Warning: Cash-Flow Problems Ahead

Will Redondo Beach have to drain its reserve fund to make up for monies owed by the state?  City Manager Bill Workman suggested that might be the case.

The state is unlikely to release the money until the budget for fiscal year 2010-11 is approved, and that might not happen until after the November election, Workman told the City Council on Tuesday.

"This is a huge cash flow issue," Workman said. "They are sitting on our money."

Concerned city officials asked whether the reserve fund had enough money to cover operations until the city gets repaid those monies, and Workman indicated that was probably the case. But he said that the city might have to spend $4 million to $5 million—"essentially our reserve"—to keep services running.    

Redondo's elected officials were understandably concerned about the possibility, decrying the gridlock in Sacramento. The city went through a painful budget process of its own this summer, trimming services in the face of declining revenue. 

"This is disgraceful," Mayor Mike Gin said. "We happen to have the reserve because we've done a good job."  

Workman assured officials that he would keep them updated about the potential impact of the state budget impasse on Redondo Beach.

Said Gin: "The way they do business up there is just insane."   

Patch will continue to monitor the possible fallout from the state's budget crisis upon Redondo.