10:31 PM PST on Sunday, February 28, 2010
By DARRELL R. SANTSCHI
The Press-Enterprise
Grand Terrace will have to cinch its belt tight for the next four months to make up a $423,240 budget gap this year and then brace for an $800,000 shortage in the fiscal year that begins July1.
City Manager Betsy Adams told the Grand Terrace City Council this week that new construction has ground to a halt, sales tax revenue has plunged and earnings on the city's investments have dropped more than expected. All of this, she said, is the result of a slumping economy in a community of 12,500 people. (She is understating the problem with the "Loans" not being accounted for and the Schwabistic Financial practices of the past. Perhaps she hopes to get continued assistance from Schwab Loyalists in City Hall. Good luck with having the Finance Department help untangle the mess of accounting practices used by Schwab and Berry for their shell game.)
The council met with city staff members in a budget workshop before announcing at their council meeting Tuesday night that cuts are coming.
In a written report, Adams said she will freeze spending on all but the most "mission critical" expenses; that department heads will have to gain her approval for spending more than $500 on anything; and there will be a freeze on hiring.
She said the city will look for ways to cut costs of services provided by outside contractors. That will not include the city's contract with the San Bernardino County Sheriff's Department, which is expected to increase next year.
Adams will also meet with city employee groups to discuss "labor savings." Even with all of that, she warned, the council will likely have to dip into its general fund reserve to balance the budget.
That could be especially painful, the council learned, because its $3.7 million reserve in a fund that pays for most day-to-day city services will be taking a $2.6 million hit to guarantee repayment of money placed in the general fund for more than a decade that should have gone to the citywide Redevelopment Agency.
Adams told the council that she has not yet determined details of the funding mix-up, but that by putting the reserve money on hold and treating it as a loan, "The city would be recognizing that part of the city owes money to itself." (This may just save Schwab and Berry and others from going to jail.)
The comment prompted a question from the audience later in the meeting.
"What does the statement 'We owe ourselves money' mean?" resident Charles Hornsby asked. "There is either money there or there is not."
Adams said in response that tax money that should have gone to the Redevelopment Agency, which pays for low-income housing programs and infrastructure construction, was placed in the general fund.
City Attorney John Harper said by phone after the meeting that San Bernardino County, which collects taxes, had sent checks to the city without specifying that the money was for the Redevelopment Agency.
"It was a long time ago," he said. "I don't even know if the law was particularly clear when the Redevelopment Agency was formed." (He is Paid Well to KNOW)
He said the money accumulated in the general fund, building as a reserve, and that "nothing nefarious" went on at City Hall. The error was discovered by a financial analyst handling a redevelopment program involving the city, he said. (Doesn't this sound like the same explanation given for the Red Light Funds? Did he nor the finance department ever learn from past experience or perhaps they did learn?)(He is still working for Schwab and not the City Council or City. He should be off the city's dime.)
Harper said the $2.6 million is now being treated as a loan until the city recovers enough financially to pay back the Redevelopment Agency.
Councilman Walt Stanckiewitz said he is still not sure whether the problem was the result of "mismanagement or sleight of hand."
"In terms of what it was used for," Adams said, "we don't really know." (Lack of documentation by Schwabish Finances is a management problem and may be intentional criminal activity to hide payments for things that were to benefit Schwab himself. Cars, House, and increases in income.)
Most of the money was received in the 1990s, although a part of this year's deficit is $155,725 of redevelopment money that was to have been credited to the general fund.
"We are not happy with what has gone on," Councilman Jim Miller said at the meeting, "and we are trying to fix it."
Reach Darrell R. Santschi at 951-368-9484 or dsantschi@PE.com
Recall Ex City Manager's Statement: HE knew what he was doing and he had no intention of the City Paying it back.
Mr. Harper should be replaced as the City Attorney. The law and code states that the CRA can not loan money to the City, it can make investments of funds not yet used with REAL Investments that should be very secure and repay the CRA with interest and secured principal. Mr. Harper should have known that then and now. He took part in selling the debt bonds after all. His service contract should be the first to go. Then there should be a complaint filed against him with the State Bar.
CUTTING BACK
Grand Terrace City Manager Betsy Adams announced measures to fill a $423,240 hole in the city's general fund budget for the fiscal year that ends June 30.
Among them are:
Freeze spending on all items not deemed as "mission critical" by department heads.
Require city manager approval for any purchase over $500.
Freeze hiring for vacant positions with benefits.
Require approval of city manager on hiring temporary employees.
Evaluate whether general fund expenses can be charged to other city funds.
Review contract services, excluding law enforcement, to determine if a more cost-effective method is available.
Review major revenue sources to be sure they are being fully collected and accurately estimated.
Meet with employees to discuss labor-saving alternatives. (The City Manager should take the lead and reduce her own compensation contract by 30 percent.)
Use general fund reserves to make up the difference. (This will leave very little General Fund Reserves.)
Schwabism's fictional "Reserves" have evaporated. Citizens have been warning of this day long before the recession. Making more debt available to a group of this type would only continue the abuse of CRA Funds and Intended Function. This is not how a city is supposed to finance its self. Adams will earn her credibility if she and Jim and Walt can get GT on the proper financial practices and standard accounting practices. Then the CRA can wind down and end in 2012 as planned. Allowing the Planning Department and Finance Department with additional Debt Generated resources should not be what GT should do.
SAY NO TO THE INCREASE OF THE CRA DEBT LEVELS
Now how does that $57,000.00 Electric Signage Look to You?
