Wednesday, May 12, 2010

Encinitas City Budget

The city held its first budget meeting for the coming fiscal year on April 28. There was a small audience mostly made up of city staff and those who do business with the city. There were only four public speakers. Two, Marshall Weinrab of the Chamber and Steve Aceti of Coastal Coalition, had their hands out asking for more money. The other two, Sheila Cameron and Tony Kranz, made succinct comments about the lack of details in the staff report.
What’s going on? Well, the city is undergoing what it calls a “fiscal realignment plan.” That’s a smoke-and-mirrors term for budget cutting or spending reductions. They say the plan will save $778,000 and will be instead of across-the-board cuts. But cuts are cuts, and reductions are reductions, no matter how they are framed.

Here is the not so good news:
1. The budget will be reduced 9%.
2. Expenditure projections are reduced considerably.
3. No Tier One capital projects are reduced, but none are increased.
4. Rubenstein traffic calming is on hold.
6. Revenue projection is down because recovery is slower than anticipated.
6. No projected increase in sales tax revenue.
7. For property tax a 3% decrease in net taxable value over the last year (1st time in Prop.13 history).

Councilman Stocks was not present at this first budget meeting. He was in Mexico City with SANDAG on a mission dealing with border problems. ¡OlĂ©! Both Councilmen Dan Dalager and James Bond spent a lot of time praising the staff for their outstanding work and justifying the lack of detail in the budget by saying they had spent hours conferring with City Manager Phil Cotton. The public doesn’t have this opportunity, so the public needs to be given details for transparency. For example, there is a technical paragraph in the staff report about changes in staff job classifications, but no explanation of what it means and its effect on the budget.

The elephant in the room that was scarcely mentioned is the financing of the Hall property park. The staff report simply says “No changes.” It is necessary to look in last year’s six-year plan to see that the city is not funding construction through fiscal year 2014-2015. Stocks and Dalager have been painting a rosy picture of the city’s economic status for several years now. They talk about a balanced budget and our high reserve fund. The contingency Reserve Fund is 20% of the operating budget and the Budget Stabilization Fund is 5% of the estimated revenues. This is a good place to be. but they fail to mention that this was accomplished by borrowing $45 million to buy the Hall property and finish the Library. And they never mention that they borrowed the money with Lease Revenue Bonds, so the cost is not counted as “debt” payment, but as a yearly “lease” payment. The money still has to come from somewhere in the budget, as the projects have no revenue stream. This is accounting doubletalk.

Councilwoman Houlihan talked about taking a conservative view, and Councilwoman Barth wanted more detail. This is a fuzzy picture at best. It all needs to be explained to the public better. After all, we pay the bills.

Gerald Sodomka

8 comments:

  1. There is only one hope.May 12, 2010 11:09 AM

    So did they even mention the biggest cause for the City's financial pain, THE PENSIONS? Of course not! The City Council will not talk about it because they don't have any answers for there screwups and the correction is to painful for them even though its what is needed to save our City.

    The City has to signifigantly increase pension payments for those golden pensions approved by Dalager, Stocks and Houlihan. What fricken fools they are.

    They voted for a 40% increase in pension payments for themselves and every employee in the City. FOREVER!

    This money comes from budgets that could have otherwise been spent on community projects such as parks, beach access improvements, landscaping and traffic calming for our streets.

    The three fools who are responsible for his catastrophe need to be voted out NOW. DALAGER, STOCKS, AND HOULIHAN ARE ALL BAD AND NEED TO GO NOW!!!

    Teresa Barth and Jim Bond need to save this City and agendize Pension Reform on a City Council Agenda!

    Make it happen NOW!!!

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  2. So you are saying that of all of the council members present, only Councilwoman Barth stated exactly what your post premise states, more details are required for transparency. Barth has been saying this on every theme, every vote, every complaint. Transparency, openness, accountability, details . . . And yet the voices of entitlement in the council (and anonymously on blogs) whine that she is mean.

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  3. I smell a RAT!!!

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  4. Thank you Gerald, for caring.

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  5. Not a single word was said about the pension problem. The problem is huge and will only get worse unless the city starts discussion about changing from a defined benefits plan to a defined contributions plan. There won't be enough money to pay future obligations.

    Two years ago the city borrowed around $2 million from itself (by shuffling money around) to meet the unfunded pension obligations. As far as I know this money has not been repaid. It's impossible to know by looking at the budget information. Another $2 million was shifted from the Hall property park fund to meet other budget needs. The justification was that the park money was not going to be used immediately.

    With falling revenues this money shifting becomes a serious problem because the "borrowed" money is not easily replaced. Don't count on James Bond to fix anything. He is strongly entrenched with the 3-man council majority that is struggling to maintain the status quo.

    At last night's council meeting during the discussion of the refinancing of the Hall property bonds, consultant Mark Northcross bragged about the city's AA+ bond rating, but had to mention how the bond rating companies have come under criticism. They failed miserably with the Mortgage Backed Bonds and Credit Default Swaps, which were AA+ rated, but turned out to be worthless and caused the biggest financial crisis in 70 years. He wasn't speaking with his usual bravado.

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  6. I 2nd that motion. Jerry would be a welcome addition to RINOs out the ass and one flaming liberal.

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  7. Did you know that if you take the total budget for employee salary and benefits (health care and retirement) it costs close to $500 dollars a day 365 days a year for life! This factors in city managers and fire personal along with the lower paid. Also don't forget Obama letting children use their parents health care insurance to age 26 now. Who picks up the tab, that's right, US.

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