Sunday, October 16, 2016


Meaning:  The act of distracting; drawing someone's attention away from something

Origin:  From mis- (1) + direction. Meaning "action of a conjurer, thief, etc. to distract someone" is from 1943.

When performing a magic trick, a magician will often draw the attention of the audience in one direction, perhaps toward a comely young assistant  or a loud noise and puff of smoke, in order to divert attention from what’s really going on to accomplish the trick.  This is known as “misdirection”. 

Looking at the “informational” pieces coming out of City Hall regarding some of the local ballot measures, if seems like nothing so much as misdirection. 

Measure BB is a prime example.  

The tax-dollar-financed flyer talks about some of the resources of Fairview Park and includes considerable verbiage about the Fairview Park Master Plan.  The flyer even devotes the better part of a page to a map of the Master Plan.

But Measure BB has nothing to do with the Fairview Park Master Plan. 

 Measure BB does not guarantee that the Fairview Park Master Plan will be implemented.  Measure BB does nothing to limit changes to the Fairview Park Master Plan—a plan that can be and has been altered without a public hearing or even any City Council action.  In fact, Measure BB specifically states that uses in Fairview Park would not be limited to those in the Master Plan (Section 4). 

What would be allowed, then? 

As stated in the flyer Measure BB permits “passive recreational uses”.  Sounds pretty benign, doesn’t it?  But Measure BB defines “passive recreational uses” very differently than stated in the flyer prepared and mailed courtesy of Costa Mesa taxpayers.

In addition to the low-key uses identified in City Hall’s flyer, Measure BB defines “passive recreational uses” to be any use allowed in Institutional and Recreational Zones and “typically occurring in parks” (Section 3 ).  We have a library, gymnasium, swimming pool and community center at Lions’ Park.  Other cities have fire stations, senior centers and even city halls in parks.  These are all important uses, but should they be permitted in Fairview Park? 

Measure BB would allow all that and more. Under Institutional and Recreational Zoning, total square footage of buildings could equal up to twenty five percent of the land area.  For Fairview Park that would mean up to about 2.26 million square feet of buildings.  That's just a tad more than the square footage of South Coast Plaza's main mall, located between Bear Street and Bristol.

And don't forget the parking.  Measure BB allows unlimited paving of the park.

Measure BB does not even guarantee that all of what is now Fairview Park would continue to be part of Fairview Park.  

Unlike Measure AA which specifically identifies Fairview Park to be the 208-acre area covered by the 2008 Fairview Park Master Plan, Measure BB does not define what area would be included in—or excluded from—Fairview Park.  Is it the full 208 acres we know and love?  Measure BB does not identify the park boundaries.  Could part of Fairview Park be carved out and re-designated the Bumper and Bonzo Athletic Park? 

Don’t be taken in by flyers directing your attention to the Fairview Park Master Plan, instead of accurately describing what Measure BB really does.  Measure BB allows unlimited changes to the Fairview Park Master Plan and allows development not included in the Master Plan. 

If you want to truly protect Fairvew Park, only Measure AA will provide that protection. 

Vote No on Measure BB!  

Tuesday, March 15, 2016

Kindly? Or "Good Enough"?

A depositary of living animals shall provide the animals
with necessary and prompt veterinary care, nutrition, and shelter,
and treat them kindly.               California Civil Code Section 1834

The “depository of living animals” for Costa Mesa is the Orange County Humane Society located in Huntington Beach.  The  City of Costa Mesa currently contracts with OCHS for animal shelter services.  OCHS used to provide shelter services to the City of Newport Beach. Too, until Newport abruptly cancelled the contract late last year (DP articles here and here).      

In a December 22, 2015 report, Newport Beach staff noted unsanitary conditions.  The report also stated that “Animal Control Officers frequently found animals soaked“ due to the practice of hosing out kennels with the dogs remaining in the kennels.  The Newport Beach report also cited poor record keeping and failure to implement State of California requirements for spay/neuter. 

After  touring the OCHS shelter a number of times, I also had concerns.  The level of cleanliness left a lot to be desired.  One of the buildings was dark and had minimal ventilation.  Dogs and cats were housed in close proximity, increasing stress for all the animals.  Overall, the situation did not look very “kindly”.


