings is right at $30,000.
TIPPING THEIR HANDS
A few things ca
me into sharper focus last night as the four council members - Gary Monahan was a no-show, but Eric Bever finally showed up after having been AWOL the past two meetings - discussed this segment of the budget. For one thing, Mayor Pro Tem Jim Righeimer tipped his hand when, during the discussion of equipment replacement costs, he impatiently instructed the staff to "come up with the head count reductions and let's get on with this". Near the end of the meeting he said, "I will never vote for anything that will increase crime.", and yet he's already done that by voting to dissolve the ABLE helicopter program and creating the atmosphere that is chasing highly skilled and trained police officers to other cities like they were running out of a burning building.LEGAL FEES UNDER-BUDGETED?
Several speakers, once again, made excellent points and asked some to
ugh questions. Budget watchdog Judi Berry asked why the budget for legal costs was $703,000 when we are presently being billed at the rate of over $100,000 per month? Hatch replied that they were looking into it and that he hoped we wouldn't see those kind of charges into the next fiscal year - even though he already added $100,000 to the budget beyond their original estimate. This was an interesting counterpoint to the memo released last week that told us we were saving tons of money by using a contract City Attorney.RDA FUNDS AND STAFF LEVELS TODAY?
Perry Valantine wondered about the reasoning for refusing to use the $1.4 million in Redevelopment Agency Funds and also brought up the Business License Fees. He also asked just what the head count was for the city staff today. Young replied that we currently have 30 vacancies, 9 of which will not be in the new budget, leaving 21. The authorized head count in the proposed budget is 486, so that means we've got only 465 staff members at this moment in time.TAX MEDICAL MARIJUANA?
Speaker Sue Lester, former council candidate and a medical marijuana dispe
nsary operator, asked if the City had considered some kind of a tax on the sales of her product as a revenue source. The answer was no, but that staff would look into it. She also mentioned increasing the Business License Fees and suggested that a comparison of Nordstrom's Costa Mesa license costs to other stores in the chain might be enlightening. She implied that she might have access to that information and would provide it to the council.ABLE HAS THE CASH
Robin Leffler wondered why it was necessary to dissolve ABLE when it apparently has enough cash on hand to operate for two years. She also brought up the need to consider an increase in the Business License Fees. Later Steve Mensinger pointed out that Nordstrom's and Nordstrom Rack combined are number 5 in sales tax revenue in the city, and that we shouldn't be hasty in trying to increase their Business License fees and risk the sales tax revenue. Does he really think Nordstrom's would pull out of the city if their Business License cost them $1,000 instead of $200? C'mon, Steve!HEAPING PRAISE - AND MORE WORK
In his comments at the end Mensinger heaped praise on Young and the staff
for the work they've been doing on the budget. I had to smile because just in the course of this brief meeting he continued to pile more demands on them, causing shifting priorities while the staff is attempting to produce a balanced budget within the next 30 days. Hard as it may be to imagine, but he just keeps throwing "little" assignments at them like he was instructing Pop Warner footballers to run some wind sprints. He actually seems to be oblivious to the demands he's putting on the staff. Heck, maybe he just doesn't care...NEW LA TIMES ARTICLE TONIGHT
Another interesting development occurred while I was at the meeting. The Los Angeles Times, via reporter Catherine Saillant, published an article that will appear in print Wednesday titled, "Republicans promote Costa Mesa as a pension-slashing leader", which you can read HERE. It's an especially interesting piece when you consider that the ONLY way the focus of the article, Jim Righeimer, can actually affect pensions in Costa Mesa is by firing many of those who will eventually receive them. His frustration about that fact was evident at the meeting tonight.BAUGH - "COSTA MESA IS GROUND ZERO"
Saillant quotes Orange County Republican Party Chairman Scott Baugh as saying, "Costa Mesa is ground zero for cities." That observation is not new to those of us following things here in our city, but Baugh uses it in the much broader context of national and state difficulties with pensions. Our city is the tip of the lance in the national pension battle, even though nothing of substance can be accomplished during Righeimer's tenure on the council. All he can do is throw folks out the door and pound his chest. He cannot affect pension reform unless the bargaining units agree to sit down and discuss it. So far, he doesn't seem interested.
SCHEDULE OF EVENTS ANNOUNCED
Hatch announced the schedule for the remainder of this fiscal year - June - for the budget. It is anticipated that the council will have a balanced budget ready for a vote on June 21st, with the 28th as a backup, drop dead date. There will be scheduled meetings every Tuesday from now until the 21st.Labels: Bobby Young, Budget Proposal, Eric Bever, Gary Monahan, Jim Righeimer, Steve Mensinger, Tom Hatch, Wendy Leece
posted by The Pot Stirrer at 5/31/2011 11:59:00 PM
15 Comments:
BC, interesting reference to City Municipal Code section 2-206. I checked it out afterwards and low and behold, it specifically says the City cannot tap into its reserves unless there is some declared emergency. The City has been tapping into this for years without any questions. It will be enlightening to see how Mr. Young dances around this one. Then again, if they make up the entire $3 mil without use of the reserves, the issue becomes moot.
