Pacific Progressive

Orange Paying for 2nd Water Rate Study Which includes Sale of Water Company

Why would a city that is running out of money to the point where they need to find ways to get rid of the city's fire department, end kid's swim lessons, and plow under the community garden want to spend money a on a second water rate study in a year?  On Tuesday, March 22, Orange City Council will consider paying up to $58,400 for a second water rate study.  

Why?  During the February 8, 2011, meeting to discuss water rate increases, when the Council couldn't come to an agreement to raise water rates to not take money from the general fund, they voted to do another water rate study.  Rolled into this study, at the request of Councilmember Fred Whitaker, is the possible sale of the water company to a private company.

And is the Council still going to spend money on consultants to figure out how to right size the City staff? The item's not on the agenda for the meeting, but that doesn't mean it's not going to happen.  The City Manager is allowed to sign contracts below a certain size without the item coming to Council for approval.  This is done so every expense report, order for office supplies, etc, doesn't end up on the agenda.  This is how the consulting agreement with Citygate Associates LLC to end the City-run fire department by creating a mini-Orange County Fire Authority appears to have been done.  

You can find out if contracts have been given out by looking at the warrant registers, which is the list of checks issued by the City. Each agenda packet has a list of the warrant registers.  Look thru the registers and ask about items that aren't clear to you or you can't find being discussed in council meetings.  Even though the contract has been signed, you can still talk about it and ask questions.  

Here are the Black & Veatch contract extension, March 22 agenda, and February 8 minutes to help you out.

Download Orange2ndWaterRateStudy

Download OrangeAgenda_Mar22

Download OrangeMinutes_Feb8

St. Patrick's Day In Memoriam in Costa Mesa - 213 Employees Laid Off

 



As Mayor Monahan enjoys big profits from the crowds packing into his bar, 213 Costa Mesa employees will be wondering where their next job will be coming from.  On St. Patrick's Day, Costa Mesa will decimate the City's workforce by laying off about 213 employees.  This action is a result of claims that the City's pension obligations will skyrocket, according to projections done by city staff, who are not actuaries or pension fund managers.  

This represents a pinnacle of achievement for Mayor Pro-Tem Jim Righeimer, who has waged war on public employees since 1998 when he had Prop 226 put on the ballot. Righeimer wants private companies to pick up the City contracts instead of having public employees.  If wholesale outsourcing comes to pass, taxes are not going to go down (Costa Mesa has limited taxing authority), but the money will go to a few well connected individuals (moguls)  who will have incentives to maximize profits while lowering services and wages.  

The whole "hurry up, the house is burning down" process pushed by Righeimer has been questioned by many.  Councilmember Wendy Leece has repeatedly questioned the wisdom of these sonic boom processes and asked for a rehearing, which was shot down by the other members of the council.  

The fiction of a budget crisis is working and people are seeing thru it.  The Voice of OC has an excellent article that points out the contractors who would be picking up the City contracts were ready to testify at the public hearing but Council had not asked for reports from the departments being outsourced or asked them to testify.  Care Ambulance was ready to go but city's paramedic coordinator reported that the fire department had not been asked to weigh in on the issue.

A request has been made for the "records, data, source documents, worksheets, computer files, emails and related documents pertaining to preparation and calculations of PERS Rates and Unfunded Pension Liability Review presented at  City Council Study Session on February 8."  You would think that given how important those numbers are to the 213 people being given the bums rush out the door that the City would have a binder of documents and CD's of backup that could easily be offered up to support their numbers. The request was made on March 3, 2011 and documents aren't ready yet.  Councilmember Leece has also asked for and not received the same data.

 If you want to make a public records request (and you should) try this website.  Follow the instructions and drag the letter into your wordprocessor to clean up. Ask for the PERS projection backup. Ask for who on Council is getting lifetime medical benefits for them and their family. Ask which Council members opted-in CalPERS (didn't know Council can get CalPERS - they can!).  Ask about expense reports, outsourcing reports, campaign finance records, anything you have a question on about how Costa Mesa has  made a decision as ugly as the one they have made now.  

