City Council Holds Financial Update Study Session Today

LEARN ABOUT THE BUCKS!
The Costa Mesa City Council will meet beginning at 5:00 p.m. today in City Council Chambers for a Financial Update Study Session.  Read the agenda HERE.

SPENDING THE SURPLUS?
Read the staff report, HERE, and learn - among other things - that the City had a budget surplus of nearly $11 million.  Here's a great sentence from that report: "The City has a great opportunity to use these one-time funds to achieve several goals and fund important projects as guided by the financial and budget policy."

TAKING THE FINANCIAL PULSE
This meeting will be the first public session in which the new City Council will give us a clue as to their financial priorities as we move forward.  We know in the past the previous council majority chose infrastructure over public safety - potholes vs. people.  This meeting should help us take the pulse of the leadership of this city, to see where they want to take us for the next two years.

How To Spend The Budget Surplus?

READ LUKE'S ARTICLE
Take a few minutes to read Luke Money's article from the Daily Pilot, HERE, which outlines what some elected officials think should be done with the anticipated $11 million budget surplus.

MENSINGER SHOVELS THE MANURE
A big chunk of that surplus came from not hiring enough staff.  Mayor Steve Mensinger is quoted as saying, "Between outsourcing and being smart about hiring, we have maintained our service level with less people while doing more with technology."  What a load of manure!  By delaying hiring in public safety organizations, and by dragging their feet on contract negotiations for those groups, not only have response times increased, but the staff that remains is being worked to exhaustion with overtime.

ANTI-EMPLOYEE ENVIRONMENT
After their fiasco five years ago when they sent out illegal layoff notices to more than 200 employees, spent years in litigation and lost, it looks like the council majority - including the lamest of lame ducks, Gary Monahan (who shows you how he feels about the city in this image) - have figured out that they can get the same result by simply creating such a toxic work environment that people will leave - in droves - and they can be backfilled by consultants with no sense of ownership to what happens in our city.  Witness, for example, the recent approval of spending more than $900,000 for temporary staff in the Engineering Department and the $200,000 authorized to fill Claire Flynn's vacancy with a consultant!  The list goes on and on.

FALSE SAVINGS
Katrina Foley is quoted as stating that on a typical day in the last fiscal year we had 73 open positions!  She is correct when she opines that it would be a bad idea to put the vacancy savings into any kind of a project.

REBUILD THE RESERVES
In the past Mensinger and Mayor Pro Tem Jim Righeimer have criticized previous councils for "blowing through reserves" during the economic downturn - ignoring the fact that sound financial management permitted those reserves to be there when needed in the first place.   We are still more than $20 million short of that reserve level that kept the city afloat in those tough times.

UNFUNDED PENSION LIABILITY SMOKE SCREEN
And, this council majority has yapped about the Unfunded Pension Liability, using it as campaign fodder, since they took office more than 5 years ago and created a special committee to study and advise it on solutions.  So far - ZIP - NOTHING - NADA.  Not a thing has been done to chip into that pension liability.  It's all political rhetoric, aimed directly at the employees, whom they've painted as greedy union thugs and malcontents.  Shortly after being created that committee did have an extensive workshop on Municipal Bankruptcy - the only real solution to the unfunded pension liability problem short of a some kind of a miracle in the investment returns at Cal PERS.

PAVING, POTHOLES BEFORE PUBLIC SAFETY
No, this council majority goes merrily along, paving streets, ripping out new median plantings and re-planting and overbuilding so their developer-buddies profit while public safety suffers.  And, by "public safety" I don't mean the organizations that provide it - I mean those of us who expect it to be at a level where we feel safe in our city.  Today we don't - for lots of reasons.

CLUELESS ON THE GOLF COURSE
It's hard to understand how the two main drivers of this decline in our city, Righeimer and Mensinger, can actually grasp how their policies actually impact the residents as they go about building new Country Club mansions.  Their idea of "affordable housing" seems to be $800,000 "starter homes" popping up like clusters of mushrooms on the Westside of town.

