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    A Management Memo's Memory Hole

    (Dec. 16, 2003) -- We respectfully add a taxpayer's viewpoint to an important part of a memo to Councilmembers by City Hall's Director of Financial Management, Bob Torrez. Set for delivery at the Dec. 16 City Council meeting, the memo explains how City Hall's just concluded (Sept. 30/30) budget performed and offers a look at what's ahead.

    Mr. Torrez's memo was co-signed as approved by City Manager Jerry Miller. Here's what the memo says in pertinent part...with bracketed comments by us:

    [begin text and bracketed comments]

    "FY 05 and Bevond

    "The FY 04 General Fund Budget incorporates approximately $38 million of structural budget solutions including $28 million in cost reductions and approximately $1 0 million in additional ongoing revenue for the City. To avoid crippling cuts in core service areas, the Plan called for the use of one-time resources and carry-over savings to balance the budget in FY 04."

    [City management's Three Year Financial Plan included use of one-time resources in FY 04 of $2.6 million.]

    "Specifically, one-time resources totaling approximately $17.5 million and approximately $9.5 million in carry-over savings from FY 03 were used."

    [No. The Plan called for using $2.6 million in one-time revenues. Yes, city management (we suspect with tacit Council approval to make it seem everything was OK going into the April 04 city elections) publicly proposed a budget in August 03 that would spend $17.5 million in FY 04. That busts the "Plan" by nearly $15 million. Shortly before the Council's budget vote, management advised increasing use of one-time revenues to $19.5 million to deal with something Sacramento did something that City Hall hadn't anticipated.]

    "As a result, $28 million of unsolved structural deficit is being carried into FY 05."

    [As a result of what the Council did in busting the Three Year Financial Plan, LB taxpayers will carry nearly $20 million more in red ink into FY 05...timed to crash on taxpayers after the pesky April 04 Council elections.]

    Two years ago, in a series of praiseworthy memos approaching the last election cycle, Mr. Torrez plainly warned Councilmembers of the mountain of red ink they were accumulating. A number of current Council incumbents refused to deal with this...until after the election.

    The truth is, the City Council had the power to adhere to the $2.6 million limit in management's Three Year Financial Plan when they voted in Sept. 03 to adopt City Hall's latest budget. They didn't. It doesn't matter to us that the City Manager proposed this. He's works for them and the Council decides spending policy, period. The Council busted the Plan by roughly $15-$17 million (depending on how it's reckoned).

    Councilmembers could have made spending cuts, but that's what we suspect some incumbents did not want to do going into an election cycle.

    Two years ago, LB voters were told City Hall was on the "right track"...until after those safely reelected acknowledged the magnitude of the mess.

    Some may think the coming cycle of incumbents can replay this strategy, but things have changed. Only months ago, a respected civic fiscal consultant (retained by the Council) and City Hall's own City Auditor warned that continuing to spend one-time resources could in a worst case scenario lead to civic bankruptcy. He told Councilmembers to stick to management's plan as then presented and resist the temptation to spend more one time resources for ongoing expenses no matter how justifiable it seemed.

    Judging by the email we're receiving, people get it.

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