Monday, July 16 , 2018, 1:45 am | Fair 66º


Ron Fink: How to Prepare a Budget, Lompoc Style

Beginning June 9, 2015, an accelerated series of workshops to draft a budget was presented to the Lompoc City Council; this series was complete June 23, just a week before the fiscal year ended. The past practice had been to hold workshops over a period of several days beginning in February.

By waiting so long to present his case, the city manager placed the council in a position where if it rejected his final budget the city wouldn’t have an approved spending plan by the start of the fiscal year and therefore technically would be out of business. In other words, the City of Lompoc would close shop until a budget was approved.

Keep in mind that the council had approved a plan to hire a consulting firm to assist with budget preparation Aug. 19, 2014. Why it took so long is anyone’s guess.

The budget presented to them was completely reformatted and theoretically based on the “zero-based budgeting” concept, meaning that each department was supposed to start with a blank page and then justify each expense.

I say theoretically because the exercise should have saved money, but the result was that the 2-year budget increased by about $400,000 over the previous budget.

There were some tricks in this new budgeting style. For example, it relied heavily on an unexplainede enterprise fund reimbursement plan that would transfer monies from all of the enterprise funds for services provided by the General Fund such as police, fire and street repairs.  

In other words, electric, water, waste water and solid waste customer’s fees would be shifted to cover General Fund functions without a vote of the people.

The council had not even seen a draft of this plan yet and they had no idea where several million dollars was coming from or whether the new reimbursement plan was based on justifiable costs.

They grumbled about the late date but ultimately passed the budget so that the city could keep operating. They had been skillfully maneuvered into a position of having to approve an unseen revenue plan or the new budget would fail.

It would take 9 months after the budget was approved for the new enterprise reimbursement plan to surface; council members had asked to see it earlier but it wasn’t forthcoming until March 15 of this year.

During the first hearing there were many questions, however, the staff couldn’t answer them so the council asked that the consultant who prepared the study attend and answer their questions.

The plan has some issues that need to be resolved. For example, the consultant says “because public property is tax exempt it has no assessed valuation”; however, during a March 2016 discussion of a recent proposal to build a new fire station on airport (public) property, the city was able to established a current value in order to assess what the fire department should pay to use the property.

Clearly there is a method in place to determine the value of city owned properties.

Next the consultant revealed that the city’s inventory of its infrastructure may not be complete, that land may be undervalued and the original cost of infrastructure may be low. Therefore, they really didn’t know the totality of what they were asked to evaluate.

Then there are how the costs are determined. It isn’t by the amount of service the enterprise funds were getting, instead proportional allocation was the methodology used to determine cost.

In April the staff came back to the council saying that the consultant would only appear if they authorized a little over $8,000 dollars to pay for their time. It seems that it took longer than first thought to prepare this plan and the consultant felt that they had completed their contract.

So now it’s May, almost a year later and the reimbursement plan still hasn’t been approved.

There’s more: during the May 3 council meeting the public works department presented their Measure A street repair allocation plan. In the text of the staff report they say “without a source of road revenue equivalent to the proposed enterprise reimbursement for ROW (right-of-way) maintenance funding, the city will need to eliminate all street maintenance and rehabilitation projects.”

As a taxpayer, I am frustrated with this whole process. First the council is duped into approving a budget late in the process because the staff couldn’t produce it in a timely manner, and now the street repair plan was held until the last minute. It was due by mid-June, and the council had no choice but to approve it.

Instead of establishing the revenue stream by approving the enterprise reimbursement first, the council approved an expenditure plan and now is trying to resolve the revenue side of the equation. It’s a new way to prepare a budget, Lompoc style.

— Ron Fink, a Lompoc resident since 1975, is retired from the aerospace industry and has been active with Lompoc municipal government commissions and committee since 1992, including 12 years on the Lompoc Planning Commission. He is also a voting member of the Santa Barbara County Taxpayers Association. Contact him at [email protected]. Click here to read previous columns. The opinions expressed are his own.

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