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Wednesday, August 4, 2010

Gimme Your Money

On Monday I wrote about the City of Long Beach and the perpetual deficit due primarily to the inability, or rather the unwillingness, of the City Council to address the basic issues which plague the balance sheets and income statements. Deficits exist because of a gap between revenue and expenses, with the latter greater than the former. One way to solve deficits is to increase revenue rather than cut expenses, this is the route most elected officials prefer to take in our region and state.

Revenue growth of course is generally meant to mean tax increases but taxpayers don't like to read about tax increases but feel good about increasing revenues. Which explains a lot of the behavior of the electorate in the ballot box.

Revenues need not always need to be from direct taxes, but can also come from other entities that receive taxes. What the Long Beach City Council has been doing the last few years to prevent having to make the necessary decisions to solve the budget deficits is essentially engineer their own bailouts, or like street thugs at a mugging demanding "Gimme your money."

The Port of Long Beach is a huge economic engine. Over the decades it has consistently been ranked as the busiest or second busiest port in the world. Sitting side-by-side with the Port of Los Angeles, the harbor area sees tons and tons of cargo loaded and off loaded every day. Almost anything you see stamped "Made In China" comes through one of these two ports. With each car, radio, shirt or laptop comes a few pennies in revenue for the ports.

State laws dictate how the Port can spend its revenues and profits, often times the City of Long Beach needing some financial assistance will take a look at the laws on the books, see that the requested expenditure is a valid and request funds from the Port of Long Beach. And the Port of Long Beach, governed by commissioners appointed by the Mayor, accedes to the request. Essentially the Port of Long Beach is the City of Long Beach's rich uncle who has a hard time saying "No" to his favorite niece--no matter how much trouble she has gotten herself into.

The commissioners have done an excellent job running and managing the Port. Properly planning for expansion and growth, putting aside reserves for future projects, such as a new bridge between Long Beach and San Pedro. The Port nonetheless seems to have a special reserve account for the recalcitrant niece who cannot control her spending or properly budget for her future.

The City of Long Beach has considerable portions of the city that are in enterprise zones and business districts. Revenues (taxes) are collected and put under control of the Redevelopment Agency for use to, oddly enough, redevelop blighted areas of the city. The RDA has different zones, downtown, central and north. The problem from many citizens viewpoint is that for decades the RDA seemed to exist solely to dump money in the the downtown project area at the expense of the redevelopment in the rest of the city. Particularly frustrated over the years has been those who live north of the San Diego Freeway, those in the North PAC.

Raided over the years to make up funding shortfalls in downtown and central area projects, now the RDA is using funds designated to redevelop North Long Beach to bailout the city on debt payments for the Aquarium of the Pacific. For the second year in a row. For those readers not familiar with the Long Beach and the Aquarium of the Pacific it is not located in the North PAC.

Year after year, seemingly month after month, the City of Long Beach is asking for the wallets of the Port of Long Beach or the Redevelopment Agency for bailouts. Time after time, request after request the Port and RDA hand over their wallets.

Our city government is being enabled by the Port and RDA to make poor budget decisions and rewarded for not properly planning, and sticking to the plans they make. Elected and appointed officials behave like spoiled trust fund kids who know their mistakes or poor decisions will always be covered by the two entities. Because of term limits none of the council members have to live long term with their poor decisions and pushing any difficult budget decisions into the future.

Now we have an even richer uncle providing even greater bailouts that relieve the city from one of its basic duties: maintenance of infrastructure. All around town we have had torn up roads and big signs saying we are restricted to one lane and sitting in stalled traffic because our route is being repaved thanks to the American Recovery And Reinvestment Act of 2009, i.e. "The Stimulus." Like the Port providing funds so we can keep lifeguards or the North PAC having funds robbed to keep the fishtank open, the Feds are paving our roads for us. Thanks to the kind people of Tulsa and Pierre our city government can cross that expense off the list and use the funds for more salaries and benefits elsewhere.

Redevelopment funds are sorely needed in North Long Beach. Taking funds from the North PAC to support the Aquarium, whose tourist dollars only help downtown businesses, is unjust to the people of North Long Beach and the taxpayers who pay into the RDA coffers. North Long Beach is grimy, dirty, crime ridden, filled with many hard working people and many laze leaches on society. There is a lack of business and commerce, I don't think there is even a coffee shop in the Ninth District. There is no development because in years past the North PAC was raided to pay for projects elsewhere. And there will be no redevelopment in the near future because funds are now being raided to bailout the city on its debt obligations elsewhere.

The Port of Long Beach has proven fiscally responsible and a great economic partner for the city. Now the City Council and Mayor will push for passage of a ballot measure to change the City Charter to restructure how much money the city gets to take from the Port every year. Like most governments they feel they can better spend the money better than the person, or organization, that earned the money.

Like many large urban cities across the country Long Beach is failing economically. Not because of the downturn in the economy but because of the downturn in political courage and vision. Long Beach is fortunate to have wallets to rob, other cities not so fortunate. Until a majority on the City Council have the guts to stand up and make difficult decisions to slash expenses and programs while laying out the purpose and long term vision of fiscal responsibility our city will continue to flounder and look to others for bailouts.

