Monday, January 02, 2012

Council Meeting Tuesday

DOWN!... SET!... HUT! HUT! HUT!
Oops, sorry... too much football this weekend. Of course, when your a college football fan, there's no such thing as "too much football". What an exciting weekend!



FIRST MEETING OF THE YEAR
Tuesday the Costa Mesa City Council holds its first meeting of the new year and, as I've mentioned in an earlier entry, it's full of interesting
items. Suffice it to say that it's going to be a very interesting evening.

REDEVELOPMENT AGENCY RULING
I find myself hoping City Chief Executive Officer Tom Hatch will explain a couple things to us during his comments. We need, for example, to know the impact of the recent California Supreme Court ruling regarding Rede
velopment Agencies on our city.

LEGAL OPINION REQUIRED
We also need to know the impact of one of the new laws that went into effect on Sunday - Senate Bill 202. We need a clear legal opinion on this one, since it may be possible to interpret this new law in a manner that would preclude the City of Costa Mesa from moving forward with placing the Charter issue on the June ballot. If so, then there is even less reason to try to jam this subject down the throats of the voters in our city. We need to know, and soon.

NEW FINANCIAL POLICIES
One issue that really does concern me is New Business item #3, Financial and Budget Policies. You can read the staff report and Attachment A HERE. As you read through the staff report and attachment I think you'll understand my concern.

BIG CHANGE HERE
For example, under OPERATING BUDGET POLICIES, Item A requires a balanced budget and PROHIBITS the use of fund balance for anything but capital improvement projects or other "one-time" non-recurring expenses. This is a MAJOR change in the way this city has done business for decades.

WAIT UNTIL YOU
READ THIS!
Further down the text we come to a section titled, MINIMUM FUND BALANCE RESERVE AND CASH REQUIREMENTS. This is the segment that causes me the most concern because the demands that will be codified appear to be possible ONLY by making draconian staff cuts.

MINIMUM FUND BALANCE
Item A., Minimum Fund Balance Reserve has the following requirements:
  • As of June 30, 2012, the minimum unreserved (Committed, Assigned and Unassigned) fund balance will be 30% of the FY 11-12 General Fund Operating Budget - $28,425,045.
  • As of June 30, 2017, the minimum unreserved (Committed, Assigned and Unassigned) fund balance will be 35% of the FY 16-17 General Fund Operating Budget.
  • As of June 30, 2022, the minimum unreserved (Committed, Assigned and Unassigned) fund balance will be 40% of the FY 21-22 General Fund Operating Budget.

MINIMUM EMERGENCY RESERVES
Item B., Emergency Fund Balance Reserve, requires the City to maintain a minimum Emergency Reserve of $14.125 million at all times. This amount is already required, but during the recent financial crisis the reserve had been drawn down below safe levels for short periods of time.

MINIMUM CASH ON HAND

Item C., Minimum Cash Balance, requires on or before July 1, 2012 the City maintain a minimum monthly cash balance (throughout the fiscal year) in the General Fund of at least $10 million. That requirement increases to $15 million a year later.

SAY, WHAT?
Further, in the section called GENERAL REVENUE MANAGEMENT, Item B., General Revenue Forecast, says the following: "Revenue forecasts will be neither overly optimistic nor overly conservative. They will be as realistic as possible based on the best available information. Should economic downturns develop which could result in revenue shortfalls or fewer available resources, the City will make adjustments in anticipated expenditures to compensate." So, forecasts can be whatever we want them to be, right?

5% REQUIRED FOR CAPITAL PROJECTS
On down the attachment, under GENERAL EXPENDITURE MANAGEMENT, in the section called CAPITAL BUDGET POLICIES, Item A., Percentage of General Fund Budget for Capital Expenditures, requires that beginning in FY 2013 - 2014 the City must allocate a minimum of 5% of the General Fund to capital expenditures.

SO, NO DEBT?
Under DEBT MANAGEMENT, Item A., Debt Issuance, says the following: "The City shall not issue long-term (exceeding twelve months) General Fund debt to support ongoing operating costs unless such debt issuance achieves net operating cost savings and such savings are verified by appropriate independent analysis. All General Fund debt issuances shall identify the method of repayment (or have a dedicated revenue source). The term of the debt should not exceed the life of the asset being financed."

AH, HA!
The whopper, though, is the last item in this segment. Item B., Unfunded Liability, says: "Should the City incur a period where unfunded liabilities exist, it shall be required the City develop a plan to significantly reduce or eliminate such unfunded liabilities."

HOW ARE THEY GOING TO DO IT?
I am looking forward to the discussion of this whole issue, even though it will come very near the end of the meeting Tuesday. I want to hear how this council plans to pull these changes off. Because they are so significant, the council is going to have to be very specific about how they plan to do it - no vague, wishy-washy terms. I want to know just where they plan to get the tens of thousands of dollars for these changes, specifically.

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8 Comments:

Blogger Gericault said...

Raising Revenues obviously isn't a priority, but drowning the baby in the bathtub is.

1/03/2012 06:47:00 AM  
Anonymous Manning&Luck2012 said...

Geoff,

For me:

there's no such thing as "too much football and Erin Andrews". What an exciting weekend! :)

1/03/2012 07:37:00 AM  
Anonymous Barry said...

Terrific reporing on some terrific financial reforms. These are long overdue. Time to start addressing our debt, prioritizing our capital projects and saving for the future. Hate this Council all you want Pot Stirrer, they are implementing financial measures that we need.

1/03/2012 08:20:00 AM  
Anonymous Phil said...

Pot Stirrer, Senate Bill 202 (crammed through the legislature by the unions to stop pension reform) only applies to citizen-backed initiatives. It has no impact on when Costa Mesa can schedule its ballot measures.

Sacramento needs to stay out of our business. Let them continue to ruin our State but stay out of our business.

1/03/2012 09:30:00 AM  
Blogger The Pot Stirrer said...

Phil,
I read the bill. It's unclear that it applies only to citizen-backed initiatives and/or state-wide issues. We need a legal review before proceeding with Righeimer's Charter scheme. If you find such information please share it here.

1/03/2012 09:34:00 AM  
Anonymous Unions Love Phil said...

Hey Phil, as much as you hate the unions, just remember that they love you and all your short cummings. They'll be there for you when you need them,so don't hesitate to give them a call.

1/03/2012 10:07:00 AM  
Anonymous Change for the good said...

Phil, it is true that the Unions will be there for you when you call.

Unless they are at the River ....

This is a light 1 st agenda, yet packed with many good elements to restructure the budget and improve our City.

1/03/2012 11:56:00 AM  
Blogger The Pot Stirrer said...

change,
That would be the "Allan Mansoor River", right? Now you apparently begrudge city employees recreation of their choice. Methinks you may have been a slave-master in a previous life.

1/03/2012 12:35:00 PM  

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