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    City Mgmt Floats 06 Budget Balloon, Includes Cuts, Cops, Smaller Deficit; Pro-Library Group Wants $25/Yr Parcel Property Tax

    05 Budget Summit(July 10, 2005) -- Roughly three hundred people -- a mixture of city staff, activists and taxpayers -- nearly filled the main ballroom at The Grand conference center on Saturday July 9 (9a-noon) for the third "Budget Summit" convened by City Manager Jerry Miller and city staff, providing a preview of management's current plans for City Hall's FY 06 spending budget (begins Oct 1/06)...and inviting public responses.

    05 Budget Summit"Just because something is in print in here doesn't mean it's in cement. So please know, don't start getting your ire up so early, you'll be exhausted by October," quipped Mayor Beverly O'Neill in welcoming the crowd.

    Alongside her on the dais were MC Mike Murray (Verizon), City Manager Jerry Miller, Dir. of Financial Mgmt. Mike Killebrew

    City Manager Miller and staff outlined plans for a proposed 06 budget (on which the City Council gets the last word) that proposes cutting LB's Main and North libraries and El Dorado Park's Nature Center to five days from six. has learned that city staff is supporting a proposed "parcel tax" on LB property owners ($25 a year) to restore library hours to what they were two years ago. The tax proposal is backed by a "Library Focus Group" comprised of individuals selected by the City Council. Such a tax would require voter approval by a 2/3 margin. has also learned that the budget plans to treat roughly $4 million in unpaid rent as "receivable" from the Queen Mary operator (which denies rent is due and is in Chapter 11 bankruptcy.)

    City Manager Miller confirmed that City Hall's Three Year Deficit Reduction Plan will take a fourth year to complete...but noted that in its first two years the Plan reduced City Hall's deficit by about 95% of its goal. "If we were talking about baseball and you had a hitter that hit 95% of the time, I think he'd be solid gold, so I think we're doing pretty well," City Manager Miller said.

    Management hoped to have the FY 06 deficit at $28 million...but it will instead be roughly $32 million, due to about $3.8 million in savings that were supposed to be realized in FY 05 (now ending) but weren't. That deficit will be carried into the FY 06 budget...where management proposes to cut about $23 million of spending exceeding revenue, resolving about 2/3 of the remaining deficit. The FY 06 budget will require about $10 million in one time revenue...with remainder of the structural deficit (once totaling over $100 million) ended by FY 07, City Manager Miller said.

    A city management power point slide also included, "Exploring Further Options to Increase Revenue to Support Investments In Infrastructure and Public Safety."

    Among those attending the Budget Summit was a contingent of library supporters opposed to another round of cuts that would reduce from six to five days operations at the Main library ($262,006) and North Library ($56,924)...reductions which come on top of rolling closures previously implemented at other branches (now open only four days a week).

    Some library supporters favor a parcel tax (property tax) increase of $25 per year to restore library hours to what they were two years ago. has learned that the parcel tax plan is supported by city management. It would require a ballot measure (which Councilmembers could put on the ballot) and passage by a 2/3 margin by voters.

    05 Budget SummitCouncilwoman Laura Richardson, chair of the City Council Budget Oversight Committee, said that over the years Sacramento had raided city funds, Washington imposed mandates, and LB grew to nearly half a million residents...yet City Hall had still "cut over $68 million in a structural deficit. That's over 40% of our current General Fund budget. You tell me that there has not been leadership displayed here in the City of Long Beach and I will tell you otherwise." She added:

    Citing tax increases passed by voters to support the LB Unified School District and the LB Community College Board of Trustees, Councilwoman Richardson said, "We're also going to need your help, and I don't have a problem with looking you in the eye and saying we're going to need your help." She added, "Some of the things we've been looking at are public safety revenue options, library assessment options, utility user options, local sales, transient occupancy, parking lot and oil production options. None of these options are things that I would say are going to happen for sure, but what this Council has done is we are looking and considering all of our options. And what we ask you to do is give us a chance to make the case. Give us a chance to earn your respect. And give us a chance to provide the services that you so richly deserve..." posts extended excerpts below.

    Among the items at the Budget Summit that caught our attention:

    • Management proposes to save $350,000 by funding the Municipal Band's six weeks of summer concerts by some private sponsorship. Parks, Rec. & Marine Dir. Phil Hester told us efforts are actively underway to secure a sponsor. "What happens without it?" we asked. "That's up to the Council," Mr. Hester said.

