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.
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%.