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Santa Ana’s new chief executive, faced with a $4.3 million projected shortfall for new police raises approved by City Council members, said a mid-year budget increase is no longer needed to cover the costs because the Police Department is cutting back on overtime among other savings.
City staff previously asked the City Council for the mid-year increase to cover a shortfall this fiscal year for a new $25 million raise for police officers. Council members approved the raises in February but without enough council support to approve the budget increase, leaving city staff scrambling to find a way to fund raises the city is now obligated to pay.
In emails to Voice of OC last week, new City Manager Kristine Ridge said staff believe there is no need to transfer money into the Police Department to cover the raises, because they’re reducing overtime, using other money sources to pay for some overtime, and are expecting savings elsewhere in the police budget from vacant positions and reduced liability costs.
Ridge, in an interview Monday, said the savings come from reducing police overtime, paying for some overtime out of asset seizure money, savings from 58 vacant but funded police jobs, and reducing the amount the Police Department pays the city for its share of “cost allocations” for legal liability, information technology, and worker’s compensation.
“At this point we are still projecting…that they’re going to come within their budget,” Ridge said. About $800,000 in savings is from reducing the “cost allocations,” Ridge said, which would cover about 19 percent of the $4.3 million projected gap for the police raises.
Asked for the dollar breakdown of how much is expected from the other categories of savings to cover the police raises, Ridge said there aren’t dollar figures, but that staff are confident it will cover the $4.3 million gap.
“The [police] chief has put in place to hold down the remainder of the overtime for the remainder of the fiscal year,” Ridge said. “It could go all completely out the window if there was a large scale public safety incident in the city.”
Police Chief David Valentin didn’t return a message asking where in the police department the overtime is being cut. But in an earlier emailed statement, he said there would be no impact on public safety.
“There are no service cuts to the Police Department and no impact on public safety,” Valentin said.
If there was a large-scale public safety response that required overtime, police would still respond and use overtime, Ridge said.
Voice of OC called all six of the current City Council members for comment, and those who answered said they had not been provided with a breakdown of dollar amounts for where the money was found to cover the $4.3 million police raise gap.
“I honestly believe that they don’t know how they’re gonna do this,” said Councilwoman Cecilia Iglesias, who voted against the raises and the $4.3 million transfer to pay for them.
A presentation by Ridge last Monday, May 13 about next steps to fund the Police Department was “just very generic,” Iglesias said. “I just don’t feel that this whole process is transparent at all,” she said.
Councilman David Penaloza, who voted for the raises, said Thursday, three days after Ridge’s announcement that the raise money had been found, that he had not yet gotten a cost breakdown of where the money was found.
“I haven’t heard from them,” Penaloza said, adding he told the new city manager last Monday the cost for the raises “should be absorbed within the Police Department’s budget. And I pretty much expect that to happen.”
In follow-up messages Monday, Penaloza said city staff had not provided a memo showing where the money was found, but that they assured him the cost for the raises “was absorbed into the [Police Department’s] current budget.”
“No memo was provided but [I] was told one would be provided at our next budget workshop,” Penaloza said in a text message Monday night.
Councilman Jose Solorio, who voted for the raises, said he was confident the money for the raises would be absorbed into the existing Police Department budget.
“Between existing salary savings and an increase of salary savings because of the slower pace of hiring officers, there are enough resources there to fully absorb the cost of the…salary increase to police officers,” Solorio said in an interview Monday.
Ridge said there’s a $400,000 shortfall facing her department – the City Manager’s Office – which staff previously attributed to payouts from the City Council’s forced ouster of the previous city manager, Raul Godinez, and some of his top deputies.
“We’re not going to be able to close the year within the [City Manager’s Office] budget. I believe it’s over by over $400,000,” Ridge said. The city charter requires approval from five council members to transfer money mid-fiscal year, so Ridge said she will seek City Council approval to transfer the money before the June 30 end of the fiscal year.
For the city’s overall budget, Ridge said staff project Santa Ana will end this fiscal year on June 30 with about a $1 million surplus, after years of deficit projections.
