Back a month ago I was stunned at the Costa Mesa City Council majority and their failure to engage in sound business analysis of their current budget shortfalls. Rather than consider facts and figures in context, these self-proclaimed taxpayer watchdogs chose to exaggerate the problem and exacerbate rational resolution.
I have been surprised to hear the four council members, who voting to lay off 213 city workers, claim that, “the City of Costa Mesa will be bankrupt this fall.” That is an extreme statement to make and for four elected members of a city council to make it. One would presume that these good businessmen would have some actual facts or projections to back up their claims.
Nope, they didn’t.
I first asked CEO Tom Hatch via email if there was “a document, report, financial forecast, or psychic reading that has been presented to the city council or budget committee that supports or makes these claims.” When I didn’t hear back from Hatch (not very transparent if you ask me) I sent my request on to the city’s new PR flak Bill Lobdell. It took a little more than a week but I finally got a response. While Lobdell cited unfunded pension liabilities, and uncorroborated pension contribution forecasts prepared by staff to specifically support conclusions already reached by Council member’s Jim Righeimer and Gary Monahan, there appears to be nothing to back up their claims.
Lobdell sent me links to the PowerPoint presentations prepared for the February 8th Council Study Session as supporting documentation for the decisions. The closest I can find to a “projection” of insolvency was that cyclical rise and fall of cash balances in the city’s general fund. There is nothing unusual about those cash flow projections as revenue does not come in at a constant rate throughout the year as shown below.
To add insult to reason, these guys have no factual basis to claim that their proposed solutions will do anything to resolve the budget shortfalls. In fact, Lobdell said in an email that the council majority plans to funnel $10 million in NEW CITY CONTRACTS “to restore some of the spending that has been cut in recent years areas such as infrastructure repairs, equipment replacement, technology and the director of finance position.” So while CEO Tom Hatch is projecting a budget shortfall for next year of $5 million, “Councilman Steve Mensigner has estimated that the city is facing a $15 million deficit with various services partially restored,” Lobdell said.
Any rational business owner should know that you should NEVER make a rash or knee-jerk decision in an effort to solve a long-term problem. You gather the facts first, then you decide, not the other way around. It seems that the recently appointed, unelected member of the council, Steve Mensinger, has no clue that tripling the projected budget shortfall by adding additional spending is not the way to address a budget deficit. It is however a great way to gin up a reason to lay off most if not all of city staff who are members of a union.