After speaking with current and former volunteers at OCHS my concerns increased.  Unfortunately, volunteers are fearful of talking on the record, as they will then be “fired” as volunteers.  In fact, the rules for volunteers impose a gag order.

Some shelters celebrate each adoption.  Some shelters post a list of animals slated for euthanization, upon which people spring into action, posting pleas on facebook,  calling friends, trying to find a home for the unfortunate animal.  At OCHS volunteers arrive to find animals gone.  OCHS  rules state “I will not [sic] question their whereabouts nor speak amongst others regarding their status.”  Wow!


No such limitation on Yelp.  OCHS received only two stars, the lowest rated animal shelter in Orange County.  Eighteen of the thirty-two reviews gave the facility only one star, the lowest rating possible.  Reviewers cited rude staff, lack of cleanliness, provision of inadequate/inaccurate medical records, and adoption of animals subsequently found to be unhealthy.  One reviewer said they saw an OCHS  staff member kick a small dog.

Where’d they go?

Each year,  our animal shelter data  is required to be submitted to the California Department of Public Health.   Costa Mesa’s annual reports show total animals coming in from various sources each year significantly higher than animals going out each year except 2010, when things about balanced.  In fact, from 2009 through 2014, records show about two thousand (2,000) more animals coming in than are accounted for going out via adoption, owner redemption, euthanasia, etc. 

This may simply be poor record keeping.  On the other hand, maybe animals are escaping to wander the streets.  What if the euthanasia rate is being masked?  Other worse, scenarios come to mind.  In that case, I’m hoping it’s just poor record keeping.

Where Do We Go From Here?

Because of the large number of animals entering the system from  Costa Mesa, our options are limited to larger facilities.  At one time Costa Mesa contracted with the City of Irvine, but that was discontinued a few years ago.  Orange County is preparing to build a new shelter, but it could be costly to participate in that, and the Orange County Grand Jury indicates that they have problems of their own, from the existing rundown facility to inadequate staffing.  We might be able to join with a few other cities to build a local shelter, if a site could be found.

Or should we continue at OCHS? 

Months ago, in response to my concerns, a staff member indicated that people in Irvine and Newport Beach were more “picky”.  I was told that OCHS was “good enough for Costa Mesa”.  Do you agree?

The City Council will be discussing the issue this evening, March 15.

Tuesday, March 3, 2015

Show Me the Money

For the past five years, we’ve been hearing about the drop in Costa Mesa’s reserves and the need to replenish our reserves.   We’ve heard politicians brag about rebuilding the reserves.  Then why are our reserves still so low, even with record revenues?

This evening, March 5, the City Council will decide what to do with the City’s “extra” money.  The problem is defining what’s “extra”.  Many would consider the “extra” to be excess of revenues over expenditures.  You take in $80 million, you spend $75, and then you decide what to do with the remaining $5 million if you have no other obligations.

Unfortunately, that’s not what’s currently being suggested for Costa Mesa.  At the end of the fiscal year, we took in $4.5 million more than we spent.  But the adopted budget would have put us $5 million in the hole. So we’ve got $4.5 million more in our bank account, but we're $9.5 million ahead of the dire financial straits projected earlier in the budget year.

Now, instead of being glad we dodged a bullet, we’re thinking about a shopping spree.  Yep, we saved $4.5 million and to celebrate the City’s poised to adopt a plan to allocate $9.5 million.   Of course,  $2 million of that $9.5 million would go back into our general fund balance, so we’d only deplete our savings by $3 million.  But that’s nothing to celebrate.

The Council has been presented with a policy that would enshrine this sort of shell game.  Instead of allocating only excess revenues, future City Councils would allocate what’s called the “positive variance”, i.e. the sum of excess revenues plus money we might have pulled out of savings but didn’t.  It’s positive as long as we don’t do any worse than our conservative worst case scenario.

But does it really matter? How different are these?  

