Council to Get Clearer Financial Reports : Hermosa Stashes Surprise Surplus

The City Council this week decided to put most of an unexpected and awkward budget surplus into reserve funds.

The surplus was nearly 75 times larger than anticipated. To avoid further surprises the monthly financial information prepared by city staff for council members is more detailed now than it has been in the past.

The surplus of $817,978 became an embarrassment in mid-January when council members learned from a reporter that the actual surplus for 1985-86 was significantly higher than the approximately $11,000 they had been mentioning publicly. Some council members--who had repeatedly said that the city was in dire financial trouble and had asked voters last November to approve a $52 parcel tax--said their credibility had been weakened.

Council members said they had depended on the city staff, and specifically on City Manager Gregory T. Meyer, to provide accurate, updated information on the city’s financial situation.

Figures Not Broken Down

Meyer said the information was provided to the City Council in monthly financial statements. Those reports, however, did not give a total dollar amount for revenues or expenditures and council members were left to wade through many pages of numbers and do their own calculations.

Since late January the reports have clearly shown the totals. Mayor John Cioffi said the change should prevent similar surprises in the future.

Cioffi and Councilman Tony DeBellis had been especially critical of the inaccurate estimates and of not being told the correct surplus earlier.

Cioffi eased his criticism this week, saying the surplus “was something that I and everybody else on the council should have picked up on and we didn’t. It was a mistake. The information was there . . . I would like to have had it pointed out, because it was a large amount of money.”

Tax Increase Rejected

He said he regrets having asked voters to raise property taxes for additional safety services because the city is not as financially strapped as officials had said. The proposition, which would have raised $482,000 a year, was approved by 57% of the voters, but did not get the two-thirds majority needed for passage.

None of the $818,000 surplus, however, was designated for additional police personnel, despite a plea by Wally Moore, president of the Hermosa Beach Police Officers Assn.

Meyer and Cioffi said the money was not allocated for additional police officers because the recently hired public safety director, Steve Wisniewski, has not requested any. Wisniewski has altered schedules and arranged better police coverage with the same manpower, they said.

“The current public safety director is being a whole lot more creative with the resources he’s got, and I think all of us in government should do that,” Cioffi said.

Underground Utilities Wanted

A group of residents on the north end of The Strand had asked that the surplus be used to move their utility lines underground.

Building up the city’s reserve accounts is most important right now, Meyer said, and other needs will have to wait until the city is more financially secure.

The surplus, he said, is the result of an increase in parking and general fund revenues by about $300,000 each and a decrease in budgeted expenditures of about $200,000.

Cioffi said he does not consider the $818,000 a surplus. “It’s all according to how you define a surplus,” he said. “A surplus is when you have more money than your needs. We’re obviously not there.”

Because of higher than anticipated revenues between July 1 and Dec. 31, 1986, the city had an additional $214,856 in surplus funds for the current fiscal year, which the council allocated this week.

Money Allocated

The City Council voted 4 to 0, with DeBellis absent because of illness, to approve Meyer’s recommendations and appropriated $100,000 for asset replacements; $150,000 for possible acquisition of Prospect Park; $99,005 to the sewer replacement fund; $96,893 to pay off a property loan early; $44,833 to the transit fund; about $250,000 for capital improvements; $150,000 for insurance; $21,314 to the Community Development Block Grant Fund; $101,000 for Fire Department salaries; $40,000 for prospective expenditures; $12,000 for property taxes; and $37,824 for state unemployment insurance expenses; $13,750 to the Police Department; $8,750 to rejoin a countywide warrants system, and $5,000 to re-establish a crime prevention program. The remaining $73,038 will stay in the General Fund without any designated use.

City Council members, who said they had a lot of questions when they first learned of the surplus, asked few questions and made few comments this week. They indicated that they had privately discussed the surplus, on an individual basis, with the city manager as they do other matters.