LB Bailout Totals $4.25M (Emergency Council Meeting)

Just last week we received word that the City is effectively broke. The combination of a massive retirement package, a hotel that’s caught up in litigation stopping it from paying its bills, and supposedly overtime from a storm that hit three months ago, have put the City deep in the red.

Then, we were told the City would need a bailout of around $1.4 million – borrowing money that it expects to get when taxes come in in January. But, from tomorrow’s agenda, we can confirm the real number is more than $4 million between the sale of Tax Anticipation Notes and Budget Notes.

First off, the City wants to issue $1,7500,000 in tax anticipation notes (IOUs). These funds are required simply to keep the grinding gears of Long Beach running. This money is required by law to pay the cops, firefighters, city workers, and back every check the City has to sign through the end of the year.  In the brief explainer about the tax anticipation note, there is no reference to the payments FEMA supposedly owes Long Beach after Irene that City Manager Theofan cited as a prime reason for the shortfall.

Now here’s the real surprise, to pay off the accrued sick and vacation time of three City workers (perhaps more have been added to the list) – Acting Police commissioner Thomas Sofield Senior being one – the City wants to borrow $2,500,000! Earlier, this figure was pegged at $1.4 million, and has now increased by 78% ($1.1M) in one week.

What really is shocking, is to pay for the $2.5M (no breakdown on how that number is arrived at) the City is not using Tax Anticipation Notes (saying we know we’re getting this money, but just don’t have it yet), but is instead issuing budget notes. From my understanding, budget notes are the same as municipal bonds, and will have to be paid back, with interest, like any other loan. So because of the way current rules exist that allow for a massive accural of vacation and sick time  (in acting police commisioner Sofield’s case some $500,000 in 30 years) and then require its payback within 60 days, the city is required to borrow money it doesn’t have, and then pay interest on that with your tax dollars.

This appears to be a mess that keeps getting bigger. It is further baffling that with these sort of financial hiccups possible, Moody’s could have come in and accurately evaluated the city’s bond rating. But then again, they don’t have a great track record.

Tomorrow’s panic session is open to the public, but as of yet, the time is not posted.  One resident relayed to me that they were told the meeting may be held at 5PM (two hours earlier than the usual city council meeting time).  Certainly doesn’t sound like they want this to be the best attended City Council meeting.

Take a look at the whole emergency meeting agenda here.

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6 thoughts on “LB Bailout Totals $4.25M (Emergency Council Meeting)”

  1. Shaun – “supposedly overtime from a storm that hit three months ago…”
    Come on – you can do better than that — it is called investigative reporting – or just due diligence. Your article is so pathetically one-sided I do not know where to start.

    However, just to help you with some comprehensive research I will included the following link :http://www.mycentraljersey.com/fdcp/?unique=1322686854180
    Help may be on the way for cash-strapped New Jersey towns and counties facing repair bills from Hurricane Irene damage to water and transportation infrastructure.

    The state is making plans to issue $100 million in bonds that will be used for grants to local governments. Because the need for the bonds stemmed from rare weather events, the legislation is exempt from the ordinary constitutional requirement that it be put on the ballot for approval.

    Now that is the gist – and if you dig a bit deeper, you may find that this is happening in 10 East Coast states where it is estimated $7 billion to $13 billion of damage without even accounting for economic losses.

    And – by the way – as far as the budget note the City Council did this before – back in 2003 and who was in charge then?

    Geez – you are obviously on the internet all day, so it would be nice to finally see some REAL reporting on this site….

  2. Ah, civility in politics. You win!

    While I appreciate the step-by-step guide on how to use Google and the condescending tone, but what I wrote wasn’t “one-sided.” If anything, I’ve been quite fair. I’ve never said these retirement packages shouldn’t be paid out (that would be an example of being one-sided) or heavily quoted the Democrats while ignoring the Republicans (also an example of being one-sided).

    Instead you’ve zeroed in on one very specific comment and tried to prove a point I was never attempting to make (that these fiscal shortfalls only happen in Long Beach after a disaster)

    Facts
    A) Yes, Irene cost a lot of cities and municipalities big.
    B) Yes, LB had to pay a sum (not disclosed) for overtime, and we can assume damages, but again, no one has seen a disclosure so we have no idea what the costs were.
    C) Theofan is quoted as saying one of the prime reasons we are surprise broke is that Irene was unexpected and that’s caused a cash-flow interruption.
    D) Irene happened on August 28th, just a hair over three months ago
    E) FEMA was on the ground in LB during the hurricane assessing damages and immediately working with the City
    F) The City has known since then that it would be a months-long process to receive any financial reimbursement from FEMA, because that’s just how it works.

    Now the reason I brought up Irene, is because it was used as the reason behind a surprise payroll shortfall that could lead to LB workers not being paid. Yet, Irene is never mentioned once in the agenda to explain how it caused the shortfall.

    The City would clearly know since then, that FEMA would not be rushing back to pay them and money was spent that wasn’t budgeted for. That would require the bean counters in City Hall to be proactive and anticipate the shortfall. Let’s give them a month. That would mean around October they would be thinking about November’s payroll and go “opps, we’re going to have to do something about this.” But instead, it comes out at the last possible second, conveniently after an election when the City’s fiscal strength was repeatedly touted!

    Geez – you obviously fail at trolling.

  3. I think I am just flustered by your use of exclamation points…and I find it hard to believe that you actually believe that putting the reason on an agenda would make a difference. Was your home damaged? Mine was and I am still waiting for reparations and sadly my bank account is down as I could not wait any longer to do the work ahead of time. I did not budget for that and yes…..”oops I am going to have to do something about this,” as sadly I am out my $7,000 deductible for flood. But I guess i should have know sooner how much I would spend. That is curious because I am still waiting to find out how much I WILL receive….some 3 motnhs later.

    Would you story have been different if the City knew before the election….I doubt it.

  4. This is not about the storm. And it is not about prior use of tax anticipation notes. It is about the City and the governing majority touting the sound fiscal condition of the City, at every chance, and in a taxpayer paid for mailer sent just a couple weeks before election day. How can that not piss you off? I don’t care who is in power. I want them to be honest. That may be asking much, but it is a legitimate expectation.

  5. This is about a son who knew his father was retiring soon and didn’t put it in the budget. This is about a city manager hiring more and more people and spending $$$ knowing the budget was off. This is about a City Council not be honest in Nov. This is about a City Council doing a terrible job!!!!!!!!

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