    • Management plans to add ten more police officers in FY 06 funded by the same federal grant [Community Oriented Police Services Universal Hiring Program] that City Hall used to hire 26 new officers over the past two years. These 36 total officers will be available for use in neighborhoods citywide. They are in addition to roughly two dozen other officers tasked to security at (and paid for by) LGB and PoLB, plus nearly a dozen other officers separately contracted for (and paid by) LBCC, LBUSD and [L.A. County] Carmelitos. Police Athletic League and the DARE vehicles would be eliminated (proposed program suspensions, saving $13,421), allowing officers to be deployed elsewhere.

    • Management proposes to close the El Dorado Park Nature Center for a second day per week (savings: $59,000). At the Budget Summit, one attendee suggested charging an admission fee; another suggested Edison (whose power lines pass over the property) should chip in to prevent the additional day's closure.

    • [Not mentioned in the Budget Summit but pursued by us] City Hall says the Queen Mary operator owes (and the Queen Mary operator says it doesn't owe) a royal rent sum (a recent Press-Telegram report says it's over $4 million). City management tells the QM rent is booked as a "receivable" in LB's Tidelands Fund...although the Queen Mary operator is currently seeking Chapter 11 bankruptcy protection. Director of Financial Mgmt. Mike Killebrew confirms to us that if the receivable isn't received, that'll leave a corresponding gap in the Tidelands fund.

    Among those we spotted in attendance:

    05 Budget SummitMayoral candidate Randal Hernandez, 2d district Councilman Dan Baker, 4th district Chief of Staff Melissa Infusino

    05 Budget SummitNewly appointed Harbor Commissioner Mike Walter, alongside 9th district digitally-equipped 9th district Councilman Val Lerch

    05 Budget Summit3d district Councilman Frank Colonna.

    06 Budget SummitVice Mayor/5th district Councilwoman Jackie Kell

    06 Budget SummitCity Attorney Bob Shannon

    06 Budget SummitLB Community College Board Trustee (in snazzy shorts) Doug Otto, 5th district Council candidate (in print shirt) Ed Barwick

    Extended excerpts of public presentations follow:

    Mayor Beverly O'Neill: ...This is the third time we've had this. That's the third time in the whole history of Long Beach. Never before has the budget been so transparent. Never before has the budget had so many people involved with it...

    Today is the first step...Just because something is in print in here doesn't mean it's in cement. So please know, don't start getting your ire up so early, you'll be exhausted by October [laughter]...Just know that we're beginning...This is important for us to hear you. It's the first step...

    Councilwoman Laura Richardson: [chair Budget Oversight Committee] ...A very great person one day said that the "only worse thing other than having a problem is not fixing it." And that's what today is about. It's not that our city doesn't have its challenges, that it doesn't have its opportunities. But the point we should be focusing on today is, what are we doing to fix it?...

    ...In 1960, Long Beach was a city of 344,000 people...but now in 2005, we have over 491,000 people. That's a 43% increase. So to think that we will not increase in our population, and that that will not cause really hemorrhaging on our city and our infrastructure and the services we need to provide is really not realistic.

    ...I would also venture to say that our city has changed, and because of that some of our needs have changed...Houses in the past averaged where we had 2.2 people in a household; now in Long Beach it ranges over 3.9. That's a pressure on a city.

    ...Things that used to be settled as after school now being settled with very violent crime that requires us to have additional police officers to protect everyone here in this city.

    ...[T]he federal government has issued various mandates, things like ADA [Americans with Disabilities Act] which is really a federal requirement and that has cost this city over $26 million.

    The state has raided city funds, municipal funds, for over thirty years to the tune of over $200 million.

    So what I'm here to say is our beautiful city over 491,000 people, if we were given all of the resources that we have rightfully earned and taken care of, I believe we would not be here today, but unfortunately have brought us for this discussion.

    So what have we done? What have we done to take the responsibility and to say, we're going to make that beautiful shining city by the sea in 1960 of 344,000 and still keep it that beautiful city by the sea for over half a million people?

    ...[W]e knew we were in trouble back in 2003 when our structural deficit rose to its highest point. And I think the best thing this City Council did, and one of the things I will be most proud of in my time of being on the Council, is that we brought in a leader who wasn't afraid to answer the questions, who didn't hide the facts, who dealt with things front up and was willing to take the hits to really make our city better. [turns to City Manager Miller] And I want to thank you our City Manager, Jerry Miller. [applause]

    ...[Councilwoman commends at length Deputy City Manager Suzanne Mason. "People know that nothing is safe. There are no sacred cows, that we are committed to having a sound fiscal city."]

