Long Beach facing $10 million deficit

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In December, city officials had projected a $2 million deficit. But that estimate has leaped significantly, Schnirman said, after he and the city’s new comptroller, Jeff Nogid, took a closer look at the city’s finances. “We were quite shocked,” said Democratic City Council President Fran Adelson. “We knew that there was going to be a deficit, we didn’t know how deep the deficit was going to be.”

Council Vice President Len Torres — who criticized the previous administration for what he called “fiscal mismanagement” — said he wasn’t completely surprised. “We’re faced with some very, very hard choices now for the residents in Long Beach,” Torres said.

Big payouts and overtime costs hurt

Schnirman, who was appointed in January after the Democrats wrested control of the council from the Republican-led Coalition majority, said that exorbitant overtime costs as well as termination payouts to a number of outgoing police officials are mostly to blame for the city’s debt. For example, the prior administration had budgeted $617,500 for termination salaries, but those payouts are expected to cost the city more than $3.1 million this fiscal year. Schnirman said that termination salaries and overtime costs are a “staggering” 410 percent and 65 percent over budget, respectively.

The deficit includes $1.5 million that the previous administration used after it issued a budget note in November to pay a number of outgoing police officials. While Schnirman said that the city does not have to begin paying off the note until the 2012-13 fiscal year, the city still must close the remaining $8.75 million gap before the budget is approved in April.

“That piece of the deficit gets kicked down the road to next year’s budget, so when we start next year’s fiscal year, we start immediately at a negative $1.5 million,” Schnirman said. “We’ve still got $8.75 million to close.”

Overestimated revenue projections are responsible for half of the city’s inherited structural deficit, Schnirman said. For example, revenues generated by state and county sales taxes, beach fees, and commercial sanitation fees and parking violations, among others, came up short.

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