Mid-year Budget Review

Against logic there is no armor like ignorance.
Laurence J. Peter

US educator & writer (1919 - 1988) 

This Blog entry is an overview of how the City’s finances are doing halfway through our fiscal year. (Here) The news is pretty good, but the risk of debacle is significant. However, some of the Council Members demonstrate fiscal maturity, which mitigates the risk. The Midyear Budget study last night also included a recap of the FY 2011-2012 financial report (CAFR) which we’ll discuss in a later entry.

Getting here

The City once had adequate reserves – the municipal version of a savings account -- but spent the reserves during the economic downturn. The justification for spending could be debated, but, regardless, the money was spent and Costa Mesa approached insolvency.

A change in administration led to fiscal discipline that is starting to be effective. We have inadequate reserves now, but aren't in immediate danger of bankruptcy. We had unexpected revenue that led to a $2.5 million surplus for the previous fiscal year, and appears to be leading to a surplus this year.

Fiscal maturity showing

There’s encouragement in the statements by Council Member Genis, Mayor Righeimer and Mayor Pro Tem Mensinger who favor restraint in expenditures as we build back the reserves. Genis expressed horror about our financial near-disaster in the immediate past and cautioned against “spending, spending, spending… (lest) the money burn a hole in our pockets.” Mensinger and Righeimer echoed and amplified that concern.

Pro Tem Mensinger and Member Leece favored consideration of Youth Sports for increased funding if and when it’s prudent to spend more.

And not so much

Leece, however, also suggested having the police and fire departments evaluate their need for more personnel in light of the City’s improving financial condition. That idea equates “more” with “better” and it ignores “what works” in favor of “what we wish would work.” That is, she wants more police to mean more safety, so, ignoring the multitude of applicable studies and information to the contrary, proposes adding more sworn officers.

Of course, sworn officers aren't a one-time expense – the cost to the city continues for the officers’ foreseeable lifespan due to pensions. Would the cost be effective in reducing crime? Probably only minimally. If the strength of the department were below critical levels the increase would be useful. However, adding more when the strength is (barely) adequate increases public safety incrementally, if at all.

This is something like a family who likes a couple of books being advertised. They decide to sign a fifty-year, monthly book purchase contract hoping their overall savings will justify the cost. They could consider the library, or decide to purchase the books they really want at Barnes and Noble, instead.

More cops or better systems

Similarly we can sign on for fifty years of expense in salary and pension, or we can try investing in public safety projects that have been shown to work elsewhere. These programs end, unlike wages and pensions.

Problem Oriented Policing is one approach.(Here) It focuses on analyzing the causes and foci of crimes and reducing or eliminating them. It’s a proven and effective approach to policing, but certainly not the only one. Several approaches have been shown effective. Chief Gazsi is clearly aware of approaches that work and is implementing a mix that he believes will work best in Costa Mesa.

What the neighbors do

A nearby city, Redlands, responded to decreased funding by emphasizing technology.  They rely on upgraded computer and communication technology – and even Segways! – to make their policing more effective.

Costa Mesa PD needs a computer upgrade, too. It looks like assets confiscated from drug sellers may be destined for this upgrading. There are a number of technology assists and improvements CMPD and CMFD could use very well.

Redlands’ Police Chief has also focused on upgrading his officers with schooling – think college and graduate studies – funded by Redlands. (Here) This is a one-time expense that he thinks will improve public safety by improving the scholastic levels of his sworn officers.

Let the Chief decide

There’s a danger in having Council Members decide what the PD needs. We have a competent and hard-charging Chief  in Tom Gazsi, so let’s authorize the money as it becomes available, audit the expenditures – and let him decide how he wants to spend it to upgrade and improve his department.

Don't ask that

This brings us back to the idea of asking the FD and PD how many more people they’d like to have. If the Chiefs are effective executives they’ll answer with as much manpower as they think they can get. More officers and firefighters equates to less overtime cost and greater flexibility. It’s not likely to lead to fewer fires or less crime, though.

The City Council controls the purse strings to insure Costa Mesa gets the most bang for our bucks. It has no business, in our opinion, asking leading questions like, “how many more personnel would you need to do even better work?”

Getting out of the hole, but. . . 

So the City’s financial affairs are moving toward stability, and three Council members are leery of spending money without concrete purpose. One member, Monahan was absent. One member thinks she can throw money and debt at crime and fires to increase public safety.

There’s still a gorilla in the room; we have unfunded (pension) debts we’ll have to pay someday. More about that later, though.

Good news -- scary news  

So, we heard some good news and also heard some good reasons to be wary as we monitor the Council’s activities. We elected them to govern the City for us; we don’t want them to incur multiple 50-year financial obligations just because we’re able to start funding our reserves.