    ...We created a Three Year Plan, which I think is now going to continue to be our ongoing hopefully plan that all Councils will have in the City of Long Beach so we have never have tough times like we're facing today.

    But let's talk about what we can celebrate. This city has cut over $68 million in a structural deficit. That's over 40% of our current General Fund budget. You tell me that there has not been leadership displayed here in the City of Long Beach and I will tell you otherwise. 40% is a huge number...

    ...[T]he Budget Oversight Committee, we've had over nine meetings scheduled, we meet the third Tuesday of every month, and we've made a commitment. The City Council has said besides public safety,...having fiscal solvency is our number one priority. And so we've been working very diligently...

    We're also going to need your help, and I don't have a problem with looking you in the eye and saying we're going to need your help. The School District came to residents of Long Beach several years ago and said 'we're struggling. We have more people. We're trying to provide quality education. Will you support us to consider revenue generating ideas to provide schools for our students.' And you as residents looked back and said, 'if you'll take care and help educate our children, yes we will support you.'

    On the [Community] College Board, they came to Long Beach residents and said 'we're growing out of our as far as we can do, and with all the students we have we need to continue to provide a quality education. We need help with infrastructure needs, to be able to grow as our community has grown.' And you as Long Beach residents said yes.

    This last year, Proposition 61, our hospital came to you and said 'we have the largest children's hospital,...we need your help...we need to expend and grow to meet the needs.'

    I would ask you to give the City the same chance. With all of our growth, with all of our challenges, we might need your help.

    Some of the things we've been looking at are public safety revenue options, library assessment options, utility user options, local sales, transient occupancy, parking lot and oil production options.

    None of these options are things that I would say are going to happen for sure, but what this Council has done is we are looking and considering all of our options.

    And what we ask you to do is give us a chance to make the case. Give us a chance to earn your respect. And give us a chance to provide the services that you so richly deserve...

    06 Budget SummitCity Manager Jerry Miller:...I am very pleased to you that I think that we're making significant progress in reducing our structural deficit in the General Fund. We have made a lot of very difficult decisions over the past two years, and we have more difficult decisions yet to make, but I think the one thing I want to leave you with today is I have a great sense of progress with regard to our task in trying to bring this city back to financial sustainability...

    ...I really do want to first and foremost thank the Mayor and City Council, and it's no false compliment. It was the Council which basically said we need to deal with the structural deficit. It was they that gave management, I believe it was 90 days, to develop a Three Year Plan to eliminate the structural deficit. I think we delivered that within that 90 day period of time...

    To have a plan is one thing; to stick to the plan is very, very difficult. And I think especially for elected officials, who really are measure by the voters as to what it is they give to the community. So when you're not "giving" you're actually "withdrawing" it's a very difficult position for an elected official to hold...

    I also want to make sure that we spend a moment to reflect on the significance of the passage of Proposition 1A, which basically constitutionally protects local revenue from the historic and frankly annual state raids that were occurring, that created such uncertainty with regard to local government finance...

    ...I also want to make sure that we don't forget the work of City Council and of city leaders before us who had the foresight to develop a lot of commercial opportunities here in the City of Long Beach, new retail, new tourism facilities and so forth because it was that kind of vision that created a better economic opportunity. We're now seeing the revenue from all of those great investments of the 80s and the 90s...[M]any people before us put us in a position to be where we are today...

    ...What the Budget Summit allows us to do is to share with the community sort of our philosophy towards the upcoming budget, what our thought process is and for you as a community to respond back to us before the budget is formally proposed to the City Council later this summer [in mid-August]....

    [Regarding Three Year Financial (deficit reduction) Plan]...At the end of the first year of our plan, we did succeed in reducing our structural deficit by about $41 million...The plan is working [and] the end is actually is sight.

    Year two, we're going hit about $33 million in reduction, and that's somewhat shy of what we had predicted. We are not going to be able to reduce about $3.8 million in planned reductions but we are going to get the lion's share of reductions.

    And I think if you put reductions planned for 04 and 05 and you compare that against what we're going to actually achieve, we would have reduced the structural deficit by 95% of our goal, I think that's pretty substantial. [applause] If we were talking about baseball and you had a hitter that hit 95% of the time, I think he'd be solid gold, so I think we're doing pretty well...