“We are projecting, city-wide for the general fund at least, that we are going to close the year in the black,” Ridge said. “That’s big news.”
The Feb. 5 staff report on the raises said they would require an “additional $4.3 million” for the current fiscal year, which ends June 30, and asked council members to authorize a transfer into the Police Department.
Solorio, who announced last week he is running for mayor, said the staff report for the raises said the funding gap for the raises was only $200,000, not $4.3 million.
He provided a copy of an apparent Feb. 4 memo from city staff to the council showing $6.5 million in projected Police Department savings this fiscal year from vacant positions. About $2.5 million of it has been used each year to cover the department exceeding its overtime costs, which the report says said means “there may be $4 million available” for the raises.
An unknown factor, the report said, is “how much will be used for the positions to be filled before the end of the fiscal year.”
Solorio said this means there was only a $200,000 possible shortfall for the police raises, which he said would be easily covered by the $800,000 in savings from liability, IT, and worker’s compensation cost sharing.
Ridge, who was Pulido’s top pick for city manager, took office as the city’s chief executive about three weeks ago.
Last Monday, May 13, she told Voice of OC in a late night email that the money was found.
“At this point based on our projections for the close of the current fiscal year [the Police Department] will not require an adjustment,” Ridge wrote.
“There were 58 [vacant] positions funded in the police department, which equates to several millions of dollars in salary savings,” Ridge added in a voicemail on Friday.
The vacant positions add up to about $6 million in costs that won’t be spent, though part of that is already being used to cover the Police Department going over its overtime budget this fiscal year.
“Everything’s a moving target,” Ridge said. “It was about $6 million that was funded [for vacant positions], and the vacancies hadn’t gotten filled, but that $6 million was also covering their excess in overtime.”
The overtime savings to cover the raises will come from reducing overtime costs going forward and paying for overtime costs out of special revenues like federal civil asset forfeiture funds, Ridge said.
“We are hopeful and still projecting that [the Police Department] will come within their budget by June 30 of this year,” Ridge said.
For months, city staff have struggled to find a way to pay for the police raises.
Four council members approved the raises on Feb. 5, which obligated the city to pay the increased salaries and benefits. But Iglesias and Councilman Juan Villegas, who opposed the raises, have voted against the mid-year budget increase, denying a crucial fifth vote to move $4.3 million into the Police Department to pay for the raises this fiscal year.
That has left the city in the difficult position of being obligated to pay millions of dollars in raises without the funding authorization staff said was needed to fund it.
Minutes before the Feb. 5 vote to approve the raises, Mayor Miguel Pulido said the council should approve the raises and “we’ll figure out” later if the funding can be authorized.
The next day, Villegas sent a memo to Santa Ana officers expressing his “avid” support for law enforcement but saying the size of the raises was not “financially feasible and sustainable.”
The day after Villegas’ memo, the police union’s president, Sgt. Gerry Serrano, called on Villegas to change his vote and approve the $4.3 million transfer at the next council meeting.
“Hopefully, at the next council meeting [Villegas] votes to fund the approved contract as staff recommended,” Serrano wrote in a Feb. 7 memo to police officers on the union’s letterhead.
But Villegas and Iglesias refused to re-allocate money to fund the raises, which the city has started to pay out amid reports the Police Department will run out of its approved budget in June.
For police department funding, the time between now and June 30 is critical because, starting with the new fiscal year on July 1, the city is much more likely to have the funding approval for the raises, even if it means dipping into reserves to pay for it.
That’s because while a mid-year budget change requires five council members’ support, an increase to the annual budget only requires four council members – the same number as approved the contract.
Iglesias and Villegas are the only two council members currently facing a recall effort that has reached the point of initial signatures being filed with the City Clerk’s office. The initial recall signatures were rejected, but the clerk left open the possibility of the signatures being filed again and accepted.
Nick Gerda covers county government and Santa Ana for Voice of OC. You can contact him at firstname.lastname@example.org.