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.