Revenues & Probolsky's Poll
Unlike in past years, this session was held in council chambers to accommodate the growing number of residents and others actually interested in these proceedings. Last night slightly more than 50 people attended the meeting, of which about half were residents. That's a good sign. The remainder were staffers, journalists, union observers and security personnel. Also, the change in format which permitted public comments after each segment made for a much more useful and informative agenda. The comments made by residents were, for the most part, respectful and thoughtful. The responses from the council and staff were generally helpful and informative.
BEVER A NO-SHOW - AGAIN
One person who DID NOT show up was part-time, part-time council member Eric Bever, who was absent again from the second consecutive meeting. Once again, nobody missed him except, perhaps, stand-in City Attorney Harold Potter, who was left dangling out there on the end of the dais by himself all night.
MONAHAN STIFF-ARMS MENSINGER
I was impressed when Mayor Gary Monahan rebuffed councilman Steve Mensinger's overture to move the presentation by pollster Adam Probolsky forward on the agenda. (Apparently Mensinger invited Probolsky to make the presentation) Monahan, appropriately, stiff-armed that suggestion, much to Mensinger's chagrin. Monahan left at 6:15 p.m., so Mensinger apologized to Probolsky when he finally had a chance to make his presentation just after 7:00 p.m.. One could only assume that he thought he could convince Monahan that Probolsky's time was more important than that of those actual residents who came to hear the budget discussions. He couldn't, because it's not. Sometimes Monahan actually does the right thing.
JUDI FINDS AN ERROR - AS USUAL
Long-time budget watchdog and community activist Judi Berry - as some of us anticipated - had gone over the entire preliminary budget document with a fine-tooth comb and popped up to ask about an error in the document. To his credit, Budget and Research Officer Bobby Young acknowledged the error and had corrected pages ready and waiting.
SALES TAX CONSULTANT WAS EXCELLENT
As in years past, the presentation by Lloyd deLlamas of The HdL Companies, Sales Tax consultants who have supported Costa Mesa and many other entities over the years, was fascinating. His mixture of facts and opinion based on decades of experience provided a clear understanding to the audience of the Sales Tax issue in general and Costa Mesa's situation specifically. Our city, apparently, is an aberration to the norm, since our funding is heavily tilted toward Sales Tax and those dollars are primarily generated by what he referred to as consumer goods and "luxury purchases" - high-end items that tend to rebound more quickly from an economic downturn like we've been experiencing for the past couple years. You can view their PowerPoint presentation HERE.
Young's presentation last night dealt with the Revenue side of the budget - the Expenditure side will be covered next Tuesday - and provided excellent information to the council and audience. His charts and graphs showed us clearly where we stand today, the trends in our revenue streams and comparisons to surrounding cities to provide perspective. He told us, for example, that 91% of all revenues comes to the City through the General Fund; that 78% of all General Fund revenue comes from taxes and franchise fees and that, unlike other cities, Costa Mesa is more heavily weighted to Sales Tax revenue - 44% of all General Fund revenue.
We learned that, while Sales Tax dollars represent 44% of the General Fund in Costa Mesa, that funding source represented only 34% in Irvine; 16% in Santa Ana; 17% in Newport Beach and 11% in Huntington Beach.
SALES TAXES REBOUNDING
We also leaned that Sales and Use Taxes dropped from a high of $46 million in FY06-07 to a low of $34.5 million in FY 09-10 and is on the rebound with $41.7 million projected for FY 11-12.
PROPERTY TAX FLAT
We learned that the less-volatile Property Tax revenue has remained fairly level, from a high of $21.3 million in FY 09-10, down to $20.1 in FY 10-11 and back up to a projected $20.9 in FY 11-12.
Property Tax revenue represents 22% of the General Fund in Costa Mesa, 48% in Newport Beach; 38% in Huntington Beach; 31% in Irvine and 14% in Santa Ana.
TOT INCREASE HELPED
The Transient Occupancy Tax (TOT), which represents 8% of our General Fund, has benefited from the 2% increase approved by the voters last November. It has rebounded from a low of $4 million in adopted FY 10-11 budget back up to a projected $5.9 million projected for FY 11-12 thanks to a recovering economy and that voter-approved increase. It makes one consider the stubbornness of Monahan last fall, when he rejected the staff-recommended 3% increase and the additional million dollars it would have brought to our coffers.
BUSINESS LICENSE FEES
The lack of a reasonable Business License Fee structure was discussed, including our inability to do anything about it until the 2012 elections. Had a modest adjustment to our Business License Fee structure been proposed and approved by the voters last November we would have begun to see an increase in that revenue stream already - it has been stable at around $850,000 each year since the current structure was adopted in 1985! That's right - we've had NO change to our current Business License Fee structure for the past 26 years!
