Budget Crisis Not News to City Hall

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At a recent community meeting, interim City Manager Paul Walters said city officials were surprised by a projected multi-year budget deficit, starting with a $30-million deficit in fiscal year 2012-13.

“When we first saw it, we said, ‘Oh my God, is this accurate?’ ” Walters told an audience of residents last week at the Santa Ana Senior Center.

Yet as early as December 2008, the Orange County Register’s Doug Irving was writing about large, looming, built-in budget deficits.  In an article about a hiring freeze prompted by the city’s then $15-million shortfall, Irving cited a $28-million “structural imbalance.”

From Irving’s story:

City officials hope to get through the rest of the fiscal year without further cuts. But next year, and in the years to come, they’ll likely face a structural imbalance between how much the city makes and how much it spends that could approach $28 million a year.

There are other indicators that city officials knew about the multiyear deficit earlier than they have said publicly. The contract employing financial consultant Management Partners, dated March 7, specifically directs the firm to tackle the city’s “structural deficit.”

The city now is targeting public safety costs to resolve the deficit. Public safety constitutes nearly 80 percent of the city’s approximately $200-million general fund budget, and most of those costs are for employee compensation and benefits.

Since Irving’s 2008 story, city officials have signed two contract extensions with police and firefighters, freezing new hires and deferring pay raises as well as deferring overtime payouts for police, among other union concessions. But the city hasn’t made substantial cuts to public safety that would have helped solve the year-to-year deficit.

Police received a 3 percent across-the-board raise this July and are scheduled for another raise in 2012. Firefighters are also scheduled for a 2.5 percent raise in January and are scheduled for another raise in 2013.

Public Information Officer Jose Gonzalez said that according to Walters, city officials didn’t see the deficit coming. Budget projections are done on a year-to-year basis, Gonzalez said, and it wasn’t until a report by Management Partners, submitted in August, that city officials knew of a multiyear deficit.

“He [Walters] has no idea where Doug Irving came up with that information. The only person who could key you in on that is Doug Irving,” Gonzalez said.

— ADAM ELMAHREK

 

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