Westminster’s Budget Shortfall Worsened by Lawsuit Costs

Two major federal lawsuits against the Westminster Police Department have made a bad budget situation worse, with the city spending $1.1 million more than it budgeted for this fiscal year, according to a mid-year update.

Roughly half of that, $550,000, came from legal fees from court cases that have gone on “longer than expected,” according to Administrative Services Director Michael Solorza.

The city recently settled a suit brought by the owner of a Vietnamese bikini bar involved in a 2013 FBI loan sharking sting, who alleged that a Westminster police officer harassed and threatened her on behalf of a businessman to whom she owed money.

The other arose from a 2011 suit brought by three Latino police officers alleging discriminatory practices within the department.

The legal fees — plus costs associated with new labor agreements — have more than offset increased tax revenue, bringing the city’s total general fund deficit to $3.1 million, according to Solorza.

Though considerable, the updated shortfall is a far cry from the $10.4 million budget hole created in 2012 when Gov. Jerry Brown did away with redevelopment.

Some time ago, city leaders declared all of Westminster a redevelopment zone, which, while capturing additional property tax revenue to improve blighted areas, put much of its budget in the same vulnerable basket.

Without its redevelopment agency, the city lost $6 million in tax revenue and was forced to lay off 67 employees.

Since then city leaders have not called for any additional staff cuts but have trimmed from the deficit by scaling back some services, reducing operation costs, shuffling around management duties and seeking out grant money.

New agreements with the city police and employees’ union have also added to the expense column of the city’s ledger.

Late last year, the city approved a new two-year contract with the police association giving officers a six percent wage increase and other benefits, like one-time cash bonuses, in exchange for making them pay more into their pensions.

That contract will cost the city $1.65 million over two years, with $460,000 as a one-time cost and $678,000 on an annual basis.

Increased in police overtime due to “unforeseen staffing shortages” and other miscellaneous costs, such as building maintenance, also contributed to the additional expenditures.

The city is still in the process of appealing a federal court judgment that awarded the three Latino officers $3.5 million for being denied promotion-track assignments that were instead given to less qualified white officers.

In addition to that lengthy court process, the city has also sought to clear its Police Department of public criticism, calling for an independent audit of the department to the tune of $25,000.

Further exacerbating the situation is the fact that tax revenues are coming in below initial projections.

While the city has brought in $1.149 million in additional revenue this fiscal year, most of it is one-time money from the state consisting of residual property tax payments as part of the winding down of redevelopment, Solorza said.

Sales tax revenue is expected to come in $557,000 less than expected, due in part to the closure of the recreational vehicle business, McMahon’s RV, last summer; falling gas prices; and “very little overall growth” in the city’s retail sector, according to the staff report.

Although sales tax revenue should improve with the opening of additional retailers and a Costco wholesale store, which is currently in the permitting phase, it isn’t expected to improve by much.

While City Council members will not discuss the budget until their April 15 meeting, the subject of generating revenue for the cash-strapped city crept into a discussion of the city’s contract with a parking enforcement company.

After receiving complaints from several residents about overzealous ticketing and enforcement in their neighborhood by the city’s contractor, Parking Concepts Inc., councilman Tyler Diep and Mayor Tri Tai proposed canceling the contract altogether.

Councilwoman Diana Carey opposed the cancellation, pointing to the projected $263,674 in net revenue from parking citations throughout the city.

“We have a [$3.5 million] structural deficit every year, we need to address our deficit – this is money that should be coming into our city every year, and our officers are doing other, more important things,” Carey said.

Diep said terminating the PCI contract wouldn’t necessarily mean the city would shift the responsibilities to its police department, and balked at Carey’s emphasis on generating revenue by ticketing residents.

“That 300,000 is off your back. Every ticket that you get is revenue for the city,” Diep said. “My value is to encourage and promote economic development – I don’t see citation as a revenue source for the city, but I’m only one out of five.”

Ta echoed Diep’s sentiments.

“I never entertain the idea that the city can get revenue on these residents…we’re here to serve,” said Ta. “We try to bring more businesses, [through] the business application process to continue to grow the city.”

The mid-year budget update will come before the council again at their April 15 meeting. A study session for the proposed 2015-17 budget will be scheduled for May, Solorza said.

Contact Thy Vo at thyanhvo@gmail.com or follow her on Twitter @thyanhvo.

  • Stacy

    I work for the city of Westminster horrible city if u ask me . If the residents knew that certain Asian areas get kick backs . We can go into all the American commercial areas but can’t cite most asian places .. Seems shady to me .. We can cite Christmas Eve . But can’t cite the Asian area for Chinese New Year or the flower festival. I hope a Westminster resident sees this post and looks more into this..

  • Smeagel4T

    Hey wow, VofOC. Something actually does happen in Westminster? I didn’t know about this. Thanks.