"Declared Emergency" is all in the eyes of the beholder. Public safety, pension deficit threat to solvency etc. This Council needs no "stinking" reason to do what they want when all they want is "stinking badges" and chance for higher public office. Go sue them. Contract City Attorneys LOVE litigation against their clients! There are so many hidden budget pockets within the City to cloak the legal budget should they wish to do so you would croak if you knew. Have at it community watchdogs.
You mean to tell me that *gasp* Leece is right?! The sky is not falling and the city in NOT going bankrupt. Well who would have thunk (yes thunk) it. Well I'll be.
ATTN: JIM RIGHEIMER (BECAUSE I KNOW YOU READ THIS BLOG): I VOTED FOR YOU BECAUSE I THOUGHT YOU'D PROVIDE BETTER LEADERSHIP THAN MANSOOr, WHO WAS JUST PLAIN INCOMPETENT. BUT I DID NOT VOTE FOR YOU SO YOU COULD TURN THIS GREAT CITY INTO GROUND ZERO OR A TEST CASE OR WHATEVER BUZZ WORD YOU AND BAUGH ARE USING TO DESCRIBE COSTA MESA. I'M OK WITH CUTS AND EVEN WITH OUTSOURCING. I'M NOT OK WITH OUR DIRTY LAUNDRY APPEARING ON THE FRONT PAGE OF THE L.A. TIMES. IT'S TACKY AND EMBARRASSING. YOU MAY THINK THIS IS GOOD FOR YOUR CAREER BUT IT'S BAD FOR THE CITY'S IMAGE. SO TAKE YOUR GROUND ZERO AND GO SOMEWHERE ELSE. I'M NOT GOING TO VOTE FOR YOU AGAIN - I'M GOING TO VOTE FOR SOMEONE WHO WILL GET THE SAME RESULTS WITHOUT THE NEED TO BROADCAST OUR PROBLEMS. BTW, THIS IS IN ALL CAPS BECAUSE I AM FURIOUS.
The LA Times article you referenced is a very interesting article, primarily because it states the following:
"There are estimates that state pension funds alone could eventually face a $1-trillion to $3-trillion shortfall for retirement benefits. San Diego officials have warned that pension payments could consume half the city's annual budget by 2025."
"Polls show strong public support for changes in government workers' benefit structure. In April, a Los Angeles Times/USC College of Letters, Arts and Sciences poll found that seven in 10 people support a cap on pensions for current and future public employees. Nearly as many, 68%, approved of raising the amount of money government workers should be required to contribute to their retirement, and 52% supported raising the retirement age for government workers. And in a recession-battered and post-Bell political environment, emotions are running even higher, said Dan Schnur, director of USC's Unruh Institute of Politics.
"You've got a Democratic governor and the mayor of Los Angeles, a former union organizer, calling for changes," Schnur said. "This isn't just an Orange County Republican issue anymore.... The challenge for their opponents is to convince voters that these types of cuts would directly affect their daily lives. It's too early to tell whether that's going to be successful or not."
Several Southern California cities are facing major cutbacks. Struggling Compton announced this week that it could layoff up to a fifth of its workforce."
"Organized labor is definitely taking notice, pouring hundreds of thousands of dollars into the battle in Costa Mesa."
Curious how you don't highlight the fact that Costa Mesa was cited as ground zero for labor at the state Democratic convention weeks ago, where Berardino and Nenadal were panelists.
At the Council's May 17 meeting, Jim Righeimer complained that the words "Wisconsin," "Costa Mesa," and "Tea Party," were used "constantly" at the Democratic Convention; he complained that Nick Berardino (OCEA) was "telling people that Costa Mesa is ground zero for this across the country."
But, he ignored Scott Baugh's comment in his speech to the Costa Mesa TEA PARTY that, "Costa Mesa is ground zero for cities." It's amazing to see how he blames others for inciting emotions by simply quoting his own allies. Why is it the Democrats' fault and not Scott Baugh's? His agenda is clear.
Last night, Righeimer's new battle call was "reduce the head count." After seeing that next year's budget could be reasonably balanced, he decided we need at least $1 million for contingencies, another $1 million for I-forget-what, and all of a sudden, we have a fiscal emergency again. And then, he (one Council member) DIRECTED the City Manager to come up with the "head count" necessary (to lop off) to restore expenditures that were reduced to balance the budget.
Again, his agenda is clear: Find any excuse to "have to" lay off employees so we won't have to pay for their pensions. And, if anyone complains about lowered service levels, he can blame it on the employees and their "exorbitant" pensions. (Never mind that the national economic crisis created by Wall Street is the reason for drastically reduced sales taxes, which is the reason the City's budget is in trouble!)
I don't doubt that the pension system needs attention, but there are better ways to do it than by firing everyone who might receive a pension. And, the solution must be arrived at statewide, not city by city.
"Reality" would appear to endorse reneging on promises to those who are already retired (pensioners and their families) rather than reform the system for current and future government workers and rebalance the pension system back to health. Destroy those who relied upon agreements, contracts and promises made and approved by the officials of the various entities. That is radical at best and possibly legally not supportable. Hate is a sin for very good reasons.
