City Numbers Are Looking Good!

NUMBERS, NUMBERS, NUMBERS
Tuesday afternoon the Costa Mesa City Council held a study session at which two very important financial issues were discussed - the Comprehensive Annual Financial Report (CAFR), HERE, and the Mid-Year Budget Review, HERE.


CAFR SHOWS BUDGET SURPLUS
Bobby Young, Director of Finance and Information Technology, guided the discussion of both issues, covering the CAFR first.  This document, 143 pages of every number you'll want to know about how Costa Mesa did financially for the Fiscal Year ending June 30, 2012, can make for some ponderous reading.  The short version is, the City of Costa Mesa did much better than anticipated during the last fiscal year, ending up with a budget surplus of $2.5 million.  If you want to know all the details, go to that link above to read the entire document as posted on the city web site.

MID-YEAR NUMBERS ARE GOOD

The city continues to make good progress with the budget.  The Mid-Year Budget Review, Fiscal Year 2012/2013, presentation by Young included some very interesting graphics.  So, courtesy of Bobby Young, I'll share a few with you.  Click on each image to enlarge for easier reading.

REVENUE AND EXPENDITURES
These first two show recent historical numbers for both Revenues and Expenditures.  You can see how the economic downturn affected the city during the first couple of years shown on these charts.   That "ABLE" number mentioned in the footnote is a one-time event as a result of the dissolution of the A.B.L.E helicopter program.  That was $2.5 million.

REVENUE/EXPENDITURES TRENDS
This graphic shows the path Revenues and Expenditures took for the past 14 years.  You can see how we fell off the cliff in 2008.

USE OF FUND BALANCE
This chart shows very clearly how we had to use Fund Balance to balance our budget beginning at the FY 06-07 time frame.  Fund Balance is projected to be at the $48 million mark by the end of this fiscal year - a slight increase from the past year.

WATCHING THE CASH
Former Mayor Eric Bever - anybody remember him? -  was especially concerned about our cash problem.  Revenues come in spikes due primarily to property tax payments, so you can see how that works.  Our rules require us to have an emergency fund of $14.125 million on hand.  As you can see, there were a few recent years when that did not happen during parts of the year.  However, the trend is, once again, looking up.

CONTINGENCY FUND USE EXPLAINED
Some folks are concerned about how CEO Tom Hatch's Contingency Fund is being used so Young provided us with this detailed explanation of how the fund has been used so far this fiscal year.  Most of the notes are self-explanatory.  There are some "salary" items that will likely be separate budget items in the next fiscal year budget.  Most items, like the $125,000 for the 60th Anniversary celebration, are one-time events.

BUDGET ADJUSTMENT RECOMMENDED
As a result of the mid-year performance Young is recommending to the council that an adjustment be made to the 2012-2013 budget of $773,300 - another good sign.

PENSION STUDY SESSION COMING UP

Mark your calendar.  There will be another study session on February 26th at which Pensions will be discussed at length, guided by pension expert Joe Nation.  More on that in a couple weeks.

Numbers To Make You Smile

GOOD NEWS TODAY!
Today we have a bunch of numbers that may make you smile if you're concerned about the fiscal well-being of Costa Mesa.

SURPLUS 13 TIMES GREATER THAN ANTICIPATED!
In a press release today, HERE, The City announced that the fiscal year which ended June 30, 2011 the city had a $2.5 million surplus - thirteen times greater than the original estimate earlier this year.  You can download the entire Consolidated Annual Financial Report (CAFR) HERE - all 163 pages of it - for all the details.  This, of course, is wonderful news and it leads to all kinds of speculation about just how that money might be spent.

"DRAINING THE SWAMP"

For example, one grumpy old fella around town thinks it should be used to tear down "slums" - apartment buildings where mostly Latinos live - and build parks in their place.  That seems like an "investment" that serves only those among us who view the Latinos living in those apartments as something to be scraped off your shoe.

PROBLEM MOTELS?

Others - perhaps some developer-friendly councilmen, for example - may wish to buy what they've described as "problem motels" and sell them at a loss to developer buddies.  You'll recall that now-mayor Jim Righeimer suggested that very thing a few months ago.

DO SOMETHING FOR THE CITY STAFF

Or, maybe there might be those who will take a look at the diminished city staff and say, "Hey, maybe we should do something for them!"  After all, there have been no pay raises for city staffers since 2008.  In fact, many have experienced a negative cash flow because they contributed more to their retirement and took enforced furlough days.  Maybe we should look at ways to reward them for their diligence and loyalty in the face of  turmoil and hostility over the past couple years.

KNEE JERK REACTIONS COMING...

Of course, there will be some of you who will leap off your couches and scream something like, "They don't deserve a pay raise!  Just look at their retirement!"  That, of course is irrelevant, but you'll scream it all the same.  In fact, most of the city employee units have negotiated changes and a state law that went into effect January 1st - AB 340 - reduced the rest.  Go ahead - scream anyhow, if it will make you feel better.

CALPERS NUMBERS WAY, WAY UP!
And, while we're talking about it, CalPERS announced that they had the best return on their investments - 13% - since 2006!  You can read about it in a Los Angeles Times article, HERE.

SPECIAL STUDY SESSION 1/29/13
The City Council will hold a special study session on Tuesday, January 29. 2013, at which the condition of our pension liability will be discussed.  It will be interesting to see how these "good numbers" will be massaged and manipulated to meet certain political goals.