 

City of Orange Budget Study Session - 2 Notable Absences, Consultants and Are Swimming Lessons on the Chopping Block

Updated 3/13/11

Orange City Council met for a budget study session before the March 8, 2011 council meeting.  This meeting, which isn't televised or taped, gives a great deal of insight into what to expect in the upcoming budget process.  Look for:

• Consultants!
• Cuts that don't make sense
• Pressure to get rid of public employees

First thing to notice at the meeting is that both Denis Bilodeau and Jon Dumitru were absent for the study session.  Mayor Pro-Tem Tita Smith commented on their absence, and her comments made it sound like both Bilodeau and Dumitru did not discuss missing the meeting with the rest of Council and the absences were a surprise. (Update:  The City Manager was informed that the meeting interfered with both Bilodeau's and Dumitru's work schedules and a request was made to cancel or reschedule the meeting.  The policy on notifying Council members of anticipated absences isn't known to the public.)   Both Bilodeau and Dumitru work for Orange County, which can be assistive of employees serving on city councils and other public functions. Bilodeau is Supervisor Shawn Nelson's chief of staff. Dumitru works in the command center coordinating fire fighting and emergency activities. Dumitru is also a union member of Orange County Employees Association (OCEA) which represents many County employees.

Consultants!

Bottom line:  If there is money for consultants, then we need to find a way to not use that money for consultants and avoid more cuts.

There is a budget gap of about $10 million which can be bridged by strategic use of reserves, trimming hours and asking bargaining units to not take raises this cycle.  Council doesn't think that department heads can handle this and wants to bring in consultants to do a study and make recommendations. In 1999, a similar project took 9 months and cost $150,000, and the recommendations were rejected.  The rejected recommendations were to hire additional staff at a cost of about $500,000.

Right Road for Costa Mesa is Against City-Council Mandated Suffering

The residents of Costa Mesa who oppose the gutting of Costa Mesa for purely idealogical reasons are on the right road. These people want a city that is livable, vibrant, and constantly attracting new residents and businesses. They want the summer concert in the park with their kids and neighbors, enjoying the ocean breezes as the sun sets.  They want to walk to the OC Fair every year, eat too much, stay too late and go back the next day and do it again because it's just fun!  They want their sense of community, history and pride.

And the current City Council hates that. They want the majority of residents to suffer so the well connected minority can benefit.  They want to put people out on the street by cutting their jobs and then turn around and give a fat check to businesses lining up for the work. Did anyone notice that no city staff gave a report on the work performed by the departments up for outsourcing? There was no report from the Fire Department about EMS or paramedic services, but the representative from Care Ambulance was cued up and ready to go.  The Voice of OC has a great article about how the meeting and process was highly biased.

The residents of Costa Mesa are on the right road in pushing back against the City Council who is working against them.  They need to follow the money and find out who is going to benefit from the outsourcing. They should also find out if any of the City Council members are taking any of the benefit package (health care, CalPERS) that they so decry and want to deny the workers.  If they are, they need to be called out for it.  

And, the residents should not be shy about talking about how the City Council is on the wrong road. They should share this openly and talk with the friends and neighbors about how to get back on the right road.  They should support their City employees during the upcoming battle, because it's the employees who are going to bear the day in, day out brunt of abuse from the higher ups at City Hall.  And, residents need to ride herd on any legal bills coming out of this fight.  Stay on the right road, Costa Mesa.

 

 

Ambulance Moguls vs. Fire Department in Costa Mesa

Frank Mickadeit's column in the OC Register sums up the Costa Mesa battle over paramedic service outsourcing:  Ambulance Mogul Looks to Cut Costs.  In the online edition, the article is titled 'Private Paramedics Get Paid (a Lot) Less'.    Ambulance mogul tells you everything you need to know about what is going on in Costa Mesa.

Private ambulances and paramedics do not work for free or to break even, they work to make a profit for the owner of the business (the Mogul).  To make that profit, residents will be charged much more than the $185/call they are now charged by Costa Mesa. According to city staff, the $185 is billed to insurance companies and Medicare and the City accepts whatever payment made as payment in full. Residents are not 'balance billed', the highly controversial practice where a medical provider starts collection activities against the insured for the difference between reimbursement and what the provider thinks the service should cost.  Costa Mesa writes off fees for residents who can't pay.  Private providers can't do that and need to pursue collection activities to get their money.

