City Records Budget Surplus
In a press release today the City of Costa Mesa announced that it had recorded a budget surplus for the fiscal year that ended June 30, 2011 of $3.8 million. This is good news, since members of the current City Council have been wailing about our dire financial condition, with the word bankruptcy frequently mentioned by them and their sycophants in the Costa Mesa Taxpayer's Association.
However, while this is good news, it WILL NOT be good enough for them. We can almost guarantee that some council members will give us one of those "yeah, but" comments in which they spin this good news as bad news. And, of course, this excellent fiscal news was accomplished without the draconian layoffs members of the council demanded. This news makes it even more obvious that certain members of this council have only their own personal political agendas in mind, not the well-being of the city. They scream about pension reform while they cannot do a thing about it without sitting down at the negotiating table with the employee bargaining units - something they've shown no interest in doing at this point.
UNFUNDED LIABILITIES EXPLAINED
Way down at the bottom of the text of the press release you'll see a number that, if you've been paying attention to this issue for awhile, should grab you right by the throat. That number is the $255 million in unfunded liabilities. I saw that number, too, so before I published this I grabbed the telephone and contacted Bobby Young, Costa Mesa's Finance Director, to be sure I understood what it meant because it's a much bigger number than we'd been hearing for the past several months.
NUMBER IS ACTUALLY DOWN SLIGHTLY
It turns out that the $255 million is the TOTAL unfunded liability the city faces. $225 million is pension unfunded liability - down from $230 million - and the remaining $30 million is medical unfunded liability, which appears to be constant with previous projections. So, while $255 million is a HUGE number, it's down slightly, which can only be viewed as good news - unless you're a political opportunist trying to use it for personal political gain.
PRESS RELEASE TEXT
Here's the complete, unedited text of the press release issued by Interim Communication Director Bill Lobdell today:
COSTA MESA, CALIF - Costa Mesa’s General Fund finished the 2010-11 fiscal year with a $3.8 million surplus, according to the City’s recently completed annual financial audit.
Higher-than-expected sales tax revenues and budget-tightening measures erased a projected $1.4 million deficit, and the City finished in the black for the first time since fiscal year 2006-07.
The independent audit, known as Comprehensive Annual Financial Report (CAFR) and available shortly on the City’s website, shows that the surplus resulted from receiving $95.3 million in revenue and transfers in, while paying $91.5 million in expenditures and transfers out for the year that ended June 30.
The $3.8 million surplus went into the City’s reserve fund, helping raise available cash in November (when cash flow is at its lowest) from about $5 million in 2010 to about $10 million this year. The cash reserves are still short of the $14 million minimum that the City, by Council policy, is supposed to set aside for natural disasters and emergencies. The City had used more than $30 million of its reserves in the previous three fiscal years while trying to balance its budget.
Compared to the prior fiscal year, total revenues increased 4.2%, while expenditures decreased sharply by 8.6%. Revenues rose because of a slight rebound in the economy and the voter-approved increase in the hotel tax rate. Savings were attained through layoffs, positions left vacant, employees contributing more to their pensions, and reductions in service.
In addition to restoring its reserve fund, the City Council has pledged to start paying down the significant $255 million in unfunded liabilities and begin a 5-year, multi-million-dollar capital improvement plan to make infrastructure repairs and improvements that had been put off in recent times because of budget shortfalls.