Joshua H. Silavent - Staff Writer
Long Beach Ends Fiscal Year 2012 With $500,000 General Fund Balance
The City of Long Beach ended the 2012 fiscal year with a general fund balance of about $500,000 as revenues surpassed initial projections, according to a year-end budget report presented to the city council February 5. More than $20 million in spending cuts were made during the last fiscal year, which ended September 30, to balance the city’s general fund budget. The general fund deficit for the 2014 fiscal year is currently projected at more than $7 million.
The finance department reports that “as a result of better performance in departmental revenues, changes to accounting for revenue accruals, which resulted in one-time revenue growth in fiscal year 2012, and the continued rebound in citywide revenues such as property tax and sales tax, the general fund ended fiscal year 2012 with more revenue than projected at mid-year.” Tax revenues were between 1.1 percent and 2.7 percent higher than forecasted. General fund revenue for the year, including one-time sources, totaled $397.4 million while expenditures totaled $386.6 million. The city has set aside about $3.6 million in savings to cover liabilities in the current year’s budget related to potential state disallowed redevelopment agency expenses.
The Uplands Oil Fund has an ending year balance of $4.4 million, which will be included in the fiscal year 2014 proposed budget, after $31.3 million was transferred in 2012 to support one-time public safety, infrastructure and other expenses.
Meanwhile, all city departments ended the fiscal year within budget following a mid-year 1 percent savings target that was met and exceeded. However, two of the nine city council districts posted overages that will have to be recouped in unique ways.
The 8th District, represented by Al Austin, was allocated $500,000 for infrastructure repairs and projects, but came in $16,000 over budget because of costs incurred by Austin’s predecessor. That overage will be balanced with appropriations from the Capital Projects Fund. “I wish there was a way around using infrastructure dollars to make up the difference,” Austin said during the council meeting.
The 5th District, represented by Gerrie Schipske, exceeded its budget by more than $3,500. Schipske said the overages were not related to personnel costs, but rather generic expenses like Xeroxing.
“The information received for District 5 led us to believe they were going to be OK, but unfortunately at the end of the day there was an overage of expenditures,” City Manager Pat West said, adding that it was possible to recoup this cost by drawing it out of the 2012 general fund surplus. But this was a solution not amenable to some.
“We’ve worked hard to try to keep council budgets and all legislative departments inside the budget,” Mayor Bob Foster said, “and if you take it out of the general fund, that’s not a deterrent. I just think taking it out of the general fund isn’t appropriate.”
Another option was to reduce or reallocate money from Schipske’s current fiscal year budget. But Councilmember Patrick O’Donnell responded that this would also set a bad precedent. Nevertheless, it was decided this was the better approach of the two.
City Of Long Beach Bifurcates Business License Of Property Owner Who Leased To Medpot Shop
In the latest and perhaps most conflicting example of the City of Long Beach’s unofficial policy to enforce its ban on medical marijuana dispensaries by targeting the landlords who lease commercial space to them, the city council on February 5 bifurcated the business license of John W. Mitchell, owner of a retail property located at 1742 E. Broadway. That property has long been home to The Brit, a gay-friendly bar, and next door, within the same property address, The Giving Tree Co-op operated until last fall.
As reported in the November 5 Business Journal, the city warned the medical marijuana co-op that it was in violation of building and fire codes, and also operating without an individual business license. But the dispensary continued to operate, and when the city began issuing thousands of dollars in citations to Mitchell, he initiated court proceedings to have the co-op evicted. The dispensary finally vacated in late October, but the city had already revoked Mitchell’s business license by that time.
Following a recent appeals hearing, the city and Mitchell came to a half-hearted agreement. In exchange for Mitchell surrendering his business license for the Broadway property, the city would issue him a new license exclusively for the square footage space occupied by The Brit. The space once occupied by the dispensary cannot be licensed or leased for a full year.
“The only reason we entered into it was in order to save the business next door, which is The Brit,” Richard Brakefield, Mitchell’s attorney, told the Business Journal. “Of course, we haven’t satisfied the issue of citations. We’re going to have to fight the city on that. There are going to be lots more lawsuits coming.”
