With a newly retained consultant, a new Director of Finance and the entire team in the room, the city of Los Alamitos began a summer listening tour wherein they hope to explain how they plan to avoid bankruptcy and what is causing all the budget pain.
City Manager Bret Plumlee told a packed meeting of the Los Alamitos Chamber Friday that the city is developing a fiscal sustainability plan and will set out on a series of informational meetings to explain the city’s financial situation to its citizens.
“We want to explain our financial picture,” said Plumlee. “We wanted to start with this audience, but it is all about educating the community,” the city manager said.
Plumlee said the city’s administration’s plan was to host a series of meetings to introduce all the financial options to the community, including pros and cons of “revenue enhancements” and “expenditure savings.” Also, he said, city officials will explain how they plan to close the “general fund budget gap.”
Eric Hendrickson, the new city finance director, said they are “proud” to be able to present to the Council next week a “balanced” budget of $14.4 million for next fiscal year (2020, see chart).
However, longer term, he said the city’s reserves of $8 million will be gone by 2024-2025 and “we don’t want to go bankrupt, we don’t want to have to deal with these problems going forward,” said Hendrickson, so we “want to deal with it now.”
Without action, Henderson noted the city would be in financial “dire straits.” The city’s stifling pension liability is the main driver of the problems, he said, but there are other factors.
David Cain, the city’s consultant, said additional factors included the passage of Prop. 13, resulting in loss of control of property taxes, now cities get “pennies on the dollar.”
Also, he said the city’s share of the local sales tax is fixed and state’s permanent ERAF (Educational Revenue Augmentation Fund) takeaway bleeds more local dollars.
The goal of the long-term sustainability plan is to provide the city “the ability to sustain long term vital city services to all residents and businesses without threatening the city’s cash solvency or defaulting on any liabilities or promised expenditures while utilizing ongoing revenues to pay for ongoing costs.”
Cain said even in the best scenario, the path of long-term sustainability could be a decade or even a generation away.
Development Director Les Johnson said there are some very positive economic news for the city, including two new housing developments, a new hotel, expansion at Los Al Medical, a drive-thru Starbucks the relocation of Epson America to Los Al, bringing with them 600 high paying jobs.
Officials said the city will post meeting dates on their website as they seek to educate the community. Mayor Pro-Tem Richard Murphy along with Council members Shelley Hasselbrink, Mark Chirco and Dean Grose attended the session along Police Chief Eric Nunez and other city staff.
In other action Friday, the Chamber;
- welcomed Col. Nick Ducich, the new commander of Joint Forces Training Base in Los Alamitos.