WHAT ABOUT SOBER LIVING HOME ENFORCEMENT?
And what about the whole Sober Living Homes issue?  We have two ordinances which are NOT being enforced.  Is it because we don't have adequate Code Enforcement staffing?

 HOMELESSNESS?
And what about our Homelessness problem?  This is conjoined with the Sober Living Home issue and, while we're told efforts are being made to reduce the number of homeless in our city, a drive around town past almost any public park will show you that we are failing on this issue.  Should we be spending some cash on that issue?

DEPLETED SELF-INSURANCE FUND
Oh, yes.. how about replenishing the Self Insurance Fund, which has been depleted by the lawsuits that Righeimer and Mensinger have inflicted on our city as a result of their boneheaded schemes?  That seems to be a good idea - particularly if they continue on the path they've followed for the last half-decade.

WHAT ARE YOUR THOUGHTS?
So, how do you feel about spending the budget surplus?  Should we stash some of it away in our reserves?  Should we pay down some of our pension liability?  Should we hire more public safety personnel?  Both Fire and Police are down significantly.  What should be do with that cash?

Budget Study Session Draws A Crowd

VENUE CHANGE A GOOD MOVE
The Budget Study Session held by the Costa Mesa City Council Tuesday evening drew a pretty good crowd for a change.  It's a good thing technological complications forced the change of venue from Conference Room 1A to the Council Chambers because there would not have been enough seats to accommodate the more than three dozen residents, staffers and the council members in the conference room.

LIVE AND IN LIVING COLOR...

Because of the venue change the meeting was televised and streamed live by CMTV.  It will also be available for later viewing, both on CMTV and via the streaming video system at the City web site.   If you did not already watch it and are interested I suggest you use the streaming video and just skip around to the segments that you want more information about.

FEW SPEAKERS
Rookie Mayor Steve Mensinger began the meeting promptly at 5:00 p.m. and opened it up to Public Comments.  In the Study Session environment speakers only get 2 minutes, and the total time allotted for all speakers is only 15 minutes.  As it turned out, that was not a problem.  Only three people stood to address the council.

Flo Martin, long time resident, educator and former Daily Pilot columnist reminded the council of the need for intelligent debt management, citing her personal experience with mortgages, car purchase, etc.  She also reminded the council that Newport Beach has made a dramatic, meaningful move to rein-in their pension debt with a 19 year plan to pay it down and will likely save $23 million in the process.  She suggested Costa Mesa seriously consider doing something similar.

Mary Spadoni told the council about a new program the Newport Beach Police Department has that

is interconnected with the Nixle notification program that links directly to police department data bases, and suggested Costa Mesa look into it - and provided council members with literature on the program.  She also concurred with Martin about the pension situation, and mentioned that Irvine was implementing a similar plan with even greater expected results.

Tamar Goldmann was the final speaker and echoed both Martin and Spadoni regarding the pension situation and suggested that more budget dollars should be put toward police hiring.

HATCH HANDS OFF TO DUNIVENT
At precisely 5:07 p.m. CEO Tom Hatch then kicked off the agenda - two items dealing with the current budget - and then handed it off to Interim Finance Director Steve Dunivent.  A reminder here - the council cannot vote on anything during a study session.  They can only give direction to the staff on issues.

Dunivent began with the first item on the agenda, HERE, the discussion of Financial and Budget Policies as recommended by the staff and the Finance Advisory Committee.  I'm not going to quote him on this plan - the staff report has plenty of good information and the detailed discussion of the policies is contained in this 7 page attachment, HERE.  He discussed the following:

• General Revenue Management
• Operating & Captial budgets
• General Expenditure Management
• Fund Balance/Reserves/Cash Requirements
• Debt Management

POSSIBLE ADOPTION OF POLICIES NEXT WEEK
The discussion on this segment, the back-and-forth between Dunivent, Hatch and the council members, took about 30 minutes.  Katrina Foley arrived near the end of this segment.  The staff will return at the next council meeting on the 17th with the policies fine-tuned and ready for the council to consider for adoption.

