By Chris Frost
Oxnard— The community budget meetings are underway, and the May 10, workshop had no good news, as the proposed budget includes closing the Oxnard Performing Arts and Convention Center (PACC), the Carnegie Arts Museum. These cuts eliminate eight positions, and the Colonia branch of the Oxnard Public Library.
Additionally, the city plans to reduce services at Oxnard Fire Station 2 on Pleasant Valley Road to emergency medical services only, plus numerous layoffs throughout the city.
By department, the city is proposing $2.4 million in cuts to the cultural and community services department, eliminating 8 jobs, $2.2 million in public works, which eliminates 12 positions, saving $1 million in the fire department, $988, 000 in the police department, deferring the hiring of five public safety trainees, $194 million to the information technology department, $190 million on the city manager’s staff and other cuts totaling $469,000.
City Manager Alex Nguyen told the crowd that the FBI raided city hall in 2010 and the district attorney published their findings in 2012.
“Not long after that, the city manager was placed on administrative leave, and the interim city manager served for about two years,” he said. “The city brought on a city manager in 2014 who did a great job of unraveling and explaining what all the problems were and that resulted in the 2015 management assessment report.”
The city had a full audit of its finances in 2016, and there were 111 findings.
“Early in 2018, that city manager resigns, and we had an interim city manager for six months,” he said. “Last July, I showed up.”
The public didn’t appreciate all the turmoil that happened when they tried to fix the chaos before 2010, he said, and what happened when the FBI raided city hall was not about the next eight years, it was about the prior 15-20 years, and those serious problems accumulated over a long time.
“Included in that, we had an outdated fee structure as an organization, which we are working to update,” he said. “All the city fees, the problem with it is, you should update some fees every year, or every two or three years. There are fees on the books since 1972.”
The city also did not have a good capital improvement plan or a parks master plan.
“A lot of the information and analysis you need to properly manage and plan for the organization you didn’t have,” Nguyen said. “We have and still have an outdated cost allocation formula, which is similar to the fees except it’s all within the city.”
Adding to the problem, he said, was dealing with a $3.2 million deficit at the Oxnard Performing Arts Center, plus a $2.8 million deficit at the golf course.
“During this last decade, budget-after-budget, we had to start paying back to make up for many of those mistakes,” he said. “The general fund had to return a lot of money to the various assessment districts that were not managed correctly to the tune of $4.4 million. The city also had to convert 140 part-time employees to full-time employees with benefits. They were classified for many years as part-time employees, and they were working as full-time employees. It’s improper to treat part-time employees as full-time employees and not pay them as full-time employees.”
That mistake cost the city between $5-6 million per year, he said, which is a new ongoing cost.
“For many years, the city was getting the services of all those employees at a discounted rate,” he said.
The city borrowed $16 million from the Measure O tax during the 2015-16 budget year to cover the general fund, and they are paying that back over a 10-year repayment schedule.
Before 2015, the city spent an average of $75,000 to $125,000 a year on the annual audit, and since then, the city has been spending approximately $3 million on auditing services over the last four years because there were so many problems.
“This current year, we discovered that we had a pension liability from the City Corp program and that’s a $2 million price tag we have to pay,” he said. “Last year, there was a special recall election, and that was $500,000. That is a rare thing and let’s hope that doesn’t happen again.”
Meanwhile, he said the pension costs were skyrocketing which is beyond the city’s control, and they don’t have any influence over what PERS (Public Employees Retirement System) does and how PERS does it.
“There was a long-term fix and improvement implement back in 2013, and they changed the formula so it will cost less for local governments and over time, all city employees will be in the PEPRA formula,” he said. “The classics, those of us who are older, will be gone.”
Through all that, Nguyen said there was “intense instability among the executive leadership” and over 10 years, 46 people filled 10 executive positions, which means 36 people left those positions.
“On average, each of those 10 years we had 3.6 executives leave,” he said. “To be clear, not all of those departures were bad, but no organization can be successful with this much turnover in such a short time. When this occurs, bad things are likely to happen, good things are not so likely to happen, and one thing that won‘t happen is innovation.”
As the city looks toward the fiscal year 2019-2020, Nguyen said the city faces a $9.2 million deficit if they do nothing.
With all that said, the city must restructure and look at job eliminations along with some strategic additions to the staff.
“The bottom line is there are certain areas in the city where we must perform better; the finance department and the planning department,” he said. “If we don’t do these things, we won’t be able to organize and manage our finances better, and we won’t be able to attract investment and expand our economy. We’ve got to grow our revenues.”
Chief Financial Officer Kevin Riper reviewed the budget with the attendees and said a little more than 75 percent of the general fund revenue comes from taxes.
“We’re looking at a 4 percent increase in property tax coming into the city from this fiscal year to next fiscal year,” he said. “That’s consistent with the last 10 years, ever since the recession, when everybody’s property tax dipped, Oxnard has averaged about 4 percent a year, and that’s what we’re looking at for next year.”
The city is planning a sales tax increase of 3.5 to 4 percent during the upcoming budget year.
On the expenditure side, Riper said three-quarters of cost is for salaries and benefits.
“Not surprisingly, public safety accounts for almost 60 percent of the general fund expenditures,” he said. “Cultural and community services are $10 million; community development services are $10 million, and $12 million is for public works, admin and other expenditures.”
Pension costs for those employees are the big driver for the increases, he said, and since 2011, the city’s pension costs have doubled.
“That’s an 8 percent per year annual growth rate,” he said. “That’s way faster than revenue has been growing. Pension costs are eating into the general fund in a big way.”
The city’s rainy-day fund sat at $18 million on July 1, 2018, and by the end of the fiscal year 2018-2019, the city should have an operating deficit of approximately $3 million which brings the rainy-day fund to $15 million.
“Our city council has a long-standing policy of 18 percent of spending, but we will only be at 11 percent come June 30,” Riper said. “The government finance office recommends a two-month operating reserve for all cities ranging in size from small to large.”
If the city does nothing or operates on auto-pilot for the next fiscal year, the $9 million-dollar deficit as it currently stands brings the fund balance down to 4 percent.
This story will continue on May 24.
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