Long Beach declares fiscal crisis

The Long Beach City Council voted unanimously on Tuesday to formally declare a fiscal crisis, after an independent auditor presented a bleak picture of the city’s finances and a number of residents called for a criminal investigation into the previous administration. The declaration will allow the administration to move forward with a plan to return the city to fiscal stability.

With Long Beach under review by Moody’s Investors Service, which downgraded the city’s credit rating to a step above junk bond status late last year, the resolution allows City Manager Jack Schnirman to rein in spending and implement cost controls to avoid another downgrade that could further impact borrowing fees paid by the city and its taxpayers.

The City Council tabled the resolution at its Jan. 17 meeting, saying that it wanted to clarify some of the language in the proposal after council members expressed concern that it would give Schnirnman too much authority. The council also wanted to wait until the release of an independent auditor’s report — which was made public on Tuesday — and to discuss cost-saving measures with union leaders.

The revised resolution gives Schnirman the ability to transfer any funds exceeding $1,500 until the fiscal year ends on June 30, to establish a hiring freeze and to implement an overtime policy. It also gives him final approval on spending and purchasing requests.

“This authority shall be for appropriations and transfers that reduce overall expenses and will not result in any change of services to the city unless it has prior approval by the City Council,” he said. “This is just to close this fiscal year and deal with this budget that we’ve inherited that is structurally imbalanced.”

Schnirman said that he and the new comptroller, Jeff Nogid, who started work last week, are taking steps to cut spending, but it was too early to say whether their plan would involve layoffs or a tax increase.