Oxnard: We have to pass the budget so that you can find out what’s in it

WeHaveToPassBy George Miller

Similar words infuriated people on one side of the political divide and had many on the other side sadly shaking their heads in wonderment when Speaker of the House Nancy Pelosi applied them to the multi-thousand page health care bill four years ago.  While they weren’t uttered at at the City Council meeting on Tuesday night, May 20, those words might have been going through some peoples’ heads as the budget was again being discussed. But the problem is a little different this time. Several residents lamented the lack of detail in the presentation by Finance Director James Cameron, who in the past has demonstrated encyclopedic knowledge of city finances. But surely this is backed up by reams of detail and rationale/cost-benefit analysis for priorities? Well, no on the second one, according to Council members and probably yes on the first, but will we have to see it passed first to see the details?

“Status Quo Budget?”

Mayor Tim Flynn said “I don’t want to say that it’s a status quo budget, but it was prepared by taking last year’s budget and adding a little here, subtracting a little there,” or words very close to that. This he said in response to complaints that the promised Priority-Based Budgeting (PBB) was not utilized in this budget cycle. In truth, some priorities were incorporated, but in a patchwork fashion, with no formal, overall unified approach to prioritization and allocation of scarce resources.

The proposed budget is slightly less than last year’s: Document: Recommended Budget (pdf 753 KB)

On the plus side, revenues are up 4% and expenditures are at least a bit contained. But Finance Director James Cameron cautioned that this is all based upon an economic recovery which is shaky at best, with no guarantees of it continuing, let alone accelerating, He warned that layoffs would likely result from a reversal, as revenues would decline. The small revenue increases barely exceed cost increases:

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From City May 20 budget report:

The recommended budget consists of the following($ millions).
General Funds $ 113.1
Measure 0 1/2 Cent Sales Tax 7.1
Special Revenue Funds 28.5
Other Governmental Funds 13.7
Enterprise Funds 104.6
Housing Authority 25.4
Internal Service Funds 27.4
Capital Improvements 4.0
Debt Service 34.6
The recommended budget is a decrease of $67.7 million from the originally approved FY 2014-15
budget primarily due to the rescheduling of Capital Improvements.

On Financial “Black Holes”

Oxnard's cash-draining River Ridge Golf Course

Oxnard’s cash-draining River Ridge Golf Course

The budget also perpetuates what was described as a financial “black hole” of enterprise project massive deficits of the golf course and Performing Arts and Convention Center (PACC). So far, no plan has been adopted to reverse this situation, although a consultant will review the golf course situation and make recommendations. There is talk of hiring a new PACC Director (haven’t had one for a long time), but so far this hasn’t even gotten to the point of finishing a job description.  There is also Mayor Flynn’s idea of using part of the PACC site as a charter school.

 

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Headcount Shortfalls

During the recession and aftermath, many personnel vacancies were left in public safety, public works and other departments.  Many have been restored, but not necessarily filled.  Some will be needed to move ahead with public works  and community policing initiatives.  Councilwoman Padilla said that the city should determine what staffing is truly needed and whether some headcounts should be reallocated to what residents need most. The city has successfully kept positions unfilled to reduce budget deficits in the past, but there are trade-offs for doing that.

Major Capital Project Needs

owtp_flow“The 300 lb gorilla” lurking in the background is the specter of massive deferred maintenance and needed expansion in public works- road resurfacing, wastewater, water, flood control and material recycling infrastructure.  The number is in the hundreds of millions of dollars- over a number of years- how many is the question and how urgent are the priorities? The budget does not appear to fully address those, although it was somewhat difficult to ascertain that given the lack of detail- some said lack of transparency – of the budget, as presented. These projects would have to be supported by ratepayers, assessments/taxes, bonds and the occasional grant. As far as we know, accruals have not been made all along and reserved for, so all of this would need to be financed going forward, either with existing cash flow, increased revenue and/or bonds, greatly increasing city indebtedness, principal repayment and debt service, heavily mortgaging the city’s future.  This was a problem many years in the making.

 

Other

The lack of adequate reserves is also a problem, especially for the General Fund. Mayor Flynn recommends that be addressed by putting more in the bank, even if only a small amount yearly. We have been previously told that inadequate reserves would affect the city’s credit rating and in fact already has.

Mayor Flynn wants all departments to deliver cost savings, He also wants to emphasize hiring for revenue enhancing employees such as for code enforcement and business licensing. He wants Citizens Advisory Committees to generate ideas for cost reduction/revenue enhancement. He realizes that a “part time” City Council cannot do it all. Councilman MacDonald was leery about the delays that too much use of CAG’s might cause.  Councilman Perello lamented excessive overtime costs-$7MM in 6 months, too many surprises, many serious expensive issues- can’t just blow them off, he said. He said we should have started earlier and put peoples’ feet to the fire, instill accountability. He says staff reports lack clarity. Councilwoman Padilla thinks the June 17 budget adoption target date may be too tight.

There was some talk about priorities, but not much definition or agreement. Mentioned were things such as public safety, community policing, public works, including water, wastewater, MRF, flood control levees, road resurfacing, tame golf and PACC deficits, code enforcement, business licensing,

Mayor Pro-Tem Ramirez said the budget isn’t set in stone and can be changed, that much time has been spent on it and not a lot done. She said future budget cycles should start earlier and involve the public.

It was  suggested by a resident that the budget and actuals be made available in detail online in MS Excel format, to facilitate transparency/visibility and allow residents to explore/analyze and participate – or at least provide some input-  in the  budgeting process.

All of this is not consistent with a Council which has trumpeted transparency, resident participation and “Priority-Based Budgeting” (PBB) as a preferred style of financial planning governance. In fairness, this is a giant leap in sophistication for a city which is just introducing the idea and doesn’t seem to have any personnel on board schooled in it. Mayor Flynn has cited Boulder CO as a model city for PBB. (see more PBB info).

The result of all this talk was an admission that the budget process once again had not been managed in a tight and timely manner, that there wasn’t sufficient time to perform a PBB process, but that the Council and staff would endeavor to accommodate a few high priorities and solicit input from the public to the extent possible.

Next Steps

The council voted to confirm the June 17 budget adoption target date. Upcoming budget events are below. The June 3, 10 and 17th sessions are open to the public and will be held during regular City Council meetings in City Council Chambers. The June 2 event will be new City Manager Greg Nyhoff’s first City Council meeting in office.

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George Miller is Publisher of Citizensjournal.us and a “retired” operations management consultant, active in civic affairs, living in Oxnard.

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