    That leaves however about $32 million that we need to address...We think it's very important that we live within our means, that we stick basically to the goal of the plan and make sure that we get this deficit reduced at least in the coming two years. And I think we're absolutely certain that even though we can't get this all done in 06 it will be eliminated in 07 and I have complete confidence in that.

    We're also looking at ways to try to do the work that the General Fund has supported but with funding outside of the General Fund where it's legal and where it's practical. An example is that we're expecting with the state budget adoption that we're going to see Proposition 42 dollars coming into the city. They're going to be used for local street work...

    We're also looking at the refuse fund. We have a fund separate from the General Fund that can be used under very specific circumstances to help things that might have been traditionally funded by the General Fund...

    ...We are probably not going to get some of the reductions that we had originally planned in 06 and so we're going to have to sort of punt and look at some other options for us. We had some pretty aggressive reductions in employee compensation that I don't think were realistic. You can't ask employees to give more as they're falling further and further behind the median and then ask them to work harder.

    I'm going to have a major morale problem if I don't begin my employees' needs, so I'm going to go a different direction with regard to employee give-backs basically. We've had no across the board compensation increases for a very long time, we've got to address that...

    ...We are going to have some reductions in the categories of recreation programs. There will be some reductions in library services, and to non-emergency public safety services...

    We have made a very focused effort to maintain a respectful relationship with our workforce...We were not sure that we could actually make the Three Year Plan work without having layoffs, and at one point in time we were thinking of hundreds of employees who might be given pink slips. That has not happened.

    To date we have had 375 positions in the General Fund eliminated but the impacts to employees have been virtually nil. We've had sixty employees who were impacted by those position eliminations but they were all transitionally transferred to other positions and many of them were actually in a better position than they were previously...

    06 Budget SummitMike Killebrew: ...I'm happy to report that our property tax [revenue] is up for the General Fund portion of the city by over 7.3% this year, and we expect the same next year. Traditional growth had been anywhere from 3-5% and even in the mid-90s we saw negative growth.

    As far as some of the other revenues, our retail and sales tax doing very strong. We're seeing a 4% increase this year; we expect the same next year.

    Our tourism industry is doing great. Our hotel Transient Occupancy Tax, otherwise known as the bed tax, we're seeing an almost 8%, or even a little bit over 8% increase this year and we expect strong returns next year...

    ...The additional revenue that we're seeing [in oil revenue from city oil properties] because of the skyrocketing oil prices are helping to really to offset the additional cost we're having to pay for fuel for all of the city vehicles, the police cars, the fire engines, all the public service vehicles.

    There are a couple of areas where we're seeing some downward trends in revenues...The Police Chief has had to redirect alot of his resources that had previously gone toward traffic programs [to respond to 911 calls for service]. The result of that is our moving violation citation level is down this year...

    [The historic rains earlier this year] hurt some our revenues, in particular our golf revenue...the number of rounds that we saw earlier part of this calendar year, the number of rounds of golf played, are down significantly...

    [Regarding pensions]...When we put the Three Year Plan together two years ago, we knew that [the current 05 budget year] we were going to start to have to pay pension payments again for the first time in six years. We took that $32 million hit in our General Fund this year.

    We expected also when we put that first Three Year Plan together to see another bump next year and that's still the case.

    However there have been some changes pushed through with our pension plan to help work our smoothing the rate fluctuations that we're seeing now for the long term, so we're hoping to see some stabilization of our pension payments starting in fiscal years 07 and beyond.

    ...Exploring further options to increase revenues, as Councilwoman Richardson mentioned, to support investments in infrastructure and also public safety, are definitely critical as we move forward with the City and gain fiscal sustainability...

    Fire Chief Dave Ellis: [On a January 2005 trip to Israel]...we saw how they're dealing with suicide bombers, large vehicle bombs, large explosive devices. We have to be prepared for responding to this, no different than if we come to your house for a heart attack...

    06 Budget Summit Police Chief Anthony Batts: ...[responds to public comment card saying "pay attention to the small things, broken window theory]...I sincerely agree with that. Our focus right now is violent crime. We don't have the numbers to focus on some of the other things, so our focus is reducing violent crime and we'll continue along those lines...

    [responds to card saying "the Long Beach Police Dept. should go back to two person cars] If you don't know, probably 98-99% of our cars are one person cars now in the city...The only time you see two-person cars are training units, when you see rookie officers training with a senior officer.

