Long Beach City Council tables resolution declaring fiscal crisis

The Long Beach City Council decided to postpone declaring a fiscal crisis at its meeting on Tuesday, as the city contends with a looming budget deficit, $48.3 million in general-obligation debt and a scathing credit-rating downgrade by Moody’s — not to mention a recent cash-flow shortfall that forced the previous administration to borrow nearly $4.5 million to pay city workers and retirees.

A resolution declaring a crisis would give new City Manager Jack Schnirman greater ability to authorize or veto spending requests and implement spending control policies, while at the same time demonstrating to Moody’s — which last month placed Long Beach under review and could downgrade the city’s bond rating even further — that the administration is developing a plan to return the city to fiscal stability.

Schnirman said that such a declaration would allow him to immediately “implement enhanced budget discipline” while ensuring the continuation of essential services.

City Councilman Mike Fagen said that in the middle of the current fiscal year, the city has essentially used up almost all overtime budgets and that revenues are falling below the previous administration’s projections. “The amount of money that we spend every week, every two weeks, on payroll and the money we spend to run the city, we’re burning the money faster than what the revenue streams are …,” Fagen said. “… We’re under an extraordinary challenge to … satisfy Moody’s that we have a structurally sound financial plan that can put us back on the road to financial stability … and at the same time … to firm up how we spend our money and slow down that burn rate.”

In the first full council meeting led by the Democratic majority, members unanimously agreed to take more time to discuss the issue with union leaders and the public before revisiting it at the next meeting on Feb. 7.