Former mayors differ on council’s decision for deficit spending.
By Jonathan Friedman / Special to The Malibu Times
The Malibu City Council entered uncharted territory by dipping into its reserve fund to cover the annual budget, for the first time in the city’s nearly two decades of existence. Former Mayor Joan House, known for her careful attention to the city’s finances when in office, said this was not a good idea. But former Mayor Jeff Jennings said the council’s action was justified and that this is the reason the city has a reserve. But he cautioned against making deficit funding an ongoing policy.
Malibu’s 2010-11 budget approved last week calls for nearly $38 million in spending, including nearly $21 million from the city’s general fund. At last week’s meeting, the council added several items to the budget that tipped the expenditures over the revenues. This included money for an extra motorcycle officer on Pacific Coast Highway ($179,000), a water quality study ($100,000), grants for community programs ($12,500 to increase existing funding for California Wildlife Center, Malibu Urgent Care and Malibu Foundation for Youth and Families) and an orthodontic insurance for city staff ($4,000).
Assistant City Manager Reva Feldman was able to make some shifts in the budget to come up with an additional $113,000, but the council’s expenditure increases covered nearly $300,000. This required $182,500 to be taken from the reserve. City officials long ago established that Malibu should maintain at least an $8 million reserve for a city prone to fires and other difficult situations. With last week’s decision for deficit spending, the city’s reserve is projected to be more than $9.2 million at the end of next fiscal year. But former Mayor House said she still felt using reserve money was a risky move.
“I would prefer to always bring in a balanced budget, especially in these times,” House said. “I realize the council has difficult decisions to make with what they wanted to spend the money on. I would prefer they cut other programs rather than deficit spend.”
Former Mayor Jennings took an opposing view. “Obviously the best thing to do would be to balance the budget with current revenues,” he said. “But one of the benefits of having been frugal in the past, now that we do have some need for extra money, we have a cushion that we can use to maintain desirable programs.”
He said as long as the city does not do this on a continuing basis, “then I don’t see any problem with dipping in the reserve.”
If council members want to fund the new motorcycle patrol officer beyond next fiscal year, they will have to use reserve money again, unless revenues increase. Feldman said some of the cost of the officer will be offset by extra tickets being written (the city receives 19 percent of money generated from a traffic violation ticket and the total bill for a parking ticket), but it would not be enough to cover the full cost. The city is currently lobbying Sacramento for the California Highway Patrol to cover Pacific Coast Highway in Malibu.
Feldman told the council at last week’s meeting regarding deficit spending, “It’s not a practice we want to get into. If the council were to ask my opinion on conservative budgeting approaches, that would not be how I would choose to budget. But I certainly understand the priorities that are in front of the city and why we would want to do a one-time appropriation as long as we understand these can’t be ongoing major expenditures if our revenues don’t support it.”
Rosenthal said during the meeting that she felt comfortable with the plan because all the additional items involve public safety.