To the "wipe out all the employees and start over crowd", perhaps you should read this. There have been people here that have said, let's just contract fire to county and police to sheriff. It's no the "cure all". Less service, fewer officers, no control over their cost increases.
http://www.ocregister.com/news/city-302303-contract-services.html
You can't touch pensions in place. Moorlach learned that the hard way. You can (and we should) be introducing new tiers for new hires for police/fire (like we did for the general employees) Several other cities have done that. However, we can't do anything because the police/fire contracts are locked in. Those MOU's were a JOKE, and we bought into them. Congrats Brea, Seal Beach, etc. for doing your job. We're too naive in Costa Mesa.
$150k lifeguards in Newport Beach, $200k firemen in Costa Mesa, new scathing benefits headlines daily; the change is coming from the public. Everyone is waking up to these costs and these outrageous payments. The unions are in full retreat. Don't expect change from the Council, expect it from the public. It's happening slowly.
It's never been about fixing or balancing a budget. It's about keeping Righeimers pudgy bloated face in the media so when he runs for whatever in 2012 he will have name recognition.
CharacterMatters, nice try but nobody said anything about current retirees. The retirement age should be raised, employees should pay 100% of the employee portion, and new non-safety employees should be out of Calpers completely if possible. New hires in non-public safety jobs should be on Social Security and get a 401(k) plan.
Current working employees let many fellow members of the Costa Mesa "family" get laid off so they could keep their benefits and keep having the city pay a portion of the employee share of the Calpers payments. That is a fact, go watch the video for the 10/26/10 city council meeting. http://costamesa.granicus.com/ViewPublisher.php?view_id=4
Blaming the council for what is happening after the October 26, 2010 vote is nonsense. Roeder and Bever said 50-100 would be laid off as a result - and the associations stood at the podium and demanded security for their membership while threatening litigation.
Bever stated that "a vote for these contracts is by necessity a vote for significant layoffs. I'm deeply concerned that we cannot afford to lose more of our highly trained and valued staff members."
This is the reality, regardless of the spin being put on by either side and it happened before Righeimer and Mensinger were on the council.
How can they say Costa Mesa is ground zero? That dubious distinction belongs to Sandy Springs, Georgia. Brothers and sisters if you want to see what the OC GOP has in store for you, check out Sandy Springs.
Regarding the LA Times article this morning ...
The story fails to explain why those of us with a deep investment in the city are so worried about its future.
Past city councils have worked hard to provide high quality services – police, fire, etc. – so the city would attract businesses and residents. Being a conservative city, Costa Mesa has never had high taxes and fees. The business license fee tops out at $200/year; high-end Nordstrom’s pays the same $200 that a mom and pop retailer pays. Hotels benefit from a low bed tax; no city in Orange County has a lower one.
Over our six decades of good times and bad, this formula has worked. The secret sauce has been that the stakeholders – employees, residents, businesses – worked together for the common goal of a healthy and safe Costa Mesa.
It’s likely that this council’s “all cuts, no new revenue” approach will degrade service quality much further than would occur if the traditional Costa Mesa approach were used.
The irony is that it’s not even clear, according to CalPERS, that Costa Mesa’s pension obligations can be rapidly modified. This suggests that, by the time the recession abates, justification for abrupt council actions will have evaporated.
This leaves residents and business owners asking, why put us through this trauma when the old way has served well for six decades?
That whole Sandy Springs Georgia argument is a red herring. Sandy Springs didn't "outsource everything" as some on the council and Costa Mesa Taxpayer's want everyone to believe.
Sandy Springs was an unincorporated area of Fulton County. When they chose to incorporate in 2004/2005, they had to decide whether to keep receiving services from Fulton County by contract, or create their own city services. they started their own police and fire from the ground up. Many of the other services, they chose to keep contracted out, as it is definitely cheaper to contract than start up in most cases.
Sandy Springs NEVER had any established city services that they dismantled then outsourced.
Re MSC Esq. comment "... it is definitely cheaper to contract than start up in most cases."
You are right, and because of this, it's a big "gotcha" you have to factor in when you consider outsourcing a job.
If you aren't happy with how the vendor is doing the work, it's very difficult and expensive to restart your own capability.
Vendors know this and lowball the initial bid to buy their way into the contract. This allows city hall to feel good, allows politicians to puff out their chests and brag that they've saved the taxpayers money, and encourages the customer to shed every remaining scrap of expertise and equipment, because now they "won't need anything since the vendor will take care of everything."
Indeed! In a year or two, change orders will start surfacing and the tab will start climbing. At the next contract negotiation, the customer will be at the mercy of the vendor. Costs will skyrocket because the city doesn't have the capability any more to really understand issues and smoke out bogus claims. Plus, inertia can discourage the city from going through the pain of reopening the contract to new bidders. End of cost savings in the long run.
But do the politicians care? Not likely, since they will have moved on to higher office. They'll be very promotable; after all, didn't they recently work magic at Costa Mesa?
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