DOWNEY – With city officials saying they were caught off guard by a nearly $9 million deficit during the last fiscal year, a special budget subcommittee last week took on the seemingly impossible task of creating a way to give the City Council and the public real-time budget numbers that would alert policy makers to major cost overruns.
Councilmen David Gafin and Mario Guerra on Thursday held the first subcommittee meeting with Downey’s management staff. The budget subcommittee will meet every two months to make sure the council understands in vivid detail the financial state of the city.
The subcommittee had been around before this year, but it only met on an as-needed basis.
At the meeting, Finance Director John Michicoff, along with City Manager Gil Livas and Assistant City Manager John Oskoui, worked with Gafin and Guerra to find a way to create a reporting system that would try to smooth out the choppy nature of government financing, where the money comes in bursts, or sometimes not at all.
While the discussion of numbers at times was mind-numbing, the council has put a high priority of avoiding the drastic, somewhat sudden cuts it undertook to balance this year’s budget. The City Council 0n June 26 approved a $135.5 million budget, which was down from a $144 million budget the previous fiscal year. It was the first time in three years the city passed a balanced budget.
Through layoffs, an early retirement program and attrition, Downey this year reduced its full-time workforce from 430 to 368. The council also reduced the Fire Department by nine employees and took a fire engine out of service, triggering an effort by the Downey’s firefighters to ask the city to study the feasibility of doing away with the Fire Department and contracting the county to provide fire service. The City Council approved a feasibility study at its meeting Tuesday.
Guerra for the last few months has advocated for a system that would notify the council if the city was spending dramatically more than it took in.
“Where’s our smoke detector?” he asked Michicoff. “When we’re over something, how do we know? What’s our stopgap?”
For Michicoff, it was all he could do at the meeting to keep the discussion from devolving into a Babel of acronyms and caveats.
“I wish I could give you guys something that showed a smooth, gradual trend,” he said. “But in this volatile world, the numbers are all over the place.”
Michicoff said the city plans to completely overhaul the way it reports finances, breaking expenses down department by department in a way that would give details on exactly how each branch of the city was spending its money.
Gafin, who is an accountant, said he cared mostly about three numbers: The budgeted amount, the amount spent to date, and the amount spent on the same function the previous year.
Michicoff said the numbers get shaky when it comes to month-to-month comparisons. If a check from the state comes in late, the numbers might show a deficit when there’s really nothing to worry about. Conversely, a big check that comes earlier this year than last year could mask a cost overrun.
In other instances, a fund could look depleted because the city often borrows from one account to pay for something while it waits for money to flow into another account.
The meeting concluded with Michicoff hoping to come back to another meeting in August with some examples of how the new reporting system would work.
Guerra said, more than anything, he wanted the council to be notified of any drastic swings in the budget.
He and Gafin both have publicly stated that they would put the mothballed fire engine back in service if the city’s financial position improved.
If the numbers get off track, Guerra said he wanted to know as soon as possible.
“Honestly, I don’t even want to wait for two months to find out at our next subcommittee meeting,” he said. “I would really like something for the council within seven days.”