Long Beach city officials will attempt to fill cash-flow gap at emergency meeting

City officials will attempt to borrow $4.5 million during an emergency City Council meeting at 5 p.m. on Wednesday, amid a cash flow shortage that could prevent the city from meeting its Dec. 23 payroll obligations and payments associated with a number of recent retirements.

The meeting comes on the heels of a Nov. 18 memo from City Comptroller Sandra Clarson addressed to City Manager Charles Theofan and other city officials, that said the city will not be able to meet its payroll obligations in late December. The document illustrates an urgent cash flow shortage that will seriously “affect the city’s ability to pay its bills” unless the city takes quick action and approves a measure to borrow a Tax Anticipation Note, Clarson said.

“Based on a preliminary review of the city’s finances, the city’s daily financial operations have come to an immediate halt,” Clarson wrote. “… there is not enough cash to make the last payroll in December.”

At the meeting, Theofan and other administrators will introduce two resolutions: one authorizing the comptroller to take out a $1.7 million tax anticipation note in order to make payroll by Dec. 23, and, because of “insufficient provisions” in the city budget, another resolution seeking the issuance of budget notes for $2.5 million to cover the costs of retiring police officials and other potential retirements in the coming weeks. Both resolutions require a majority council vote, and with a 3-2 Republican majority, city officials said that they are confident both proposals will pass.

The Democrats, however, have called for a press conference on Wednesday at 11 a.m. in Mineola, where they will announce that they are seeking an injunction to prevent the city from borrowing the $2.5 million — to cover payouts for three or more retiring police lieutenants and a $500,000 lump sum payment to Police Commissioner Tom Sofield Sr., the father of City Council President Tom Sofield Jr. — until an audit of the payments can be completed.

The press release states, “The newly elected Democratic City Council finds this attempt at greed to be outrageous and we are going to seek injunctive relief in an effort to protect the taxpayers of the city.”

Every two weeks, the city issues more than 600 paychecks to its employees totaling $1.4 million, Theofan said. In her memo, Clarson said that at present, the city has $3.9 million cash in its operating bank accounts, but is running a $1.3 million shortfall to meet its Dec. 23 payroll date.

In order to make up for the gap, Clarson advised the city to take out a short-term Tax Anticipation Note, which is payable no more than a year from the date of issuance. Authorization for the note would require a resolution approved by a majority of the City Council. She explained that if approved, a “fiscal adviser” can buy the note at a local bank, and that the entire process would take 14 business days.