This statement reveals a great deal about the relationship between the city attorney’s office and city business relations bureau and the local property owners it is targeting in an effort to shutter medpot shops.
“This is kind of a good story,” was Long Beach Business Relations Manager Erik Sund’s characterization to the city council, describing the “resolution” with Mitchell as negotiated and that revocation has “more or less been put on hold.”
If his attorney’s statements are any indication, it’s reasonable to suggest that Mitchell would quibble with that portrayal. “This is self-inflicted city blight,” Brakefield said of the decision to revoke Mitchell’s business license for the space formerly occupied by the dispensary. “The city is just not trustworthy. I think we’ll have issues that will come up, even over this resolution, in the future.”
Long Beach City Council Requests Report Detailing Status Of Local Infrastructure
The Long Beach City Council on February 5 unanimously requested the city manager’s office return in 90 days with an updated status report on infrastructure and funding for ongoing maintenance. “One of our core duties is to maintain public infrastructure,” said Councilmember James Johnson, adding that infrastructure is something that must be preserved for future generations.
The city has reinstated street maintenance after putting it off for years, Johnson noted, and one-time funding also has been used for street and sidewalk repairs. But many councilmembers expressed concern that the city’s inventory catalogue is outdated and needs to be adjusted to more accurately reflect the urgency of specific infrastructure repairs, such as street repaving, and clear out those listed that have already been addressed. “I’m not sure that I’m overly confident in our inventory of what is in good, excellent or poor condition,” Vice Mayor Robert Garcia said. “I find that to be a problem.”
According to city staff reports, “Among other items, the update should include the ongoing shortfall for residential street repair and maintenance, sidewalk repairs and public building maintenance. Analysis regarding future savings that could accrue from properly funding maintenance should also be included. Moreover, spending on residential streets and sidewalks, both in the general fund and in all funds, over the last 10 years is requested to give context to our historical levels of investment for these critical pieces of public infrastructure.”
Councilmember Gary DeLong asked city management to consider the feasibility of issuing municipal bonds in order to generate revenue for infrastructure projects, the responsibility for which more and more cities are having to account given the end of federal stimulus dollars and likely cuts coming to other federal infrastructure funding programs.
According to city staff reports, “There is no significant fiscal impact for this report. To the extent that infrastructure maintenance spending is increased, there could be a corresponding amount of long-term cost savings from preventing deterioration. For example, the American Public Works Association estimates that cities save $6 in street repair costs for every $1 invested in maintenance.”
Long Beach Exploring Whether Enterprise Funds Should Contribute To Public Safety Services
The Long Beach City Council has asked the city manager’s office to produce a report addressing “a potential policy and plan by which public safety enterprise fund services and weighted costs are addressed appropriately by all departments.”
The Port of Long Beach, gas and oil department, water department and the Long Beach Airport are unique in that they produce revenue for the city. In some cases, these city enterprises allocate money for direct public safety services. For example, the airport pays for its own police services. But does it also contribute funding toward the city’s S.W.A.T. team in the event they are called upon at the airport? That’s what the city council wants to know.
“Significant public safety assets are required to protect our gas and water departments as they face potential homeland security threats,” Councilmember O’Donnell said. “Are they paying for a portion of the safety or other assets necessary to protect or service them? Or could they?” According to a staff report sponsored by O’Donnell, “These [enterprise] departments do not generate general fund dollars but do and should bear the direct costs associated with the provision of direct public safety services and others. Significant and costly specialized public safety assets and other equipment are kept on hand should a major homeland security or threat be incurred due to the existence of these functions in our city.”
Vice Mayor Garcia said he hoped city management would cast a wide net when conducting their analysis of how enterprise funds support public safety services. The council is expected to hear the results of this analysis within 90 days.
Rex Pritchard, president of the Long Beach Firefighters Association, told the council he supported the review and analysis in light of the fact that 64 firefighters have been let go since 2010. “If there are enterprise funds that are not pulling their fair share, then we definitely encourage it being looked at,” he said, adding that doing so might produce savings for the general fund that will allow the city to restore some public safety services that have been scrapped amid budget cuts in recent years.