Another California city is facing bankruptcy, the cutting of basic services and retirement pay. Stockton, Vallejo, San Bernardino all went belly up. Now we know that Montebello in the San Gabriel Valley is joining this not so exclusive circle of government agencies where high taxes, bad regulations, corruption and mismanagement catches up to them.
“City officials may have to make substantial cuts to next year’s budget after the city manager projected that a year from now the city could be broke.
In a memorandum to the City Council on Feb. 25, City Manager Francesca Tucker-Schuyler said an $8 million budget surplus from July 2015 will be reduced 75 percent in 2016’s budget, and could fall by millions of dollars more next year.
In just one year—in the midst of the “Brown and Obama Economic Recovery”—another city is facing the reality of the real economy. While the hacks in Sacramento proclaim victory, families, businesses and cities are planning for a shut down and a move.
Montebello could be out of money a year from now, city manager says
By Mike Sprague, Whittier Daily News , 4/20/16
MONTEBELLO >> City officials may have to make substantial cuts to next year’s budget after the city manager projected that a year from now the city could be broke.
In a memorandum to the City Council on Feb. 25, City Manager Francesca Tucker-Schuyler said an $8 million budget surplus from July 2015 will be reduced 75 percent in 2016’s budget, and could fall by millions of dollars more next year.
Mayor Art Barajas said the numbers are just preliminary and the budget won’t be due until June.
“(But) the concern is there,” Barajas said. “We are going to do everything possible to make the budget balanced. We’ll tackle these issues as they come.”
The $51.7 million budget that the City Council adopted last summer was balanced only after the city received $3.4 million from the sale of property to a condominium developer and the lease of other land for six cell towers.
City officials at the time conceded the one-time budget fix but said they would try to balance future budgets.
But in December 2015, the council agreed to pay back over 18 months the $4 million in redevelopment funds the city owed to the state.
Tucker-Schuyler said at the time the agreement would allow the city to continue fighting its lawsuit against the California Department of Finance, which ruled that cities across the state must forfeit the funds.
Worsening the situation for the city was a steep fall in oil tax revenue, which came in 60 percent below a projected $1 million figure. Tucker-Schuyler also said property taxes could fall.
That will diminish the $8 million in reserves the city built up in the 2014-2015 fiscal year. The city’s surplus is expected to fall to $2.1 million at the end of the 2015-2016 fiscal year in June, Tucker-Schuyler wrote.
By the end of the 2016-17 fiscal year, that surplus will turn into a $5.4 million deficit.
Tucker-Schuyler hasn’t returned calls for comment.
Montebello has had budget problems in the past, but in the last few years the city appeared to be in a healthier position, with money for pay raises for firefighters and police.
But recently, the city has faced large deficits after declining revenues. There were other problems, as well.
An independent financial audit of the city found that Montebello in the 2010-2011 fiscal year had 14 accounting problems that were either risky, violated spending rules or prevented the city from accurately determining its financial condition.
Advertisement
As a result, the council in 2010 laid off 26 employees and seven were retired. In June 2011 the council voted on a financial package that included freezing vacant employee positions, reducing employee pay and increasing city fees.
By 2013, the budget was balanced and city officials were looking to spend money on roads and parks.
Councilman Bill Molinari said he believes the city has returned to spending more than it can afford.
He said that last year the one-time money from property sales and leases should have been used to pay off expenses, a budget that he ultimately voted against.
Molinari said the 5 percent, three-year raise given to police was too generous.
“We can’t make commitments when you don’t have money to cover it,” he said.
Still, Councilman Jack Hadjinian said Montebello is, like many cities in California, facing financial problems. He pointed to Whittier, which also is facing future deficits.
The difference is that Whittier has reserves of $17 million.
“We don’t have the luxury of a big balanced budget,” Hadjinian said. “That’s why this will be an ongoing process.”
Councilwoman Vanessa Delgado said the city should be looking at how to increase its revenues through economic development.
“I’ve been talking with cities grappling with how do we increase revenue,” Delgado said. “I’m looking at how we can increase revenue to find a solution that is more permanent.”
A temporary solution could come if Montebello voters approve a June ballot measure to sell the city’s water system to San Gabriel Valley Water Co., which bid $14.4 million for the system.
“It’s possible, but I’m not going to commit money I don’t have,” Hadjinian said.
About Stephen Frank
Speak Your Mind