The positive variance has exceeded revenue minus expenditures every year since 2010 except 2012.  In 2010, there was a “positive variance” of $3.5 million even though the City depleted our general fund balance by over $7 million.  We just didn’t eat up as much of our reserves as originally feared.  Does anyone think the City should have spent the $3.5 million “positive variance” as well?

The total difference since 2010 years adds up to about $10 million.  Spending our "positive variances"  would potentially cut our reserves by $10 million over just a few years.  

The City's proposed financial policy does include priorities  for allocating the funds in question.  However, while replenishing reserves is listed first, this apparently doesn’t reflect its priority over other uses.  Paying off unfunded pension obligations is listed second, with capital spending last.  Yet, recommended use of the “positive variance” is mostly to capital spending.  Only $2 million would be returned to reserves, for a net loss of $3 million in reserves. 

This is barely greater than the low point of the recession.  

It’s actually lower if even our current modest rate of inflation is taken into account.  The $41.5 million low in 2010 would have to have grown to about $45.4 million to have the same buying power.

How is it that a general fund balance of $41.5 million was considered a disaster a few years ago, but in 2015 about the same amount is suddenly OK?

Monday, February 9, 2015

Look How Much We Saved!

Should Costa Mesa dip into its savings account when the City has record breaking revenues?  That’s what’s been suggested in our mid-year budget report to be considered at the Tuesday, February 10, Study Session (link).

Were we to adopt the suggested spending plan, our general fund balance would drop lower than at any time since the recession.  And it would be barely $1,000,000 more than the low point in 2010, at the close of the recession. That’s not even keeping up with inflation!

But how can that be?  Didn’t we run a surplus?

Yes we did, but the report suggests spending nearly double the surplus.  Spending proposals address the “budget variance” instead of the surplus.

So what’s the difference?

The net increase in revenue over spending is what we commonly call the “surplus”.  This is sometimes called the “increase in fund balance”.  For 2013-2014, audited figures (here) show a net increase of $4.55 million in the general fund balance as of June 30, 2014. 

The variance is the difference between where the City was projected to be and where it ended up, financially speaking.  If the budget projected a surplus of $2 million to the general fund and we ended up with a $5 million surplus, the $3 million difference would be the variance.  Cash on hand would have increased by $5 million, but since a $2 million increase was already anticipated, only the $3 million would be the variance.

Similarly, if the budget projected using $20 million out of savings but we only used $12 million, then $8 million would be the variance.  Sure you’re not as bad off as anticipated, but no one with an iota of fiscal responsibility would see that as time to start an $8 million shopping spree.

The 2013-2014 budget projected dipping into general fund reserves to the tune of $5 million.  Fortunately, the City spent less and generated more in revenue than anticipated, resulting in a general fund surplus of $4.55 million.  Instead of going into the red and using $5 million out of our savings account, we are $4.55 in the black.  The total variance (NOT surplus) is the amount previously anticipated to be in the red ($5 million) plus the amount in the black ($4.5 million), i.e. $9.5 million.

About $3 million is already spoken for, leaving a $1.3 million surplus.  Since our general fund is still so far below pre-recession levels, you might think common sense would dictate saving all of the remaining $1.3 million surplus.  Especially since the midyear budget report says we are pretty much on track to come out even in the current year, without a surplus. 

Instead, it’s suggested that the City go ahead and use not just the entire surplus but the rest of the “variance”, too, continuing to gut the General Fund.  Remember, every penny over the $4.55 million surplus means additional draining of our reserves. 

As proposed, $4 million would be allocated to capital projects, and $2 million would be returned back to the general fund reserve.  This would result in a net loss to the general fund of about $3 million, but is being billed as “an opportunity to increase reserves”.  Huh?!?!?

As seen above, our general fund hasn't increased much since the recession—less than use of savings included in the $9.5 million variance.

The variance includes funds saved BEFORE the recession even started. 

Wow! At this rate, pretty soon they'll be spending funds we built up during my previous stint on council, twenty years ago.

It could be worse.  What if the entire variance (NOT surplus) were spent?  That would bring the general fund balance lower than it’s been at any time since well before the turn of the millennium!

But look how much we saved!

Wednesday, October 29, 2014

Hey Big Spender!

