Critics creating phantom money problems

LIBBY COWAN

Whew, is it election season! Over the course of the next month and a

half, the voters of Costa Mesa and the readers of the local papers

will, as Daily Pilot Forum contributor Geoff West has indicated in

several Pilot commentaries, have much material to digest and reckon

with.

How does one separate the wheat from the chaff ? West is correct;

each voter must engage with the candidates. More importantly,

however, the voter must first understand how a city, by law, operates

and then actively engage with the candidates.

In his August 19 Pilot commentary, “Time to start learning about

City Council candidates,” West claims that the city of Costa Mesa has

a deficit, and now the voter is hearing this same claim from some of

the candidates for Costa Mesa City Council. This claim is just not

true.

The city of Costa Mesa simply does not have a deficit, nor has it

ever had a deficit. Under state law, cities may not run a deficit,

period. Unlike the federal government, the city has no authority to

print more money when there is a budget shortfall. Unlike state

government, the city cannot confiscate tax revenue from other levels

of government to pay bills. Like every household in our community,

the city cannot spend more than it takes in.

So where has the allegation of a deficit come from if it doesn’t

exist? It stems from the fact that like every household budget,

everything you plan for at the beginning of the year doesn’t always

end up that way at the end of the year. Roofs leak, washing machines

break, and the unexpected medical expenses are all part of the

balancing we all do with our finances. While much larger in scale,

the city’s budget is the same. The city budgets each June are based

on estimated revenues (which are always estimated conservatively on

the low end) and projected expenditures (always estimated liberally

on the high end). The past few years -- as a result of a

slower-than-normal economy and the state of California’s continuing

thirst for local revenues -- projected expenditures have exceeded

estimated revenues. It is on this basis alone that the claims of

“deficit spending” are made.

Just like every household budget, the city manages its budget.

Because budgets are based on projections, we continually make

adjustments based on reality, not speculation. Even casual observers

of City Council meetings recognize this fact. And for the skeptics,

you can verify this from your home computer by simply going to the

city’s website and looking up the Comprehensive Annual Financial

Report for each of the past three fiscal years. These are the

independently audited financial statements, not someone’s campaign

spin.

West, and now candidates, claim that the City Council has slashed

dollars for street repairs. As with the claim of a deficit, this is

simply not true. Of the tax dollars the City Council has control, the

city has not only maintained its level of street rehabilitation but

substantially increased it over the past 6 years. The tax dollars

over which your City Council has authority for street maintenance --

Measure M Sales Tax and the Gasoline Tax -- has remained constant. In

addition, the City Council has added to this by dedicating a good

part of the city’s Community Development Block Grant funds to street

rehabilitation and major reconstruction exclusively for the Westside

at an average of $583,000 per year. Adding funds obtained through

competitive grants, spending for street maintenance is up

substantially overall.

Like the deficit rumor, how did the idea that the city has

“slashed” street maintenance get started? Pretty easy to understand

if you take the time to look. It’s from something West and some

candidates count on the public not to do. The reality is that each

year, the city competes for millions of Measure M, state and federal

grants. And while the city has been more successful at receiving

grants for street maintenance than the vast majority of cities in

Orange County, even Costa Mesa cannot expect to win every competitive

grant available. So in years when the city does not receive as much

in competitive grant funding as the year prior, West and others term

it “slashing” street maintenance. By this convoluted sort of

thinking, if the city made no effort to secure millions in

competitive grant funds for street maintenance, we’d be doing a great

job.

West goes further with claims of “developer giveaways” that could

be used to balance the budget. Over the past year, West has

specifically called out certain of what he terms “developer

giveaways.” If he is referring to the affordable housing agreement

made in conjunction with the project at 1901 Newport Blvd., the funds

committed to this project by the Redevelopment Agency could not and

cannot be legally siphoned off to the City’s General Fund. When

redevelopment agencies are formed, part of their legal obligation is

to provide for increased affordable housing. In the case of 1901

Newport Blvd., a majority of the Redevelopment Agency chose to

reinvest the property taxes generated by the project into affordable,

owner-occupied units on site. This reinvestment allows those who

qualify, such as teachers and nurses, journalists and rookie public

safety personnel, the opportunity to live in a promising brand new

development. If he is referring to the waiver of fees given to the

Orange County Performing Arts Center, what better way to painlessly

give to the creation of yet another arts centerpiece in Costa Mesa?

Again the fees in question -- traffic impact fees paid by new

development -- could not be used to balance the city’s general fund

operating budget.

Costa Mesa is one of the more financially secure communities in

the state. We have a $14.3-million operating reserve to which, by

law, access is held strictly to emergencies. The city has never found

it necessary to access its operating reserves.

Don’t misunderstand. The budget situation is very tight and until

the state solves its problems, Costa Mesa’s sources of revenues are

not safe -- a circumstance that holds true for every city in

California. Whoever is elected will need to be ever-vigilant to

protect the services this community holds dear. The voter must

understand city government and then vote for those who will protect

the services the voter wants.

Voter, be knowledgeable of the candidates’ positions. Ask hard

questions and demand full answers; don’t rely on sound bites for the

complete picture. Protect those services you want and those you

believe a city should offer.

* LIBBY COWAN is a Costa Mesa City Councilwoman.