Costa Mesa City Council has invented a new and unique form of ambulance chasing - picture the for-profit company  outracing the fire department to get to the patient first so they can load them up into their vehicle to claim the higher payment due to them.  There's going to be a financial Russian roulette going on here - do you get the low cost, high quality Fire Department or do you get the high cost private service?  The injured and bleeding public won't know until they get the bill. 

Ambulance moguls don't like fire departments because fire departments can provide fast, cost effective services to people without discrimination and without first checking for a financial pulse first.  And that gets in the way of being a good mogul.

Grassroots Occupation: Chicago Parents Sit-In to Save Field House

by: Yana Kunichoff, t r u t h o u t | Report

Parents and students in Chicago occupying a school field house to protest its planned demolition have become a symbol of community resistance to blind budget cuts.

More than 50 parents have been staying overnight at the field house, nicknamed "La Casita," for more than a week, supported by donations of food by the community, and calling for the squat, peeling, two-room structure to be turned into a library instead.

The building currently houses after-school programs for Whittier Dual Language School and the neighborhood's community center, and has been targeted by Chicago Public Schools (CPS) administration for immediate demolition.

Wiping away tears, Whittier parent Araceli Gonzalez told Truthout the library was essential for the community and she was prepared to continue to fight for it.

"We are basically doing this for the children, to get them a library, space, activities after school," Gonzalez said. "Let's take them out of the streets. CPS is like throwing them to the streets." One of Gonzalez's children graduated eighth grade from Whittier, and another is in third grade at the school.

Parents at the school in Chicago's Pilsen neighborhood had been organizing for seven years, according to Teachers for Social Justice activist and Pilsen resident Gema Gaete, to divert some of the money in Chicago Mayor Richard M. Daley's Tax Increment Financing (TIF) fund to their school.

Contracting that Works: A Toolkit for State and Local Governments

By David Madland, Karla Walter, Paul K. Sonn, Tsedeye Gebreselassie

This material was created by the Center for American Progress Action Fund.

Download this memo (pdf)

State and local governments finance millions of jobs across our economy with the hundreds of billions of dollars they spend each year to purchase goods and services. Yet jobs created through government contracting are often substandard, paying very low wages and involving poor working conditions where employment law violations are common. Such jobs not only hurt America’s workers; they also undermine the quality of goods and services delivered to government agencies and the public, and often result in significant hidden costs for taxpayers.

Growing numbers of state and local governments are therefore adopting “responsible contracting” reforms to improve the quality of jobs generated by their procurement spending. This report identifies the best practices in government contracting that are allowing state and local governments to significantly raise standards for workers and secure better value for taxpayers. They are accomplishing these goals by reducing the hidden costs taxpayers often bear when workers are paid poverty wages such as income assistance and health benefits for the uninsured, improving the quality of goods and services taxpayers receive, and increasing the number of companies competing for government contracts.

This toolkit outlines reforms that can improve the quality of the jobs generated by government contracting and supplements other contracting reform blueprints that chiefly focus on improving transparency and accountability. The key strategies inventoried in the toolkit are:

• Careful review of decisions to contract out
• Prescreening contractors for responsibility
• High standards for wages and benefits
• Incentives to raise wages and benefits above the legal floor
• Strong post-award enforcement
• Increased data collection and transparency

How Orange County is Doing - 2010 Community Indicators Report Available

Orange County is the fifth largest county in the United States.  The county has more residents than there are in 22 states including Nevada, Utah, Iowa and Idaho.  So, how is this big state sized county doing?  The 2010 Community Indicators Report shows a changing population and a mixed bag for if we are better off now than a few years ago.  The report is a compendium of county information which is handy to have if you are making decisions, advocating for decisions, or trying to learn more about your community.

Orange County is becoming less white - 46% of residents identify themselves as non-Hispanic white, 34% are Hispanic and 16% are Asian/Pacific Islander.  The white non-Hispanic population is declining while the other groups are trending upward.