    We're experimenting right now three of our twenty-four beats, we're shutting down units in other areas and we're putting two person cars in nighttime hours. That's something in the future that we're looking to do. I think we should do, because we're dealing with gang issues within our city. It becomes a little problematic when you have one officer stopping four people. It doesn't make sense to do that, it's an officer safety issue so what we're trying to do as a command staff is find ways currently with our staffing to put two-person cars out there so two people in a car can stop four guys safely, four or five guys safely...

    06 Budget Summit Eleanore Schmidt [Director Library Services]...[Indicates were many people concerned about proposed closure of Nature Center for a second day per week, saving $59,000]...A suggestion as far as alternatives if the funding is not restored is to charge an entrance fee per person, and also to ask Edison to adopt part of the Nature Center since their transmission lines take up a large part of the area...

    With respect to the library, the main focus is on the reduction in library hours and also a sense that library hours have been cut too much. The cut that is now being proposed is a reduction in the Main library [101 Pacific] hours, so the Main library would be closed on Sundays and Mondays, and this would be in addition to the rolling closures that are currently in place at the branches, so the branch libraries are open four days a week. North library will be reduced from six days to five days a week of service...

    Most of the comment cards when people were proposing an alternative expressed support for a special tax earmarked for the library, and if you haven't heard about this suggestion, a proposal on the part of the Library Focus Group, I would ask you to contact me...If any of you are interested in hearing more about this recommendation, essentially it proposes a $25 parcel tax earmarked for the library. It would be an annual tax, and this would restore and enhance library services and bring the hours back to their previous level and expand those hours as well...

    Lydia Hollie: [member of Library Focus Group]...The library is the precious resource that flows throughout our city for an entire system of lifelong learning. It is pivotal to facilitating the overall growth and potential of human potential in Long Beach.

    The Library Focus Group is alarmed by the pending reductions beyond closure of the Main library on Mondays and reducing public access to five days a week in fiscal year 2006.

    These cuts are nearly 300%, or $2 million more, than originally projected in the Three Year Strategic Financial Plan. In the opinion of the Focus Group, these additional budget reductions are untenable.

    Defunding the library without regard to the generational impact that such actions inflict have a far more devastating impact on the body politic than book burning. The Founding Fathers of this city acknowledged the need for a literate, enlightened and competent citizenry...[H]ow can this City and the community at large justify a cumulative $2 million reduction in 2006 for Library services? [applause]

    Q: From audience member [paraphrase]: How did the City justify raising the pension level for its employees?

    A: City Manager Miller: ...We're working towards getting all employees to participate in the cost of their retirement and we're making progress in that regard. We're also asking employees to participate in the cost of their health care. Neither of those two things were done in the past previous to my administration or this City Council for that matter.

    And in 2003 when the enhanced retirement was approved, it was approved in lieu of a salary increase to my recollection. So it's one of those things where, frankly, the employees have made a major contribution to public service for a very long time. And it's something that was provided for by state law and this City Council looked at and openly addressed it by way of bargaining and awarded it in lieu of a salary increase and therefore, from my perspective, it was a benefit fairly awarded.

    The Budget Summit is part of a relatively new process that, in effect, lets the public and interest groups weigh in on spending items before management's proposed budget becomes too set in stone. Previously, management submitted budgets under wraps to the Mayor (by August 1), who didn't release them publicly until they were given to Councilmembers (by Aug. 15). Councilmembers get the last word (they can change what management and Mayor propose) in September...but as a practical matter taxpayers had little opportunity to lobby for their favored items (with the Labor Day holiday eating up the end of August and early September).

    That changed in 2003 after a series of seismic fiscal events rocked City Hall a year earlier.

    In 2002, voters reelected (by write in) Mayor Beverly O'Neill and Council incumbents. (Supporters said City Hall was on the "right track"). After the election, Councilmembers voted to boost pensions for city employees and within weeks, Mayor O'Neill announced (in Aug. 2002) that City Hall faced a major fiscal crisis (pensions + Council spending exceeding revenue). The Council replaced its previous City Manager with Mr. Miller...and directed Miller to prepare a Three Year Financial Strategy to deal with the deficit. The first Budget Summit combined public venting with a management request for input on priorities, but two years later the process has matured.

    At this year's event, management presented a straightforward briefing in plain English with accompanying written departmental materials to match. To view the written materials, click City Manager Dept. Summaries.

    Major city department heads were present and accessible to the public.

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