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.