In her Feb 22 newsletter, Mayor Barth wrote, "the city has already included a 10%
annual increase in the current six year financial plan beginning in FY 2015/16." To city-watchers, it was great news that the city was actually thinking ahead and already had a plan to pay for not just increased pension costs, but the new debt service and operating costs for the Hall Park as well as perhaps ending the short-sighted, costly deferral of road maintenance.
Barth was relying on an e-mail from Finance Director Tim Nash to the council in response to a question from Council Member Lisa Shaffer:
In the current six year financial plan projected contributions to PERS are increased approximately 10% per year beginning in FY 2015/16. By FY 2018/19 (the final year of the current six year plan) contributions are assumed to increase 40%. When the six year plan is updated to add FY 2019/20 another 10% increase will be included resulting in a total 50% increase in PERS contributions between FY 2015/16 and FY 2019/20.
Encinitas Undercover wanted more information so that we could share the good news with our readers. Somehow, City Manager Gus Vina had found a way to increase revenues and/or cut costs that resulted in a balanced financial plan even including rapidly rising pension costs, road maintenance, park operations, and debt service. It seemed too good to be true.
Well, you know what they say about things that sound too good to be true. We asked for a copy of the current six year financial plan that Nash referred to. No current plan was provided, and the response was:
The 10% annual increase that the Mayor is referring to is the anticipated increase in PERS contributions for actuarial changes that CalPERS has implemented. The “draft” financial plan was included in a couple of slides in the CIP presentation on 2/12/2014 and is included as an attachment to the agenda report for that meeting. The final budget and financial plan will be discussed at three City Council meetings in May with final adoption in June.
In fact, the CIP presentation on February 12 did not include anything that could be remotely considered a financial plan, "draft" or otherwise. A financial plan, in any normal sense of the term, would show projected revenues and expenses by category, and an explanation for any significant increases or decreases. Nothing like that exists in the presentation.
Apparently, the most that can honestly be said is that the city is aware that costs are going up, but has absolutely no plans on how to pay for the increases. That's quite a different reality than the Mayor's reassuring statement to the public based on staff assurances to the council.
Wouldn't any competent city manager have created at least a medium-range financial plan before starting a project as large and expensive as the Hall Park construction? And what does it say of our city council that they didn't even require Gus Vina to produce a plan before they approved his borrowing and spending?
Communications Director Marlena Medford and Mayor Barth were very helpful and responsive to our inquiries, and both seem genuinely interested in improving transparency in the city's financial plans, as does Council Member Tony Kranz. We hope to see a legitimate six-year financial plan at the city's budget meetings in May.