Anaheim: Dispatch from the Fiscal Front Lines.

.

.

.

First, the good news: Tuesday November 3, the Anaheim City Council approved spending $3,841,969.48 for street and sidewalk repair, in 5 of the 7 neighborhoods identified in need of improvement for the FY 2015/16 budget.

Click for PDF that you could zoom in on if your heart so desired.

Click for PDF that you could zoom in on if your heart so desired.

Now, for the bad news. It will cost the taxpayers of Anaheim about $7,500,000 to pay off those improvements, and they’ll be obsolete before their final invoice is covered in 2046.

PAGE 24 of Anaheim’s FY 2015/16 Budget says:

Capital Improvement Program Practices

The City strives to maintain a high reliance on pay-as-you-go financing for its capital improvements in order to maintain debt within prudent limits…

On March 11, 2014 three members of the current City Council majority (Mayor Tait voting NO and Councilmember Vanderbilt not yet on Council) approved the sale of bonds totaling $258,925,000 for Convention Center expansion, the refinance of previous bonds, and unspecified Capital Improvements to be named later. Included in that total was an extra $20MM borrowed for just-because-we-can money. That $20MM is being spent, piece-by-piece, in neighborhood improvements such as we saw this week.

Nobody argues that the repairs are not needed!  Any claims of Anaheim being a “world-class city” are belied by the dismal state of our neighborhood streets, chock full of potholes, gathering water (where available) to breed mosquito larvae, and of course the ubiquitous weed collections growing from them to indicate their not-new existence. Anaheim’s sidewalks are so routinely pulled out of place by parkway trees uprooting the cement that trip-and-fall is part of daily life here now.

Photos below are courtesy of the author, from her own “wealthy white enclave” Colony neighborhood.  🙂

Colony sidewalks.

Colony sidewalks.

Colony Gutters

Colony Gutters

The Karcher Pothole!

The Karcher Pothole!

RIGHT in front of the Karcher residence!

RIGHT in front of the Karcher residence!

Pride Of The Colony.  :-(

Pride Of The Colony. 🙁

No, nobody argues that Anaheim neighborhoods don’t need fixing. But Anaheim’s grandchildren should not be funding the streets, curbs, and sidewalks that are crumbling again just as they are paid off in 2046! THAT’S why Anaheim has a pay-as-you-go provision in the City policies. Financially responsible leaders, like responsible individuals, calculate the anticipated age of their belongings, whether a set of tires for the car or a roof for the house, or pavement for neighborhoods, and determines how much is needed to set aside for each year of anticipated use, enabling replacement for functional age.

BTW – our schools should also have done this long ago, asking the various unions to duke it out for the money left after we had fixed the roof. Instead we try fixing the roof with what the unions leave us. I support a line item in the City budget to support schools not to backfill budgets left empty by previous irresponsibility, I support it because Anaheim has reneged on some funding agreements we made long ago, and because KIDS should not be held hostage in substandard classrooms thanks to the union pandering of past leaders. Bonds should be reserved for new facilities of public purpose, facilitating the influx of new students or replacing outdated facilities, not to make basic repairs. There, now I am pissing off all of our readers on some level. My work here is complete.

Since Anaheim leaders stopped calculating replacement age for capital improvements, taxpayers were obligated, without being asked, to fund basic civic upkeep on credit by way of bonds.

Not disclosed in this week’s attempt for the City Council to pat themselves on the back until their rotator cuffs popped, and unknown to the average taxpayer unless one wishes to dig into the Official Statement for the various bond funds  (because some of us have nothing better to do with our time) is that the $258,925,000 borrowed will require $258,052,237 in interest payments, in addition to repayment of the principal, between now and 2046. That is nearly two dollars repaid for every dollar borrowed. So that nearly $4MM in approved expenses Tuesday for maintenance is actually double that total.

When called out for irresponsible financing during the Tuesday meeting (again, because some of us have nothing better to do with our time) Kris Murray and Jordan Brandman did their usual Justification Gymnastics, prodding staff to explain how long it would have taken to fund those improvements, had we not borrowed the money. Public Works Director Natalie Meeks dutifully answered that it would be several more years before those improvements could be covered if not for the bonds. Thus, says their argument, Anaheim had “accelerated” the improvements by borrowing.

Once upon a time, we called that instant gratification, and it was not considered a character quality to be cultivated.

cost vs worth

It is bad enough to throw your “extras” on a credit card to be paid off over time. Most folks do it at some point, using some form of debt to cover a temporary or disposable expenditure, whether a vacation you can afford just slightly less than the breakdown certain to overtake you if you don’t get away, or that new pair of shoes FINALLY at 75% off. (Some of us even calculate this as a SAVINGS, since we were going to buy the shoes anyway. My husband will often respond, “Gee honey, just think about how rich we will get if you keep shopping like this.” Thankfully he is usually smiling with amusement when saying it. But then I am not using someone else’s money to buy the shoes.)

