Costa Mesa Isn’t Broke After All

Costa Mesa’s municipal employees have been saying all year that while there have been revenue shortfalls over the past several years, the city is not on the verge of a financial collapse warranting the mass layoff of hundreds of city workers. Well the numbers are in for the fiscal year ending June 2011 and it turns out Costa Mesa had a $3.8 million surplus. City officials had predicted a shortfall of $1.4 million earlier this year. But what’s a $5.2 million difference among friends?

In a release dropped late Monday afternoon, city spokesman Bill Lobdell wrote:

Costa Mesa’s General Fund finished the 2010-11 fiscal year with a $3.8 million surplus, according to the City’s recently completed annual financial audit.

Higher-than-expected sales tax revenues and budget-tightening measures erased a projected $1.4 million deficit, and the City finished in the black for the first time since fiscal year 2006-07.

The independent audit, known as Comprehensive Annual Financial Report (CAFR) and available shortly on the City’s website, shows that the surplus resulted from receiving $95.3 million in revenue and transfers in, while paying $91.5 million in expenditures and transfers out for the year that ended June 30.

The $3.8 million surplus went into the City’s reserve fund, helping raise available cash in November (when cash flow is at its lowest) from about $5 million in 2010 to about $10 million this year. The cash reserves are still short of the $14 million minimum that the City, by Council policy, is supposed to set aside for natural disasters and emergencies. The City had used more than $30 million of its reserves in the previous three fiscal years while trying to balance its budget.

Compared to the prior fiscal year, total revenues increased 4.2%, while expenditures decreased sharply by 8.6%. Revenues rose because of a slight rebound in the economy and the voter-approved increase in the hotel tax rate. Savings were attained through layoffs, positions left vacant, employees contributing more to their pensions, and reductions in service.

In addition to restoring its reserve fund, the City Council has pledged to start paying down the significant $255 million in unfunded liabilities and begin a 5-year, multi-million-dollar capital improvement plan to make infrastructure repairs and improvements that had been put off in recent times because of budget shortfalls.

The news of the surplus isn’t really new information. rather, it simply confirms what an independent financial audit of the city’s books showed back in June.

Costa Mesa's Righeimer and Monahan

Costa Mesa Council Members Jim Righeimer and Gary Monahan, Photo: Chris Prevatt

In his release Lobdell states; “Savings were attained through layoffs, positions left vacant, employees contributing more to their pensions, and reductions in service.” It should be noted that while layoffs and other reductions did occur in FY 2010-11, the savings realized by pension contributions were negotiated with the city employees before Councilman Jim Righeimer was even elected to the Council. The layoffs were a reduction in services, not the result of wholesale outsourcing of city departments. The current strategy of demonizing public employees and issuing needless mass layoff notices in an attempt to facilitate rapid outsourcing has had ZERO EFFECT on the numbers reported yesterday.

“This demonstrates once again that the Council can’t be trusted and has been promoting a manufactured budget crisis to advance their political agenda. And now it’s been exposed – the financial report proves once and for all that the fraud of their outsourcing scheme is that the City has money, thanks in large part to the real sacrifices employees made,” said Jennifer Muir, OCEA Communications Director.

Don’t expect however that this revelation will deter Righeimer from his mission to outsource every possible municipal job in the city. His current strategy is to grant himself and his yes-men on the Council unlimited authority to plunder by turning Costa Mesa into a charter city.

But the next time Righeimer and his boys throw out their forecasts of doom and gloom you may want to take their predictions with a supertanker of salt. Their last estimate was only off by $5.2 million, a little over 371%.

  9 comments for “Costa Mesa Isn’t Broke After All

  1. Phil
    December 20, 2011 at 12:57 pm

    Earth to Chris, earth to Chris, are you there?

    Costa Mesa has a budget surplus because the Council made the cuts.

    Now they can use this money to start paying down our quarter billion unfunded pension obligation.

    This is terrific news and a great step forward to the residents of Costa Mesa! For Mr. Prevatt, bah humbug!

    • Sam
      December 20, 2011 at 2:24 pm

      I’m confused. What cuts did the council make?

  2. December 20, 2011 at 5:15 pm

    This council hasn’t done squat except pay more than one hundred grand per month on legal fees. The year-end surplus for the FY ending last June is the result of tough decisions the PREVIOUS council made. All this crew has done is cause turmoil and at least one death (poor Huy Pham leaped from the City Hall roof on St. Patrick’s Day when he learned he was going to receive a layoff notice). You know they’re bad news when their very first hire is a PR guy to spin their actions. Phil is just one of their bootlickers…

  3. Phil
    December 21, 2011 at 9:54 am

    In Geoff West (Potstirrer’s) world, anyone who wants financial reform and cost cutting to right the City of Costa Mesa’s financial ship is a “bootlicker.” Geoff, you live in a world where anyone who disagrees with you is just a kiss-up. I feel bad for you.

    As far as our budget situation, it will take 59 consecutive years of a budget surplus like this to draw down Costa Mesa’s unfunded pension obligation (assuming that obligation stays flat and does not increase) Oh, and that doesn’t even address the neglected infrastructure needs that the City Engineer has identified we desperately need, nor does it buy backlogged equipment we need, etc.

    The Potstirrer doesn’t care because he won’t be here to pay that debt. He will be long gone. For me, I’m glad we’re addressing it and will continue to speak out!

    • December 21, 2011 at 10:02 am

      Phil — do you have a mortgage? Do you have a balance on your credit card that you can’t pay off right now? Congratulations, you have an unfunded liability. Now let’s address the notion that these Republicans on the city council insist on running the city like a business. The goal of business is to make profits and grow. Do you want bigger government? Most people don’t. But government should be “in business” for things that shouldn’t be profitable. Police and fire protection; streets, good schools. These things benefit the community, encourage businesses and families to move to a city thereby increasing the tax base to fund the things that make a community so desirable to begin with.

  4. Sam
    December 21, 2011 at 10:18 am

    Phil, why can’t you answer my question? What cuts has this council made to create the surplus?

  5. juandoez
    December 21, 2011 at 1:38 pm

    Phil has been raking his brain when he realized that he is living a life of unfunded liability. Just like every busy, bank, governement agency of all levels.
    Why is it you only hear “Unfunded Liability” when people talk about public employees, but it isn’t ever brought up within the private sector or federal government? Oh, maybe because it is an acceptable way of business when its convenient.

  6. Say What?
    December 21, 2011 at 2:21 pm

    Valid question my Uncle Sam!

  7. December 22, 2011 at 5:18 pm

    Don’t waste your time with old Phil, guys. He’s just another of the OC GOP sycophants who may have never had an original thought in his life. He hears the drumbeat and marches as ordered. The fact is, the current Costa Mesa City Council has done NOTHING to balance the past budget and are spending money like proverbial drunken sailors – no offense to you semi-sober swabbies out there – by creating an inverted pyramid at City Hall. The CEO’s office has so much heft, staffing-wise, that the 5th floor may implode!

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