Council Finally OKs Budget in Balancing Act

It took considerable fiscal slashing, shuffling and soul-searching, but after two months of political turmoil the City Council this week produced what officials hailed as a workable spending plan.

“At long last we’ve achieved a balanced budget,” City Administrator Darwin G. Pichetto told the council before it approved the $2.5-million general fund budget for fiscal 1988-89, which began July 1.

The new budget, which cuts deeply into most departmental requests--including recreation and law enforcement--adds $42,000 to the city’s depleted reserve, but does not include a sought-after 5% wage increase for city employees, officials said. The budget, however, also did not force any layoffs, which some city employees had feared.

The budget was approved during an unusually quiet special session in stark contrast to recent meetings, during which council members argued with each other while staffers struggled to untangle the city’s finances.

‘Free Rein’ Suggested

Pichetto and Assistant City Administrator Ronald Downing drafted the yearly financial document after a spokesman for the auditing firm of Arthur Young suggested that the council give its staff “free rein” to bring spending into line with expected revenue. Council members, faced with slashing politically sensitive programs in their effort to produce a new budget, had hotly debated many proposed cuts.

For example, council members changed course three times in considering a $900,000 law-enforcement contract. First, they decided to cancel the agreement, which pays the Los Angeles County Sheriff’s Department to keep at least one deputy on around-the-clock patrol in the city. Then, they decided to restore it. Finally, they agreed to save money by reducing the hours of patrol by a third.

Monday’s final budget-balancing session came after several false starts. The most recent occurred when Pichetto postponed an Aug. 23 hearing because his staff had not figured out how to make about $398,000 in final cuts.

The budget-balancing efforts also were dealt a setback when Pichetto announced in mid-August that the city’s general fund had been unbalanced “for some years,” apparently because of faulty accounting and bookkeeping practices. Pichetto’s announcement prompted charges that former city officials had managed the city poorly and covered up financial problems.

Pichetto said that for the past two years, the city has operated on budgets with deficits totaling $1.78 million.

Called on Reserve

That imbalance had forced officials to draw from some special revenue sources and also dip into the city reserve, which in 1986 stood at about $1.2 million. The reserve has shrunk to about $340,000, according to city financial statements.

Council members have said they had no idea that such deficits had occurred.

When charges of cover-up were raised by Mayor Kathleen M. Navejas, the council requested that the grand jury conduct an audit. City officials say they have not received any response to the request for an audit, and a grand jury spokesman has declined to comment.

Terrence M. White, an accountant for Arthur Young, recently reported that poor bookkeeping practices in years past--including the inadvertent mixing of the city’s general and restricted funds--had led to an “extremely complicated and confusing” array of entries and prompted several key mathematical mistakes.

White, whose firm is trying to unravel the city’s accounting records, said the problems should be worked out by Thanksgiving, when the firm completes its audit of fiscal 1987-88.

Out of Balance

Pichetto has said that last year’s spending outpaced revenue by $982,110. The year before that, the budget was $806,297 out of balance.

While acknowledging the deficit spending, White told the council to “not let the problems of the past cloud the future.” The council, White said, should be concentrating on working out current spending plans.

City staffers had initially submitted spending requests that exceeded anticipated revenue by $1.2 million. Belt-tightening efforts by staffers affected all departments. For example, the popular Recreation Department’s initial $407,000 budget was trimmed by $75,186, officials said.

And city officials agreed to drop out of the sheriff’s Street Crime Apprehension Team program, which would have cost $32,424 in addition to the $976,322 that the city pays the department for law enforcement services.

The council also charged some proposed projects and salaries to the Community Redevelopment Agency’s budget, which is yet to be drafted.

Money Trade Proposed

Assistant administrator Downing, hired last month to help straighten out the troubled finances, said he also is working out a deal with at least two other cities to trade about $293,000 of unused Proposition A restricted funds for $175,800 in general fund money. He declined to name the other cities involved in the negotiations.

Like other restricted funding, Proposition A money, administered by the state for use in transportation-related projects, cannot be used to pay general city expenses. But state law allows city officials to exchange funds with cities that have a more immediate use for them, Downing said.

City officials said they also hope that a once-profitable bingo operation, revived after seven idle months, will add about $240,000 to city coffers. The NuTowne Bingo Parlor, which replaced the failed Cooper Fellowship Bingo Parlor at Carson Street and Pioneer Boulevard, is expected to open next week.