The current City Council majority likes to tout its skill  in balancing the budget, but a review of recent budgets tells a different story.

Did you know that the Fiscal Year 2014-2015 Budget appropriates $139.9 million on anticipated revenues of just $132.8 million?  And that’s not all.  Every budget adopted over the past four years has been similarly out of balance.

That’s right.  In four years of rising revenues, the Righeimer Council has yet to adopt a budget that balances spending and revenues. 

Every budget adopted for the past four years has relied on savings in order to balance.  In four years, Jim Righeimer has never voted for a truly balanced budget, with planned spending at or below anticipated revenue.

As revenues have risen, the urge to spend has followed.  Appropriations increased 28 percent from Fiscal Year 2010-2011 to FY 2014-2015.

It isn’t unusual for a City to go into savings for a major construction project, as would have occurred under our adopted budgets, but the money has to be saved up in the first place. Costa Mesa could have been in real financial trouble if we’d hit another financial bump in the road.

Fortunately for Costa Mesa’s financial future, tax revenues are at record levels.   In addition, it wasn’t possible for city staff to get the money out the door as fast as some on the City Council may have liked. 

So what about those much-vaunted capital improvements?

Capital improvement spending has remained relatively modest, when compared to pre-recessionary years.  In the past, the City rehabilitated as many as fifty miles of arterial streets in a single year as well as repaving numerous residential streets (2007-2008).  In recent years it's been less than half that.

Spending is below the amounts appropriated, not yet rebounding to pre-recessionary levels.  A good thing, too.  If all appropriated funds had been spent, we’d really be in the hole.

At the same time, it is important that we maintain our infrastructure and not allow it to degrade. But as we pursue major projects we must make sure we have appropriate priorities.

City beautification is nice, but with all our other pressing needs, should that be a priority? The new landscaping on Harbor Boulevard is lovely, but is it really the best use of our tax dollars, as well as our residents' time stuck in construction traffic, as we pay contractors to rip out pink stamped concrete and replace it with rocks that look like ... er... gray stamped concrete?  

Not to mention the Manolo Blahniks of the crosswalks world.   Just like Manolo stilettos, they look great, but cost a bundle and are impractical for their ostensible purpose, i.e. walking.

Let's spend our infrastructure dollars wisely. 

Right now, Costa Mesa still needs to consider all spending very carefully—and not call a budget “balanced” when it’s balanced by our hard earned savings.

Tuesday, October 28, 2014

It Just Doesn’t Add Up

Costa Mesa City Hall has issued a press release  telling us the City will have a surplus of at least $6 million this year.  The press release also asserts that “Over the past four fiscal years, the city’s budget surpluses have added up [emphasis added] to $19.4 million.”

So our General Fund should really be growing, right?  We don’t have audited numbers yet for the 2013-2014 Fiscal Year, but the Comprehensive Annual Financial Reports (here) show less than a $5 million increase from 2010 to 2013.

This shows a decrease in the General fund from 2012 to 2013.  

Sometimes money is transferred between different City funds.   Let’s look at the balance in all of our government funds.

Hmmm.   There’s a drop in total fund balance from 2012 to 2013, too.

With all those surpluses, our fund balance should be well on the way to pre-recession levels.  Then why have our assets crept up so little? 

We did take a loss due to closure of the Redevelopment Agency.  The City Council had little to no control over that.   

On the other hand, the Council majority is crowing about revenue increases over which they had had little to no control, either.   If they want to own the up side, then they need to own the down side as well.

Where did the “up side” come from?  Obviously, a big factor was the recovering economy.  City budgets  show that annual sales tax revenue increased from $34.6 million in FY 2009-2010 to $45.8 million in FY 2012-2013. 

In addition, Costa Mesa voters approved an increase in the hotel tax in November 2010, the same election which put our current Mayor in office.  Just the increase in the hotel tax rate brought in a little under $4 million over 2010-2013, with additional increases due to the economy.

We also got over $5 million from narcotics asset seizures from 2011-2013.  Since it takes a few years for the Feds to process these funds, we may still have a little of that trickling in from past seizures, but with our decimated Police Department don’t expect to see much of that generated in the future.

