City's Repeated Deficit Spending Slashes Savings

The City of Lake Elsinore is running a Budget Deficit again this year and proposes more of the same next year. According to the Proposed Budget for next year by City Manager Grant Yates, the City’s projected income is $38.1 million and spending is $39.4 million. On page 12 of the 168 page Proposed FY 2015-2016 Annual Operating Budget it states…”This proposed expenditure level results in a shortfall margin of $1,251,451 for projected operating revenues over proposed operating expenditures in the General Fund”. The City proposes to pay for this huge shortfall by dipping into savings (Reserve), which are dwindling.

The Press Enterprise states…”The city is expected to finish this fiscal year $9.6 million in the black”. Butt, the PE is confusing these long term savings (Fund Balance) and lumped those savings into annual revenues. Nothing could be farther from the truth, as the City’s income (revenue) won’t cover next year’s spending (expenditures) and the City will have to dip into the long-term savings (reserves) to cover the shortfall of $1,251,451. The City’s Annual Budget is bleeding red with deficit spending, with discretionary savings almost depleted.

In 2006 the City had $24.6 million in savings (General Fund Reserves). At the end of the next fiscal year they’re projecting only about one-third of that amount left at $8.4 million. The City has been drawing down about $1.7 million per year from its savings over the last 9-10 years to cover the deficit spending. Of the remaining $8.4 million in savings, the City swears they’ll save $6.9 million (17.5% of Annual Budget) for some future catastrophic event. By law, there’s another $1.3 million the City must keep in savings (Nonspendable GF). So, at the end of the next fiscal year there will only be a paltry $0.2 million of discretionary savings left. Then what?

Mayor Manos appears to be in lala land with his statements to the PE about record breaking revenues. It’s just like a politician to hype revenues and disregard excess spending. Who wants to talk about a boring balanced budget anyway? Not Mayor Manos.  The City has a serious structural budget deficit problem that the Mayor & Council fail to recognize, let alone address.

Related weblinks:

City Council Agenda Item #12 at weblink (See pages 12 & 59 of Proposed Budget).

http://legistar.granicus.com/lake-elsinore/meetings/2015/6/1096_A_City_Council_15-06-09_Regular_Agenda.pdf?id=d8210d0f-77b0-4408-86fd-145a936f4109

2014 Comprehensive Annual Financial Report (CAFR) (See pages 147,148 & 151).

http://www.lake-elsinore.org/index.aspx?page=55

Read more cause & effect about the Budget Deficit:

http://patch.com/california/lakeelsinore-wildomar/deficit-spending-city-lake-elsinore-next-years-budget