Santa Barbara budget showdown – ‘heat is on’ as police union, city management clash
By JOSHUA MOLINA — AUG. 27, 2010
In an attempt to show that the city of Santa Barbara has money available for police salaries, a consultant hired by the police union released the results of his “forensic audit” on Thursday, suggesting that Santa Barbara has up to $116 million in unrestricted net assets.
The audit’s findings imply that Santa Barbara has money hidden in its budget, a bold charge considering that budget shortfalls
in recent years have forced cuts in service
and the elimination of city positions.
City officials, however, quickly struck back, saying that the consultant either doesn’t understand municipal budgeting or is attempting to misrepresent the numbers at a time when the police union and the city are in contract talks
The debate has brought out longstanding tensions between Sgt. Mike McGrew, a police union activist, and Jim Armstrong, Santa Barbara’s City Administrator.
McGrew said Armstrong is not giving all of the financial information to the City Council.
“I think we are being fed a line,” McGrew said of Armstrong. “I think he wants to force council members to make decisions regarding public safety without all of the information.”
Armstrong on Thursday flatly denied McGrew’s contention that he was withholding information from the council, calling the claim “ludicrous” and “absurd.”
Armstrong said the police union wants the city to use one-time funding to pay for a new contract, rather than make financial concessions that other city employees have had to make.
The police union’s consultant, Peter Donohue, gave the results of his audit of Santa Barbara’s books for a period spanning from 1998-99 to 2008-2009, at Fess Parker’s DoubleTree Resort.
The report did not include information from the most recent fiscal year. Donohue said the city has not provided that information.
The audit is designed to shine attention on the city’s finances, at a time when the police union is seeking a new salaries and benefits contract.
Donohue led off his talk by saying that Santa Barbara is a wealthy community and its bond rating is “near-excellent,” yet the city still claims to have serious financial problems.
“It raises my ears a bit,” Donohue said.
Donohue’s contention is that despite the state of the city’s budget, there in fact is money available for the police union.
“When the economy is in distress there’s a presumption that everyone is in trouble in the same way and, quite frankly, that’s not true,” Donohue said.
The audit targeted money allegedly available in the city’s “enterprise funds,” rather than the general fund, which pays for police, fire, parks, recreation and other services.
Enterprise funds, such as the waterfront, water, wastewater and airport departments, are self-sufficient, meaning that they are intended to pay for themselves without burdening the general fund.
In June, Santa Barbara scrambled to close an $8.9 million shortfall in its general fund, as part of a $275 million overall budget.
Donohue said that the city seemingly has millions of dollars available in these enterprise funds, money that potentially could be set aside for salaries, benefits and other matters.
The consultant attempted to drill deep into the city’s finances at Thursday’s meeting. He showed several slides and charts to illustrate money that might be available.
The consultant relied heavily on the city’s Comprehensive Annual Financial Report, a government-required document that outlines the state of the city’s finances.
Donohue frequently noted that the financial report portrays the city in a flattering light financially, yet when it comes to budget talks, the city always says it is struggling.
The idea that the city has $116 million in unrestricted net assets comes from the pages of the financial report.
“How can unrestricted assets in the comprehensive annual financial report become restricted during budget talks,” Donohue asked. “I don’t get it. I don’t get it.”
Armstrong said he would have happily explained it to Donohue had the consultant agreed to meet prior to taking his findings publicly.
The consultant had been shopping the audit around privately to members of the council in recent days. Armstrong said he wishes they would have extended the same courtesy to him.
“I have not seen his report,” Armstrong said. “We asked to see it before he presented it and he refused.”
In response to requests for information from Donohue, the city’s Finance Director Robert Samario sent a nine-page letter to Donohue explaining all of the legal restrictions on water, wastewater, airport and harbor funds.
“For some reason they continue to bring this up,” Armstrong said.
Armstrong added that the only documents that the city had not provided Donohue were the last year’s final financial statements, and that’s because they will not be completed until mid-September.
“We are not going to accelerate the closing of the city’s entire books because the union’s consultant wants it,” Armstrong said.
Santa Barbara Mayor Helene Schneider said she met with Donohue on Tuesday morning.
“I have some questions about their report,” Schneider said. “I want to ask Jim Armstrong and Bob Samario about their assumptions before making any final determination.”
Schneider, a former human resources manager, said that if the council were to determine that it could take unrestricted money from enterprise funds to pay for other expenses, that such a policy change “would not happen overnight.”
“If we want to revisit those policies, we can,” Schneider said. “I am hoping we can work together in providing the services rather than having a big fight over policy that really cannot be addressed overnight.”
From McGrew’s perspective the issue is simple.
He believes the money is there and that it’s just a matter of the council making the right decision.
He made similar contentions during budget talks in 2005, and clashed publicly with then-mayor Marty Blum.
He said Armstrong has shown a pattern of whittling down the police force during the last decade.
McGrew said the city lost several officers around 2005.
Those officers went to Ventura, Oxnard and other communities, McGrew said, because the pay was better in those areas.
“It devastated us last time,” McGrew said.
Now, McGrew said, more officers could flee the area, even for places such as Santa Maria.
McGrew said he’s feeling the animosity from upper management for speaking out.
“There is more hostility toward me,” McGrew said. “The heat is on and I am feeling it. That can only be coming from Armstrong.”
S.B.C.C.C. The place where COMMON SENSE never goes out of style!