 Along with this shift in ethnic make up, there is a shift in jobs.  In 2009, Forbes magazine ranked Orange County at 107 out of 200 metro areas ranked for business climate.  This is a 15 point decline from 2008 (ranked 92) and an 80 point decline from 20045 when the county was ranked at 27.  The cost of living is relatively high, even in the recession, making it hard for employers to attract and keep workers.  Wages in the higher paid occupations (computers and engineering) are showing declines in recent years.  The major growth industry for Orange County is the low wage, no benefits tourism industry. Add to this a decline in the number of technology related undergraduate degrees granted by local universities and you start to see a picture of a changing Orange County.

Other subjects in the report are:

• State and local finances
• Housing and commuting

Fixing Tustin's Decaying Water System Discussion Delayed to Oct 20

The third time was not the charm last night at the Tustin City Council meeting.  The hot potato of water rate increases to fix a falling apart system was supposed to come back for the third time in three months but was delayed until the October 20 meeting due to the absences of Councilmen Palmer and Gavello.  Staff worked to craft six proposals presented in the 127 page report (follow links to Oct 6 agenda).  

These problems did not evolve overnight. Rawlings Reservoir has had cracking problems since 1991.  Tustin is not a dry, poor, dusty desert town with limited resources for capital. Tustin is, according to Forbes magazine, a good place to live. So why is Tustin in this situation?

The six options created by staff range from fixing the problems and rebuilding cash reserves called for by prudent fiscal management (Options 1 and 2), fixing the water infrastructure on a five year schedule and not building reserves for five more years (Option 3), fixing only a few things and not building reserves for five more years (Option 4), fixing a few things and  not building reserves at all (Option 5), and just raising rates to keep barely even and putting the problem off for another day (Option 6.) 

Option 1 - Allows debt to be issued in February 2010 to build a new Rawlings Reservoir and fix the Tustin Avenue Well.  Simon Ranch Reservoir and Booster Station and Beneta Well can be fixed in FY 2012-13. Completes other pay-as-you go projects.  Meets existing bond covenants.  Cash reserves replenished within five years.

Impact of State Budget Cuts on Orange County

State budget cuts caused by an obstructive minority of Republicans in the State Legislature are causing hardship for all Californians. Even though the majority rules when it comes to deciding elections, a minority in the State Legislature can force the rest of California to live in a way that they didn't vote for.

In Orange County, the pain is made worse by the Supervisors unwillingness to backfill programs cut by the State or to aggressively seek other sources of funding.  At the most recent Orange County Board of Supervisors meeting, the pain of budget cuts was laid out in detail. 

• Eliminate Prop 36 Substance Abuse and Crime Prevention Act Funding  -  $1.1 M Probation Department, $328,483 District Attorney, $328,483 Public Defender , $4,1114,760 OTP 10 full time positions in Probation Department, 9 other positions
• CalWORKS - $481,491 and 5 full time positions
• HIV Reduction- $1,399,109 and 9.5 full time positions'
• Early and Periodic Screening, Diagnosis, and Treatment Services (EPSDT) - $470,066
• Eliminate Maternal, Child,  and Adolescent Health - $65,304
• Children's Dental Disease Prevention - Healthy Smiles - $240,219
• Adolescent Family LIfe Program - $550,762
• HIV Prevention - $441,482
• Mental Health Managed Care - $4,313,800
• Statewide System Automation for Social Services Agency - $249,691
• Medi-Cal Administration - $700,000
• In Home Supportive Services (IHSS) Public Authority - $578,397
• Child Welfare Services - $5 M
• Foster Care Administration - $2,809,703
• Transitional Housing Program (THP) Plus - $313,877
• Redevelopment Agency Revenue Shift - $8,788,594
• Community Based Services Programs - $268,390
• General Fund Fund Prop 1A Suspension - $37 M
• OC Parks Prop 1A Suspension - $4,100,000
• OC Libraries Prop 1A Suspension - $3,100,000
• Flood Control District Prop 1A Suspension - $5,300,000
• OC Fire Authority Prop 1A Suspension - $13.8 M

The documents presented to the Board of Supervisors are here:

Download StateBudgetImpactsSept09

Download CountyBudgetImpactsSept09

Update: Impact of State Budget on Orange County

Property Tax Borrowing by the State (Prop 1A)

Under terms of the new budget, the State will borrow property tax revenue from the Counties. The Counties are creating bonds thru the California Statewide Communities Development Authority (CSCDA) to purchase the receivables due to cities, counties and special districts which will have the property taxes borrowed. By creating the bonds, the cities, counties and special districts will receive cash flow from the sale of bonds to offset some of the loss of cash from property taxes.