Speaking of decimation, we also got a couple million as our share of the assets remaining in the now-defunct helicopter program.

Wow with all that money coming in, Costa Mesa should be rolling in dough.  Our reserves should be way up, shouldn’t they?

Sure, if the City didn’t spend the surplus.  In November of 2013, also before the audit was released, the City began making plans for spending the “FY 2012-2013 surplus of $7.1 million”.   Ultimately a spending plan for $5.5 million of the surplus was adopted.   

At the same time, proposed spending for Fiscal Year 2013-2014 was increased by a $1.568 million.  That means “extra” money at the end of 2013-2014 includes a carryover of the “extra” $1.568 million from 2012-2013.  Has anything else been double counted?

We do know one thing that isn’t counted in the overall figures for government fund balance—decreases in the self insurance fund recently analyzed by Anna Vrska (link).  

Tuesday, September 30, 2014

Financial Fantasies?

You may have received a mail piece claiming that back in 2010 the City had been running a deficit of $23 million that was quickly turned into a $13 million surplus.  Wow!  That would be some accomplishment—if it were true.

What do the City’s audited financial statements say?

According to figures in the Comprehensive Annual Financial Reports  (link ), expenditures exceeded revenues by $14.6 million in Fiscal Year 2008-2009 and by $16.3 million in FY 2009-2010.   So yes, the City did run in the red at the height of the Great Recession when revenues suddenly plummeted, but well below the $23 million claimed. 
City leaders cut spending and sought ways to raise additional revenues, looking at everything from raising dog license fees to increasing hotel taxes.  As adopted in June 2010, the 2010-2011 Budget projected a deficit of over $9 million. 

But the City Council (consisting of Eric Bever, Katrina Foley, Wendy Leece, Allan Mansoor, and Gary Monahan) continued to trim the budget through the summer and fall of 2010.  Employees agreed to various concessions, including paying a greater share of pension costs.  In November 2010, voters approved an increase in the hotel tax.  Best of all, the economy began to recover.

By the end of 2010, when Allan Mansoor and Katrina Foley left the City Council, the projected deficit had shrunk to $1.4 million. (staff report). Ultimately, the City finished the 2010-2011 fiscal year $2.95 million ahead.

The new Council (Eric Bever, Wendy Leece, Steve Mensinger, Gary Monahan, and Jim Righeimer) took several actions to cut costs in early 2011, but they didn’t go into effect that fiscal year.  These included getting rid of the police helicopter operated jointly with Newport Beach, cutting the number of police officers and giving notice to hundreds of employees.  They did increase the budget by $200,000 to pay for consultants.

So how did the new council do on their adopted budgets?  Well they came out ahead by $12.3 million in Fiscal Year 2011-2012.  But did they really?

That figure included a big gain, on paper, from the Redevelopment Agency due to statewide elimination of redevelopment agencies.  Oops!  The state said that wasn’t legal so the redevelopment funds were pulled back, resulting in a DEFICIT, on paper, of $7.8 million the following year (FY 2012-2013).  Costa Mesa may still get those funds back eventually, but in small increments paid out over decades.

Still, over two years (2011-2013) there was a net gain of about $4.5 million or $2.25 million a year.  Not bad, but far, far short of the $13 million claimed.

And just in case you were wondering where we got that $4.5 million:  $2.5 million was a one- time asset from shutting down the helicopter program and selling the helicopters at a bargain basement price, $0.9 million from Orange County which had to pay back all local cities for tax collection overcharges, and $0.5 from cancellation of an affordable housing agreement with a developer.  These were all one-time payments which basically returned assets or overcharges accrued in prior years—maybe even in the years Costa Mesa showed a deficit.

As far as magically balancing the budget and saving buckets of money, excluding one-time, unusual gains, the Righeimer Council did manage to come out $600,000 ahead over two years—years that the economy was rebounding and City revenues were increasing.  At that rate, it would have taken previous councils hundreds of years to build up the reserves that tided the City over during the recession. 

When it comes to public finance, it can be hard to know who's got the accurate figures.  I’m sticking with the auditors.