A PAUSE, THEN THE BUDGET REVIEW
As an aside, at this point Mensinger seemed to be having trouble following what was going on - he was ready to adjourn the meeting, but was reminded that the best was yet to come - the Mid-Year Budget Review.  Hatch again deferred to Dunivent for this discussion.  You can read the staff report for this segment, including the links to the seven (7) attachments, HERE.


FUND BALANCE, VARIANCES, AND MORE
The initial discussion got a little convoluted, trying to explain fund balance, variances, etc.  The upshot was that we are projected to have a little over $9.6 million in the fund balance due to greater revenues than anticipated and fewer expenditures.  Of that amount, $3.2 million represent "carryovers and encumbrances" - monies already earmarked.  For the remainder of about $6.3 million the staff recommended $2 million placed in reserves; $4 million in Capital Projects and the remainder in unassigned fund balance, where it could be spent later.

PRIORITIES
The Finance Advisory Committee had reviewed the draft and the draft policies.  They recommended the following priorities for use of the net budget variance:

• First priority should be to increase reserves if reserves are below target.
• Second priority should be to assess the prepayment and accelerated payoff of debt.
• Third priority should be to allocate additional funds to capital facilities.

During the discussion it was pointed out by Foley, who had attended the meeting where this was discussed, that the "debt" discussed above was NOT the unfunded liability debt.  It was also clear from the discussion, particularly by Gary Monahan, that he didn't necessarily agree with those priorities.  That particular discussion next week should be very interesting.

HATCH'S SLUSH FUND
You might find Attachment 6, HERE, of interest.  This is titled "2014-15 Allocation of General Fund Contingency Account as of 01-27-15".  This is a list of the money spent out of CEO Hatch's Contingency Fund - the $1 million the current council has been giving him to spend as he (and they) see fit - generally without a subsequent vote of the council.

As you scroll down the list you'll find some interesting numbers.  Foley, for example, wondered about the $42,000 and $19,000 spent on mailers and mailing to promote the Charter last year.  She wondered if the proponents of that failed ballot measure might want to hold a fund raiser to reimburse the city for the costs.  I think she was asking that tongue-in-cheek, but I'm not sure.

There was also a discussion of the $47,000 for portable field lights and snack bar improvements (for the Jack Hammett Sports Complex Snack Bar)  It was an interesting exercise.

90 MINUTES AND GONE
Finally, just after 6:30 Mensinger got it right and adjourned the meeting to the next council meeting on Tuesday.  Watch the video or the televised discussion on CMTV.  The replay is not yet on the schedule, but you can check HERE to find it later.  You can look for the streaming video on-demand HERE.

Ouch! That Hurt! But I Deserved It!

REMEMBER THE BUDGET STUDY SESSION?
Yesterday I wrote, HERE, about things coming up in Costa Mesa, including the first of two Budget Study Sessions tomorrow afternoon.  In that segment of my message I referred to a "big budget surplus"... Uh-oh... That may have been a mistake...

SETTING ME STRAIGHT, SO TO SPEAK
Well, late this afternoon I got slapped upside the head by councilwoman Sandra Genis, who knows a thing or two about municipal finances from her time on the council now and when she also served as mayor a few years back.  While she didn't exactly tell me I was lazy and stupid, her message to me  nibbled around the edges of that territory - and she may be correct.

DARN THOSE "VARIANCES"!
The clinker in the issue is the use of the term "variance" when talking about our finances.  I AM NOT going to try to clarify this mess - I'll surely just further confuse the issue.  I WILL, however, refer you to HER blog posting today on La Femme Wonkita, HERE, which does a dandy job of telling it like it is.

BE THERE OR...
So, this is just one more reason to present yourselves at Conference Room 1A at City Hall tomorrow at 5:00 p.m. to hear city officials try to explain exactly what they mean in the staff report, and tell us EXACTLY how many dollars we have left and, according to Genis, how we can spend money we don't have.

UH-HUH...
See you there - I'll be the guy in the back of the room in a dunce cap.