Timing is going to be an issue.  The first installment of property taxes will be transferred to the State by January 15, 2010 but securitization cannot occur until March 2010, two months later.  Several parties including the League of Cities are working with the State Department of Finance and the State Legislature to have this situation fixed.

In Orange County, the estimated gap between borrowing of property tax revenues and issuing bonds will impact the General Fund by $37 million, OC Parks by $4.1 million, OC Libraries by $3.1 million, and the Flood Control District by $5.3 million.

Outlook for the Economy

In July, unemployment rose from 11.6% in June to 11.9%.  Job losses are slowing down, but job losses are continuing. There were 63,000 jobs lost on average each month from March to June 2009 compared to 87,500 lost from November 2008 to February 2009.  

Residential real estate shows signs of stabilizing with the number of sales up 20% from last year.

The cash flow situation is not good.  Most sources of revenue are running behind projections.

• Personal Income Tax was $74 million below the May Revise budget.
• Sales Tax was $76 million below the May Revise budget. 
• Corporate tax revenue was $104 million above the May Revise budget.
• Vehicle License Fee (VLF) was $36 million below May Revise budget.
• Other taxes were $8 million above May Revise.

More Problems with Tustin Investment Management

How Tustin manages investment money was the topic again at the City Council meeting on August 4, 2009. The money Tustin invests is money that can be needed to pay bills (meet obligations.)  The investment policy is designed to protect the principal and maintain liquidity.  Not losing money but retaining the principal takes priority over making money.  Another way of looking at Tustin's investment accounts is this is the savings account for Tustin (or money market checking account), not a stock market account. 

A review of the current investments was made and it was determined that Tustin's investment policy had not been followed.  A $3 million security (bond) issued by Merrill Lynch, now owned by Bank of America, rated single A had been purchased. Tustin's investment policy requires that corporate securities be rated AA or higher by Moody's or Standard and Poors. 

 City Treasurer George Jeffries admitted that he knew the rating of the security did not meet the requirements of Tustin's investment policy when he made the purchase.  The clip below shows the discussion with Jeffries regarding the purchase of the security that does not meet required city standards. 

 Later in the meeting (available online),  Jeffries makes a statement which sounds like he is saying that he can count on his hand the number of times he has purchased securities which met Tustin's investment policy.  If this is what he meant to say and if this is what has happened, Tustin's stewardship of city funds is questionable at best.

After the discussion with Jeffries has ended (not in the clip but available online), Councilman Jerry Amante stated that he wants to change Tustin's investment policy to obtain a higher yield.  The purpose of these investment accounts for Tustin is not to make money, but to hold the value of money that may be needed to pay obligations.  These investments are, in effect, Tustin's saving account, not their stock market account. The objective of an investment pool like Tustin's is to match the yield of Treasury securities, not stock market or other funds. A good financial manager understands that different investments have different uses and yields.  Changing Tustin's policy to make more money by allowing riskier investments does not make sense for Tustin's city savings account.

Review Tustin's investment policies for youself. Each policy has been signed off by Treasurer George Jeffries:

 Download 2009InvestmentPolicy

Download 2008InvestmentPolicy

Download 2007InvestmentPolicy

Download 2006InvestmentPolicy

Download 2005InvestmentPolicy

Quarterly investment report reviewed at August 4 meeting:

Download 07 QUARTERLY INVESTMENT REPT 08-04-09

 

Tustin Water System Needs $45 Million in Capital Improvements

Tustin has serious problems with the city-owned water system - $45 million in capital improvements are needed on fixed assets valued at $40 million including repairing a collapsed reservoir and a rate increase has been voted down by the city council. What is the magnitude of Tustin's problem and how did it get this bad?