In this overly simplistic comparison, Anaheim is not reaching for some extravagance after the bills have been paid. In Anaheim we are putting the GROCERIES on a credit card, and not to pay it off at the end of the month to get frequent flyer miles! Anaheim is tapping the home equity to pay the light bill (a comparison that gets me a flash of annoyance from Kris Murray when I use it at the public comments podium. But she has not yet explained why it ISN’T the same. So let her be annoyed.)

The City Council’s use of borrowed money for basic maintenance is an admission that they have FAILED COMPLETELY, in their duty as leaders, to plan ahead and provide for the funding of basic civic upkeep, planning for the standard replacement age of facilities and infrastructure, which is the most elemental of services the citizenry expects them to provide.

  • Public Safety.
  • Civic upkeep of streets, curbs, sidewalks.
  • Quality of life services such as parks and libraries.

This is not rocket science.

The Mayor has been trying to remind his colleagues of the needs of our community with each new crony capitalist scheme they create, and he is consistently outvoted. Often James Vanderbilt is there asking very insightful questions about how funds are being spent, and his lead is not picked up by those too obtuse and dead-set on their own agendas to understand the long term damage in allocating “future revenues” that need to be built into the budget of Anaheim’s infrastructure, not the budget of some hotelier’s retirement fund!

As we saw this week in the discussion of Agenda Item 19 (to be discussed elsewhere soon) we have some VERY smart people working for the City of Anaheim who can help us figure out how to make our money work harder and stretch farther for us. But staff is limited by the direction of their Council overlords.

From the FY 2015/16 budget docs:

Budget Process

Overall, the budget process takes approximately eight months, ending in June with the adoption of the budget. The process begins each November with a review of the City Council’s goals, upon which the City’s budget will be built. Departments usually begin preparation of their individual budgets in December.

WHEN DO WE GET TO SEE THIS?

“Citizen participation in the budget planning process is encouraged through several Council appointed boards and commissions. In addition, public hearings are held to address the entire plan and for specific funds, such as Housing Authority and Community Development Block Grant monies. The Budget, Investment and Technology (BIT) Commission reviews the budget and presents its findings and recommendations to the City Council.”

So we have some of the smartest staff in government who are capable of making innovative programs work, and we have active citizen participation in the way of volunteer boards and commissions allowing us to tap into a variety of experts, with experience Anaheim could not afford to pay for without serious damage to the piggy-bank, yet offered for FREE in exchange for a lapel pin and a seat at a thank you luncheon once a year. What a deal! Yet it is all wasted by the mandate from 3 self-dealing leaders whose direction is to figure out how to make their personal and political agendas fit into the money we have coming in, and/or money we can pretend may or may not materialize in the future.

angry guyAnd they wonder why residents show up so hopping mad at the Public Comments microphone week after week. Each of these lost opportunities puts us that much further from the greatness of Anaheim’s potential. Shame on our leaders for forcing those lost opportunities off the platform for their own myopic vision, and shame on us for allowing it to happen!

Anaheim is blessed with a public utility that provides the lowest rates for power and water in the region, and that SHOULD be drawing industry and commerce to Anaheim, as utility bills can be a huge portion of a manufacturing business’ budget.

The Public Utilities Department has also developed a Level Pay Program that lets business customers smooth their payments over the year, which become very attractive to any business owner trying to maintain as much predictability in the monthly budget as possible.

The City has shifted to a flat fee structure for many permits and consolidated services to make them simpler and more straightforward for businesses.

Anaheim’s Brew City campaign has drawn some of the country’s finest brewers and distillers to Anaheim. This is not merely some warm fuzzy way to get better beer into our fair city (as worthy an idea as that is) but studies show craft breweries are one of the most stable business fields in the US right now, with virtually NO bankruptcies. THAT is good business practice, offering stable, decent paying jobs for the service industry. We have weather that is the envy of the world, we are within an hour’s drive of the beach, snow skiing, wine tasting, hiking, you name it, Anaheim has access to it. We should be drawing new businesses faster than we can drop off the gift baskets from the Welcome Wagon ladies.

modjeskaAnd yes we ARE blessed that Walt Disney selected Anaheim as the location for his dream to come to fruition some 60 years ago. (Anaheim had a reputation for hospitality for 100 years prior to Walt’s arrival, and that international reputation brought Helena Modjeska and her party here all the way from Poland, Walt did not bring Magic to Anaheim. Walt came here because this is where the Magic of hospitality was already happening.)

The presence of a destination that draws over 20 million visitors a year, and increasing annually with such success that Disney has to raise prices to discourage customers, offers those in the hospitality industry the kind of opportunity that others in less trafficked locales would give their left arm for.

The flip side of this opportunity is that money from tourism is the most volatile of funding sources, and the most sensitive to the highs and lows of economic impact, and world news events.

