SANTA ANA — In a story this morning, Adam Elmahrek of The Voice of OC has looked over the wall of silence erected around City Hall to reveal a frightening image of a city in the midst of financial disaster. It is beyond puzzling how the City of Santa Ana that in June supposedly closed a $13.6-million budget gap by “borrowing money from the liability and workers’ compensation reserves,” has found itself in such a dire position. At that time Elmahrek wrote: “The Santa Ana City Council signed off on a $210-million budget for fiscal year 2011-12, making fewer cuts compared to recent years because of a smaller deficit.” Today he describes a very different picture:
The city of Santa Ana is essentially living paycheck to paycheck, according to records released this week by the city’s finance director, Francisco Gutierrez.
Santa Ana’s general fund balance at the end of September was $313,343.50, according to the records. This represents about one-tenth of 1 percent of its nearly $200-million general fund budget.
The balance has dropped precipitously since the end of July, when it stood at just under $3.4 million, records show. Then it dived to $161,035.46 by the end of August, according to the records.
Recent Census data pegs Santa Ana’s population at 324,528 residents. The fund balance for the city amounts to less than $1 per resident. During the first two months of the fiscal year, there were no agendized discussions by the city council on the matter of the city finances. the only indication that serious financial problems loomed were comments made by Council members and city staff regarding the termination/postponement of the City Manager recruitment. In September the City released a report from their consultants Management Partners which revealed a $30 million budget shortfall.
It appears from Elmahrek’s report that Council members are surprisingly unaware of the City’s current cash flow position.
“I want answers if we only have $300,000 in the bank,” Councilman Sal Tinajero said.
Tinajero and Councilmen Vincent Sarmiento and David Benavides said they would be making inquiries at City Hall.
Councilwoman Michele Martinez said she asked Gutierrez about the city’s cash flow after Voice of OC’s post on the issue last week. She said she was told that the city is waiting for its large revenue disbursements at the end of the year and that the city would be able to pay all of its bills.
But Gutierrez did not inform her of the city’s low cash position, she said.
“I believe we should have a reserve policy for times like these,” Martinez said.
Elmahrek goes on to point out that:
City officials acknowledged that they’re leveraging internal service funds set up for special purposes, like payouts for legal settlements. The city transferred $5.2 million from those special funds to balance its books in September and is planning a $2.8-million transfer this month. That money will not be available again, according to the Management Partners report, and some of the special funds are already underfunded.
This is beyond frightening evidence of a Council out of touch with, and not in control of, the city finances. I have previously written about the incredibly lax management of city contracts. This is recent revelation that the Council doesn’t even know how much money is in the bank only adds to justifiable concerns that the city is standing on the brink of bankruptcy.
Give me my buck and I am out of this rat hole of a city.
Does this mean no street cars?
You know things are really bad when when this city can actually almost double its general fund just by asking developer Mike Harrah to pay what he owes them.
Good point. Now if only they had money for a stamp to mail the invoice to Harrah.
This city council is so out of touch with reality, they should be committed. Unfortunately there is not Stupidity disorder because they would have an epidemic on their hands.
Well, all I can say is this. It sure is a good thing that Mr. Expensive, Paul Walters is there to help at a time of crisis. After all, he’s only collecting his pension (90% of his old salary), plus a current paycheck on top of that. Oh, did I forget that 10% raise? He’s being paid twice! What a lifesaver he is especially when Santa Ana is broke. Ahh, geez, where would Santa Ana be without “Paul Walters”?
I think they are all in their Happy Place and it’s not SA.