Tustin's Water System

The city of Tustin acquired the Tustin Water Works in 1982. Tustin Water works was founded by Charles Willard, who sold the business to C. E. Utt in 1897.  The Utt family operated Tustin Water Works until the city acquired the assets.

During the past 26 years, assets have been added to the system to support the increase in population.  Currently, there are 170 miles of pipe, 14,106 water meter connections, 13 wells, 2 water treatment plants and 6 reservoirs in Tustin's water system.  

The goal is to use 80% pumped groundwater and 20% purchased (imported) water to meet the city's needs.  Groundwater is supplied from the Orange County Water District (OCWD) basin and costs $350/acre foot.  Tustin purchases water from the East Orange County Water District (EOCWD), Municipal Water District of Orange County (MWDOC), and the Metropolitan Water District (MWD).Water purchased form these agencies costs $603/acre foot.

Tustin's city owned water system does not serve the entire city.  The eastern part of the city is served the Irvine Ranch Water District (IRWD.)

What Has Been Rejected

The proposed rate increase which included money to fix water delivery infrastructure was rejected by the City Council. The proposal included rate increases of about 10% a year for residential customers and implemented a new tiered rate structure tied to usage and water meter size.  The rate adjustments from water suppliers MWD and OCWD are being passed-through automatically so the water district does not have to absorb the rate increase.  The 10% increase is in line with what Tustin has historically done - put off rate increase until the last minute, then do a big increase.  

Additionally, a capital fee is assessed on all water meters as a way to raise money to build and repair infrastructure.  The capital improvements include issuing $30 million in bonds (on a system with a book value of $40 million.)  The $30 million will be spent as follows:  $14 million for Rawlings Reservoir, $4 million for Tustin Avenue well, $8 million for Simon Ranch Reservoir and Booster Station and $4 million for Beneta Well.  The problem Tustin faces in issuing the water bonds in a soft market is the market is unwilling to issue or buy bonds for a water operation which is not at least breaking even. Tustin's water operation currently operates at a loss, making a rate increase needed to make the bonds saleable.

Budget Cut Mandated Restructuring of Sheriff's Department Finalized

Orange County Sheriff Sandra Hutchens has released details of the budget mandated cuts to her department.  In late July 2009, Sheriff Hutchens presented her plan for dealing with the drastic cuts to her department.  Part of the plan included "chopping at the top" - asking several senior staff members to take early retirement or layoff.  The cuts for FY 2009-10 total $28 million and the expected cuts for FY 2010-11 are an additional $60 million.  Sheriff Hutchens has said that she views these cuts as temporary because maintaining this level of service, in her opinion, could cause long-term damage to public safety and the Orange County Sheriff's Department.

The structure of the new organization significantly differs from the existing organization.  The organization seeks to do the same amount of work with significantly fewer people.  Sheriff Hutchens objective in creating the new structure was to impact front-line public safety as little as possible. She did not want to cut the first responders - Sheriffs in cars assisting the public, 911 operators, and investigators.  The new structure includes an increased workload for Sheriff Hutchens as she becomes responsible for the Coroner and Crime Lab/Support Services.

Brea Uses Recently Released Prop 40 Funds for Park Improvements

Brea put some park improvements on hold after receiving a letter in November 2008 telling the City that Prop 40 projects might not have the money to move forward.  Since that time, the bonds to fund Prop 40 have been sold, and the money is now available.  

Brea had planned to spend $356,163 on park improvements under Prop 40.  Of that amount, $157,458 was spent by November 2008 and won't be reimbursed by the newly released funds.  The projects that are receiving reimbursement are:

• New Backstops and Dugouts  $88,631
• New Concrete Picnic Tables $24,613
• New Drinking Fountains $14,728
• New Play Structures $17,064
• New Restroom Hand Dryers $7,160
• New Slides $3,372
• New Park Ordinance Signage $1,890

For more information, contact Sean Matlock from the Brea Community Services Department.