Anaheim’s over-reliance on tourism as the basis for our local economy, and our stubborn refusal to consider the very real community impacts of low wage labor as the foundation of our economy, combined with the economically irresponsible practices of long-term debt financing for common daily expenses, will crush the advantages Anaheim has within our reach. Leaders who continue promoting this financially dangerous mindset need to be held accountable for the damage they are doing, and it is the right and the responsibility of taxpayers to hold them accountable, as we are the ones who will be left holding the (empty) bag when these leaders are long gone to their next elected office (or sharing an island retirement colony with their favorite lobbyist.)

Somewhere out there (that would be EVERYWHERE ELSE IN AMERICA) cities manage to pave their roads, seed the lawn in parks, pay librarians, and provide public safety personnel for their citizens without the “economic engine” of the Resort, and without long term borrowing to cover basic repairs! It takes a special brand of stupid to not be able to cover the bills with the money that rolls into Anaheim’s General Fund.

Capital Improvements

The total Capital Improvement Program (CIP) for FY 2015/16 is $298.1 million. There are no projects planned for the General Fund; most projects are supported by funding sources that are primarily restricted.

measure m logoTuesday night, while explaining that borrowing into the next generation is a good thing, Public Works Director Natalie Meeks also explained that Anaheim got behind on street repairs because the gas tax funding and Measure M sales tax allocations had not kept pace with inflation thanks to some outdated formula.

This of course does not explain why someone had not read the funding formula and anticipated this outcome over time. Nor does it explain why our world-class city has not factored the potential for instability in our increasing reliance for outside funding sources, and created a backup plan that does not involve paying twice the cost of something in order to satisfy the need of politicians to put something happy on their campaign literature today, when we cannot actually afford it.

Not only should a forward thinking economic policy apply to basic civic upkeep of streets sidewalks, libraries, parks, and sewer lines, but it should technically apply to the enterprise funds such as the Convention Center itself, which is where the bond funds for the FY 2015/16 budgeted basic maintenance originated.

anaheim convention center wormseye

Let the Convention Center stand on its own, paying its own way, and funding its own future expansion in a set-aside fund, if only to get folks USED to the idea that taxpayers should not be carrying this “loss leader” of a white elephant. The excuse that the Convention Center generates hotel room nights and thus the TOT recoups the loss of bond funds has never been shown in any budget document or accounting of any kind. It is a GUESS, AKA wishful thinking, and until the great minds in the Finance Department can track the TOT generated specific to convention room nights, we have no reason to buy the theory.

We now know that the CBRE SOAR report on Resort funds is false, debunking claims of 50% of General Fund provided by the Resort, as staff now shows it is less than 1/4th. There is no reason not to believe that further scrutiny of the other sacred cows of Anaheim’s funding issues might reveal similar results, showing us that those “economic engines” might be revving in neutral, or even reverse.

Something has Anaheim so buggered up that despite bringing in more tax revenue than many COUNTIES in the United States, we are forced to borrow to pave our roads. Perhaps I am the only one horrified at that, but it boggles the mind to me. Either the money is not really coming in as reported (unlikely) or expenditures suck through more of the funds than are reported (more likely) or the entire pot of gumbo is so seriously mismanaged that it is literally wasted instead of working as hard as every penny that comes in can stretch. I think I see Option Number 3 staring back at me tonight. And I think I really, really don’t like it.

Anaheim is a city at the tipping point. Anaheim MUST turn back RIGHT NOW from the wasteful schemes begun by the previous Mayor and followed by the 3 Blind Mice elected since Mayor Pringle’s departure, but continuing the legacy of failed policies begun in his administration. Unless we get off the economic equivalent of a hamster treadmill, borrowing to cover basic expenses will become the norm, and catching up will be as fictional a scenario as any animated production from our famous neighbor.

The good news is, some neighborhoods in desperate need of some lovin’ and respect are going to get it.

The bad news is, we will spend twice as much as we should to cover the cost.

But the other good news is, we have time and the opportunity to make sure that is the LAST time we throw today’s needs on tomorrow’s taxpayers.

This has been a dispatch from Anaheim’s Fiscal Front Lines.

front lines


About Cynthia Ward

I am a truth-teller. It gets me in trouble. But if you ask me if a dress makes you look fat, I will tell you so, and help select another, before you go on television and realize it for yourself. My real friends are expected to be truthful with me as well. A secret shared will be taken to my grave, but lie to me, and it will end up here…on these pages… especially if you are tasked with the stewardship of public resources. I am a registered Republican who disdains the local GOP power structure, a born-again Christian who supports everyone’s right to spend their lives with the partner of their choosing. I am a wife, a mother, a daughter, a sister. I am a loyal friend to those who merit that friendship and when crossed I am a bitch with a capital C. I do not fit into a box, nor do I see others through the stereotypes that politics and public affairs so often tries to shoehorn us into. I think for myself, and so do you. Welcome to our shared space in this world.