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Disclosed In Pre-Xmas Non-Prime-Time "Study Session": LB Taxpayers Face Fiscal Trainwreck After Upcoming Mayor/Council Elections: Deficits (Spending Exceeding Revenue) In FYs 19+20+21 Totaling Over $30 Mil

  • Mgm't's previous estimate for FY19+FY20 deficit increases roughly 40%-55% in six months, and acknowledges add'l deficit in FY 21
  • Mgm't proposes partial fix for FY19 IF Council increases fines/fees/shifts "Measure A" (sales tax increase) funds to "maintain" (not restore further) public safety services BUT says this partial fix will STILL leave est. $7.3 mil deficit that re-elected or new Council will deal with in summer 2018 with some likely proposed "Department Reductions"
  • Mgm't doesn't mention that deficits include Mayor/Council-approved city employee/management raises, hotel room tax "sharing" (giveaways) and start of annual escalating "Civic Center" payouts to private operator
  • Mgm't says an additional $8.3 Mil "litigation" deficit requires LB voter-fix with Charter change after LB taxpayer Lejins forced city settlement/rebates due to multiple Mayors/Councils shrugging Prop 218 voter approval req't
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    (Dec. 21, 2017, 10:00 a.m.) -- As first flashed on's front page, LB city management announced in a pre-Christmas scheduled afternoon (non-prime-time) Dec. 19 "study session" that LB taxpayers will face potential budget reductions and/or higher fees from fiscal deficits (City Hall spending exceeding revenue) -- that will hit after April/June 2018 elections for Mayor and five Council incumbents -- for FY19+ FY20 + FY21 in a range of between $30.6 million and $36.6 million dollars.

    In late July 2017, management put the estimated FY19+FY20 total at $19.1 million but now (Dec. 2017) estimates the FY19+FY20 total will reach $25.6-$29.6 million (roughly 40% to 55% higher than estimated six months ago.)

    Management proposed roughly $6.3 million in partial FY19 deficit fixes IF the Council approves increased fees and fines and shifts "Measure A" ("blank check sales tax funds now allocated mainly for infrastructure items) to "maintain" (not restore further) public safety services. However management added that this partial FY19 fix would STILL leave LB taxpayers facing an estimated $7.3 mil deficit that may likely involve some management-proposed "Departmental Reductions."

    Decisions on any increased fees/fines/Measure A shifts and/or any FY19 service cuts would be made by re-elected or new Councilmembers in summer 2018. Management didn't publicly propose any specific remedies for deficits estimated in FY20 and FY21.

    [Scroll down for further.]

    City management's disclosures come despite City Hall receiving cash infusions of $45+ million per year as Measure A (LB voter approved, June 2016) now requires LB consumers to pay the highest sales tax rate in an CA city (tied with only a few other cities.)

    To date, the City Council has used Measure A's revenue to restore only 17 police officers out of 208 erased (which hasn't restored LBPD's 22-member field anti-gang unit) and restored LBFD Engine 8 and Rescue 12 but not Fire Engine 17 at Station 17 (Stearns Park) or Engine 101 at Station 1 (Magnolia south of Broadway, second engine previously maintained to deal with downtown high rise/density fire factors.)

    Other community-sought restorations didn't occur in any form, including restorations of LB's former Park Rangers A few hours before city management's presentation, the City Auditor released a report indicating that LB's Animal Care Services Dept. (animal control) operates without sufficient resources but didn't criticize Mayor recommended or Council approved budgets for this. ( coverage here.)

    A week earlier on Dec. 12 the Council voted without dissent to approve what management called an amended a "tax sharing" agreement that will let the developer of a proposed hotel (currently conceptualized at the SE corner of Pine/Ocean) keep 80% of LB's hotel room tax revenue collected from the hotel for the first nine years of its operation. (The Dec. 12 Council action amended a 2016 Council approved "tax sharing" agreement to let the developer/operator keep 50% of the hotel's room tax totaling the same amount over twenty years.)



    The above listed City Hall deficits come in addition to a $8.3 million "litigation" deficit that management said can be fixed if LB voters approve a City Charter change (because LB taxpayer Diana Lejins sued and forced a City Hall settlement requiring r rebates after multiple Mayors (O'Neill, Foster and Garcia) recommended and multiple Councils approved (2003/2006 forward) years of budgets "balanced" by using City Hall-created "pipeline fees" that shrugged Prop 218's requirement for voter approval.)

    City management said pension cost increases are the primary drivers of the deficits. Management didn't mention a number of other Mayor/Council approved spending items including city employee/management pay raises and the start of annual escalating "Civic Center" payouts to private operator. (Now-former Councilwoman Gerrie Schipske was the only Councilmember to vote against the Civic Center transaction, which was enabled in part by Sac'to legislation carried by state Sen. Ricardo Lara (D, LB-Huntington Park) and supported by state Sen. Janet Nguyen (R, SE-LB-west OC); Ms. Schipske is running to replace Sen. Nguyen in June/Nov. 2018 elections.)


    City management noted that current economic development, including recent and scheduled hotel and retail openings "are not entirely factored into the outlook and could have a positive impact on both near and long term revenues."

    Mayor Garcia responded that the pension issue came [in mid-2002 under Mayor O'Neill and then-Councilmembers] before he and other current Councilmembers took office. [Garcia didn't mention that the LB pension spike was enabled by his now political allies including then-Sacramento lawmaker (now Congressman) Alan Lowenthal and then-Councilmembers Bonnie Lowenthal and Frank Colonna whom Garcia recently chose and the Council approved as new Harbor Commissioners.]



    Mayor Garcia also noted (consistent with city management's statement) that revenue from new hotels, new commercial centers and economic development wasn't factored into management's deficit estimates. Garcia urged the public to keep the anticipated revenue from those projects in mind and said it shows the need to continue LB's current economic development policies.


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