Running for office means you are willing to make difficult decisions. Decisions that will not please some people, and may in fact bring some harm to some citizens in the short or long term. However the overall quality of life for the majority of residents and businesses should be critical and central to decision making. Not what is best for city employees, but what is best for the residents and businesses that are invested in the neighborhoods and business corridors that make a city what it is.

It is time for the City Council and Management of the City of Long Beach to quit depending on others to cover their fiscal and political cowardice. Make the hard decisions and put our city back on a healthy fiscal plan for our future.


Monday, August 2, 2010

City Budget Decisions: It's Deja Vu All Over Again

Yogi Berra, famous for his malaprops, infamously said "It's like deja vu all over again." That sums up perfectly the City of Long Beach budget process that is now underway. And probably the budget process of most cities across the state and many across the country. With just two changes, for the council members from the 7th and 9th, I could just repost the piece I wrote last September, "Dear City Council, Fix It" and once again follow up with "How To Crush Budgets: The Median Income Spiral" because nothing has really changed structurally or politically in Long Beach. To update for the current council from last year's district by district analysis I would say no real change in the 7th and a big change in labor's favor in the 9th. Not good news for residents looking for real shifts in fiscal policy at City Hall.

Last year I said that until the City Council addresses the pensions and benefits for public employees we can expect to read about the City of Long Beach facing another $20 million deficit next year. I was off by $1.5 million as the City must deal with an $18 million deficit. Despite the calls from 3rd District Councilman Gary DeLong last year there has been no movement to reign in the spiralling pension and benefit costs for the city. As a result next year at this time I will be writing about the City of Long Beach and its $20 million deficit.

Last year's budget was presented and passed with the hopes that the City could renegotiate with the various unions that represent almost all workers, from public safety through Parks & Rec. While there were some minor concessions made in negotiations earlier this year the golden eggs were not touched nor discussed. With no real change in the composite of the City Council and their dependence and favoritism to the public employees' unions we can expect no real change in the structural deficit our city faces due to growing pension and benefit contributions and payments.

While pay increases have been postponed under recent negotiations, at some point those postponements come due. As I wrote in "...The Median Income Spiral" when the pay raises are due to kick in the City will continue to use the formula of basing our employees' salaries on those in surrounding and like sized departments and populations. Ask the cities who have the City of Bell in their median income pool how that will go for them. Because of the formulas used to determine salaries and benefits, Long Beach continues to facing growing spending and deficits until the City Council directs the City Manager to re-open all city contracts and renegotiate them from top to bottom.

Meanwhile Mayor Foster and City Manager Pat West have presented their budget to Council and workshops and budget sessions have begun to debate where to slash spending to make up the $18.5 million gap. This past weekend the Press-Telegram published 43 budget questions for readers to answer with a simple "Yes" or "No" regarding budget cuts. (It is also on-line for those who wish to chime in: "How Would You Cut Long Beach Budget")

Thanks for asking but I would have answered anyway. As I have stated in the past the primary problem our country faces when it comes to governance is no vision and no over-riding philosophy of the purpose of government at each level. For Long Beach I believe the most basic purpose of the city government is to protect persons and property, to provide services that provide for the safety of the citizens, to build and maintain the infrastructure necessary to support neighborhoods and business districts, to provide limited services that promote the general welfare of all citizens, such as libraries. According to my perceived purposed of city government the budget should focus on public safety, which includes not only police and fire but also life guards, park rangers and crossing guards; city inspectors for buildings, health and code enforcement; maintenance crews to repair city streets, sidewalks, sewers, water lines and public parks and buildings; public libraries, parks and recreation. Since our City has a Health Department which keeps us somewhat independent from the County it would also by a budget priority. Once those budgets are properly funded and secured if there is any funding left over then the City can consider temporarily funding other services and programs that have mushroomed over the year. Do we really need a Human Dignity Officer and staff? A Mobility Coordinator? A Sustainability Office? Do we need to spend millions of dollars on bike lanes? Do we really need both a Civil Service Department and a Human Resources Department? How many departments and personnel do we have that are feel-good departments that cost money that should be used elsewhere?

Unfortunately I have little faith in our current City Council to make the necessary cuts and give the necessary instruction to fundamentally change the budget of our city. The majority are beholden to public employees for their positions, current and future when they seek higher office, and that eliminates fundamental changes in contracts with city employee unions. The majority are of a particular ideology that the purpose of government is too provide seemingly infinite services to mostly poor residents rather than attracting business, economic development and new home owners to stabilize neighborhoods. They would rather perpetuate the pockets, growing, of poverty that attract more crime, more public service dependent residents and more poverty. Instead of developing a long term economic plan to provide for more private sector jobs the City Council has decided a major public works project requires a Project Labor Agreement to drive up costs against a deficit budget and restrict employment in an almost 20% unemployment community.

My expectation is that City Management will not be scaled back, union contracts will not be renegotiated, and we will face another $20 million or more deficit next year. And the year after. In 2012 we will have another election, this time for the even Districts, and the same general ideology and fiscal policy mentality will remain. And City residents will complain about what programs are being cut after essentially electing the same politicians cycle, after cycle, after cycle.

Visit the Press-Telegram site and cast your votes on what should be cut, but don't expect much in the way of results. Our City Management and Council don't have the stomach for them, results that is.