LB officials explain city budget woes at Petroleum Club meeting

budget-meeting.jpgBY NICK DIAMANTIDES
Staff Writer

The City of Long Beach is facing an approximately $17 million budget shortfall for the 2008-09 fiscal year. City officials are conducting a series of meetings to describe how they plan to deal with it and to field questions from residents. Last Thursday evening about 45 people attended the budget meeting that took place in the Long Beach Petroleum Club.
“This (shortfall) is something that we knew about quite some time ago so we have had a lot of time to plan for this,” said Long Beach City Manager Pat West. “This budget year, in addition to cutting costs, we are trying to build efficiencies into the way we do things.” He noted that the city had an approximately $102 million combined deficit from 2003 to 2007. “The city made some major cuts and revenue enhancements that were largely successful,” he said. “Some 400 full-time positions were cut (during those years), about 250 vehicles were eliminated from the city’s fleet and all that was very successful.”
West said the projected 2008-09 deficit was not as severe as in recent years, but city staff is trying to find ways to deal with it without reducing essential services to residents and businesses. “You just can’t cut your way out of a budget every single year,” he said. “We want to do the efficiencies and get rid of the duplications.” He noted that several departments perform the same services to the public and, since his appointment to the office about a year ago, he has combined some departments and eliminated redundancies.
West acknowledged that the city has been criticized for what some people consider overly generous pension packages provided to city employees. “Our regular employees that are (represented by) IAM and other unions are going to be taking a pension reduction this year,” he said. “It basically requires you to retire from the city to get your full pension.” He noted the reduction applies to new employees. Long-standing employees are covered under previously negotiated labor agreements.
After West’s comments, Lori Ann Farrel, the city’s director of financial management, took the podium. She began by noting that every city department will have its budget reduced in the upcoming fiscal year. “The department of financial management worked very closely with the city manager and assistant city manager to come up with the recommendations that we feel are the best given the circumstances,” she said.
Farrel noted that the city’s overall budget is $3.1 billion, but only $404.2 million of that is in the General Fund. She added that by law many of the funds in the overall budget are restricted to specific purposes such as port operations, redevelopment and a number of other special funds. “What we are left with is a General Fund of $404 million,” Farrel said. “That’s the budget that we discuss every year, and it supports public safety (police and fire) services, street and sidewalk repair, parks, libraries and many of the other services that are important to our residents.”
Farrel stressed that the deficit is only within the General Fund. “The city is not going broke,” she explained. “A deficit is just a shortfall between what you think you are going to spend and what you think you are going to get in.” She added that her department has calculated that expenditures would exceed revenues by $16.9 million in the upcoming fiscal year. “We have developed recommendations to the city council as to how the city can address that,” she said.
Farrel told the audience that about 66 percent of the General Fund is dedicated to police and fire services because public safety is always a city’s top priority. “That only leaves about $100 to $125 million for everything else,” she said. “That’s our Parks, Recreation and Marine, our public works, our library services, other citywide activities, and every single elected city official.”
Farrel said that, under West’s leadership, the city has taken a new approach to how it conducts its operations and how it will work to attain fiscal sustainability. “It’s based on three founding principals,” she explained. “All the General Fund departments need to contribute, all the non-General Fund departments also need to pitch in to provide the services that are really vital to the city, and we need to make lasting organizational changes.” She stressed that this is the first time that all General Fund departments and all offices of the elected officials are facing budget reductions. She added that department heads are planning to streamline operations so as to necessitate the least possible amount of reduction in services.
Farrel noted that deciding where to cut expenditures was a long, difficult process, and one of the goals was to bring all city departments back to their core services, while eliminating ancillary services. “I’d like to highlight that 117 positions are being eliminated from the budget,” she said. “We are consolidating bureaus to be more efficient, and we are losing 12 management positions.” She added that the city is also planning on contracting out for services, which will result in further cost reductions.
The proposed closure of the main library until a new facility for it can be found and the reduction in some parks and recreation programs have been two of the most controversial city cost reductions. Farrel tried to assure the audience that library services would be available at a temporary downtown location until a new, permanent facility is built or purchased. She also noted that most of the youth recreation programs would remain intact. She stressed that the city has increased its numbers of sworn police officers and firefighters in the last two years. “We are excited about the positive things,” she said. “Unfortunately, some programs have been discontinued because of the deficit.”
After Farrel’s presentation, an audience member asked why the city approved pay raises for city employees earlier this year that equaled almost half of the current deficit amount. “If we want to have a quality workforce, we have to be competitive,” Farrel replied. She explained that in recent years, significant numbers of police officers, firefighters, engineers and other highly skilled employees had resigned to take jobs with other municipalities. “It’s getting harder and harder to recruit people to work for the City of Long Beach,” she added.
Eighth District City Councilwoman Rae Gabelich addressed the audience as well. “These budget decisions are very difficult to make,” she said. “We have been cutting for several years, and we are looking at another shortfall next year.” She reminded the audience that when the city’s utility users tax was reduced from 10 percent to five percent a few years ago, the General Fund was reduced by $40 million annually. “That’s a lot of services,” she said. “At some time in the near future, the citizens of Long Beach have to decide what they want their city to look like and what they are willing to pay for it.”
West, Farrel, Gabelich and several other city officials remained after the presentations to answer questions from individual audience members.

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