COMPARISONS ILLUSTRATE SHORT-SIGHTED MANAGEMENT
While Costa Mesa generates only $850,000 each year on Business Licenses, Santa Ana has $10 million, Huntington Beach $2.2 million and Newport Beach generates $3.9 million. When you consider that we have arguably the most successful retail center in the country - South Coast Plaza - it makes you realize what a short-sighted lost opportunity we have had. If an increase in this fee were to be approved by the voters in 2012 we won't receive any impact of it until 2013.
When we finally got around to the presentation by Probolsky we learned a few new things thanks to the excellent questions by some in attendance. We learned, for example, that "nobody" paid for this poll - it was done "pro bono" by Probolsky Research for the Association of California Cities - Orange County (ACC-OC) as an "in kind" contribution to their operations. Unfortunately, nobody asked the second part of that question - "Who asked for the survey to be done?" Since Probolsky is joined at the hip with many of the Orange County Republican movers and shakers - including Mayor Pro Tem Jim Righeimer - one might speculate that one or more of those folks put the bug in his ear. I can almost hear Scott Baugh whispering in his ear.
SMALL SAMPLE SEEMS PROBLEMATIC
Several speakers took exception to the validity of a poll with such a small sample - 325 respondents in a pool of 3.2 million residents does seem a wee bit thin. Probolsky defended it, saying it was perfectly valid to measure the tendencies of Orange County residents, including all demographics. He did say the survey was conducted in English, though, so that certainly cut out a significant segment of the county population. In Costa Mesa it would have eliminated more than a third of the residents, for example.
"PUSH POLL" OR NOT?
Both Righeimer and Mensinger seemed extremely sensitive to the characterization by some (me) of this poll as a "push poll", so they asked Probolsky to address that issue. He, of course, denied that it was a "push poll", since it wasn't designed to influence public opinion during the process of conducting it. He cited, and Righeimer emphasized, that the small sample kept it from being a "push poll" - that thousands of individuals would have had to been polled. Of course, the way the questions were framed DID influence those taking the poll and the summary of the results touted that fact. I guess these guys really DO think the public is stupid - that we don't actually see through the facade and understand the intent of this poll.
READ THE POLL YOURSELF AND DECIDE
I encourage you to read the poll results yourself, HERE, concentrating on the actual questions as asked by the pollsters. Bring a magnifying glass because the type used for the questions at the bottom of each page on the report is teeny. Judge for yourself whether those questions were geared to influence the answers. I know what I think...
RIGHEIMER - "PENSIONS NOT PART OF THE BUDGET DISCUSSION"
Righeimer, during his council member comments segment, told us that "pensions were not part of the budget discussion tonight", and yet there stood Adam Probolsky - invited to be at the podium of a study session dedicated to the discussion of our municipal budget - with his poll that was clearly aimed at influencing public opinion toward major pension reform. Righeimer acknowledged that, because our association contracts last for the next 3 or 4 years, nothing can be done about Costa Mesa pensions now. As I've said before, his only choice then, is to dump the employees who would get the pensions. To my knowledge no representative of city management has asked the bargaining units to sit down and discuss concessions that might save jobs - yet. Instead, the draconian and mis-applied outsourcing stampede continues.
REALLY, JIM? C'MON!
During his comments Righeimer said we need to decide what pensions are supposed to be. He made a clever statement to the effect that we don't want to "kick them onto the streets" but do we "want to kick them to the beach?" - alluding to his opinion that the current pensions are much too rich and take effect too early. After this mini-rant, are we REALLY supposed to believe that "pensions are not part of the budget discussions tonight"? Clearly, that issue is in the forefront of his considerations as he hears and contemplates our current budget dilemma. Again, he apparently REALLY DOES think the residents of this city are stupid.
"LET'S HAVE COFFEE"
I was amused when, at the end of the meeting, Righeimer suggested that if people REALLY wanted to discuss issues they should call him and make an appointment to have a cup of coffee and discuss them instead of griping at the podium of public meetings. I chuckled out loud because that is SO typical of him and his pals - "let's discuss public issues in private"! Well, I can tell you from personal experience, "having coffee" with Righeimer doesn't resolve issues - unless you agree with him. So, good luck with that, folks. You'll end up with a half-caf decaf frappachino with an order of baloney on the side.
NEXT WEEK THE "FUN" PART - EXPENDITURES
Next Tuesday, the day following the Memorial Day holiday, the considerations of the Preliminary Budget will continue with the presentation of the "expenditure" side of the equation. This meeting - again at 4:30 in the council chambers - promises to be even more interesting because it will dig into just what parts of our budget will have to be cut to find that elusive $3.3 million necessary to balance it. Since much discussion took place about "rebuilding our reserves", don't be surprised that simply balancing the budget is enough for these guys. I expect that there will be strong support for building the reserves by ousting more staff members. See you there...