You know how for years staff and council have told us that Encinitas finances were in great shape and conservatively managed?
Fiction:
Find out what's happening in Encinitaswith free, real-time updates from Patch.
The city is in good economic health despite the looming threat of state budget cuts, Mayor Jerome Stocks said in his State of the City address last night.
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Find out what's happening in Encinitaswith free, real-time updates from Patch.
Stocks said a combination of healthy property-and sales-tax revenues and adequate reserve funds have braced the city for the fallout of the state budget crisis.
During the April 27 meeting, acting City Manager Phil Cotton told City Council members that Encinitas is in a very good spot and will once again have a "structurally sound budget." The city has ridden out the nation's troubled economic times by being fiscally conservative, city finance department staff said.
"We tend to be realistic, but conservative," City Finance Director Jennifer Smith said as she discussed the city's proposed revenue forecasts for the coming two years.
Following a watchdog report on government reserve fund overflows, appearing in the U-T in late April, officials with the City of Encinitas claimed a chart depicting the percentage the city had in their general fund reserves for the Fiscal Year 2010/11 was misleading.
Gus Vina: "Good, prudent and consistent fiscal management in Encinitas has allowed our organization to serve the community at appropriate levels in spite of the recession that has swept across America."
An important element of the City’s overall financial strategy is to remain nimble, proactive and prepared for occurrences beyond its control. The City has a $10 million Contingency Reserve and a $1.1 million Budget Stabilization Reserve.
The City plans to continue pursuing the conservative budgeting philosophy that has enabled it to preserve programs and services while moving forward with new projects desired by residents such as Encinitas Community Park, slated to open in 2014.
Reality:
Well, those lies have just been officially and thoroughly debunked. Council Member Lisa Shaffer's Feb 13 newsletter acknowledges the sad financial truth that Encinitas watchdogs have been screaming about for years.
One issue I feel strongly about is pavement management - we have chronically underfunded road maintenance, and unfortunately, the draft CIP budget did not offer any improvements. We have been spending about $1.3 million/year and it would take about $2.8 million/year to maintain a constant quality level and prevent continued decline (which only leads to more expensive repairs later). Council agreed that we need a strategy to increase funding for pavement overlays to get to this level and be able to maintain it going forward.
This is the issue behind the long-running road report fiasco, where staff and council spent years illegally trying to hide a public document from the public. Our new City Council last year unanimously approved continuing the contract of city attorney Glenn Sabine, the legal mastermind behind the debacle. Council watchdogs note that even the new $2.8 million figure could be dramatically understating the true cost, as staff and council still have not provided the public any transparency behind the estimates and calculations.
Beyond the roads, there are tens of millions in desired capital improvement projects with no apparent funding. Last year, the council unanimously voted to put the city deeper into debt and plunder its reserve accounts to build the Hall Park, without identifying revenues to pay for either the Hall Park operating costs or its debt service. Shaffer:
Without going through all the projects and all the fund sources, there is no question that our "wants" exceed the available funding. The City has a number of financing strategy options:
* Pay as you go - only commit to what we have funds to pay for
* Take on more debt through issuing bonds
* Increase revenues through a sales tax or other tax assessments
* Cut expenses and/or cut back or cancel other projects
* Sell surplus assets
And then there's pension costs, which will be rising by millions of dollars per year due to years of chronic underfunding by our city's "good, prudent and consistent fiscal management."
And of course last week the council floated the idea of raising the sales tax instead of getting our spending problem under control. Giving a drunk the keys to another liquor cabinet.
A sincere thank you to Council Member Shaffer for being the first city insider to publicly begin speaking honestly about the city's financial condition.
