Last in a five-part series about Costa Mesa's political battle.
It has been nearly two years since Costa Mesa residents elected Jim Righeimer and his brand of small government. Hostile to organized labor, Righeimer led a four-member City Council majority in a quest to privatize city services and cut employee compensation.
Some heralded him as a visionary committed to getting outsized municipal spending under control, while others labeled him an ideologue hellbent on dismantling a competent government work force.
In November, voters will have the opportunity to affirm his philosophy or break up the majority and reject its proposed city charter — essentially a local constitution. A trio of candidates backed by Righeimer and an opposition coalition of three supported by a grass-roots group, Costa Mesans for Responsible Government (CM4RG), are in the Nov. 6 election.
The three-person opposing slates differ on issues from taxation to transparency, but perhaps their largest gap is their stance toward the city's employees.
"If the folks of Costa Mesa like what has been happening in the past few years," said Cal State Fullerton political scientist Shelly Arsneault, "it seems like they would stay the course. And this charter would likely make this move more quickly."
If the opposing slate wins, "I would not expect a total shift to some liberal agenda," she said, "but it looks like those folks want to take things more slowly."
On one side are Planning Commissioner Colin McCarthy, Councilman Gary Monahan and Councilman Steve Mensinger, who was appointed to the council in January 2011. Dubbed the "3Ms," they share Righeimer's plan for a smaller government payroll and reduced pension obligations.
On the other side are former mayor Sandra "Sandy" Genis and two political newcomers, attorney John Stephens and businessman Harold Weitzberg. They have the backing of CM4RG.
"Costa Mesa is at a crossroads. There are major, major issues," said Monahan, who was first elected to the council in 1994 and has run multiple times since then.
The current City Council majority has championed outsourcing as a potential money-saver and sent 19 city services out for bid. So far, the council approved four to be contracted out to private companies, six to be kept in-house and three to be some hybrid of in-house and outsourced.
Before it studied the feasibility of contracting, the council issued pink slips to more than 200 employees in March 2011. Officials said they were bound by labor contracts to give advance notice in case the employees lost their jobs.
The Costa Mesa City Employees Assn. sued, and a judge issued an injunction that has prevented the council from signing contracts with outside companies.
If they could finish the process, city officials say they could save more than $2 million annually.
"That money that we save can be put into improving our roads and our parks," Monahan said.
The CM4RG candidates are more wary of outsourcing. They say selling heavy machinery — street sweepers for example — could leave the city at the mercy of companies.
"If we make the wrong decision, and we sell our equipment, it's very hard to put the toothpaste back in the bottle," Stephens said.
Genis, who makes the same point about equipment, does support outsourcing jail services.
"If we could do that, and free up some of the personnel to do the other police functions, that would be a great way to go."
But she says she wants to "reexamine" the parks and the street-sweeping contracts.
Stephens says he "would take a fresh look at all of those [outsourcing] decisions ... I would reexamine those and use my own judgment."
The CM4RG candidates said they would rescind the layoff notices and negotiate with the employee association for more affordable contracts.
"Any effort needs to start fresh because it's a tainted process," Genis said.
Weitzberg said he would rather have such robust and efficient services that other municipalities contract with Costa Mesa.
In 2011, the council majority approved a Police Department restructuring plan that would save up to $1.8 million annually. It reduced the number of sworn officers from 139 to 131, replacing some with civilian employees.
Essentially, the CM4RG candidates say the city should hire more cops to combat an increase in property crime, while the "3Ms" contend more officers don't necessarily translate to lower crime and the city should spend the money addressing the problems underlying criminal activity.
"Property crime is increasing everywhere, and it has nothing to do with the number of police," Monahan said.
That's not quite right. Among 69 California cities with populations over 100,000, Costa Mesa had the sixth-highest increase in property crime in 2011, the most recent year FBI statistics are available. On average, the cities saw a 1.2% drop in property crimes compared to 2010, while Costa Mesa experienced a 10.6% increase.
Since those FBI statistics were released, council critics seized on the occasion.
Weitzberg said, "it's a very visceral" sense that the city is becoming more dangerous. "There is a climate and an image of less safety in the city."
"I would look for money to hire police officers," he said.
"Simply hiring more police officers is not going to help our crimes go down," said McCarthy, referring to the city's motels that officials say are magnets for crime. "We need to focus on the things that breed crimes."
Those are the places "where parolees, pimps and prostitutes go," said Mensinger, who points out that a disproportionate share of police calls are to a handful of motels. Through code enforcement and other means, the current council majority hopes to improve or shut down the motels.
The CM4RG candidates said they were concerned that police officers were stretched thin, and that could create a perception among criminals that residents and businesses are easier targets.
"We have cut police officers pretty much to the bone," Stephens said.
But Genis acknowledged "just because you have more cops, it doesn't mean magical things are going to happen. They have to be deployed correctly."
City employee compensation
Each of the candidates said he or she would try to get the police officers to accept a similar deal as the city's firefighters, who recently agreed to contribute more toward their pensions and offer new hires less generous retirement benefits in exchange for job security and steady pay.
"Folks have to work longer. We can't retire police officers at age 40," McCarthy exaggerated. He would like to see a retirement age of 55 or 57, instead of today's 50.
McCarthy would also seek to reform the employee association contracts when they are up in 2014. "We need to look at getting rid of the gamesmanship" like pension spiking, he said.
While the CM4RG candidates all said it was important to have compensation comparable to surrounding cities, the current majority has indicated it is ready to reevaluate that method of setting pay.
"It has got to change," said Monahan, who wants to compare to the private sector and have "much more market-based negotiations in the future."
Unfunded pension liability
Competing visions of the pension debt can sometimes prevent cities like Costa Mesa from taking action sooner than later. Conservatives often characterize it as "crushing," while labor and its supporters liken it to a mortgage, saying the city has plenty of time to make up the deficit.
In reality, the city's liabilities fluctuate over time. When the economy is doing well, and California Public Employees Retirement System investments are posting healthy returns, the unfunded liability is not as large. When the economy is tepid, as it is today, the debt looks dire.
At the moment, Costa Mesa has promised $131 million more in retirement payments than its investments could cover. The current council budgeted $500,000 for the 2012-13 fiscal year toward paying that off, while spending more than $20 million on infrastructure repairs to streets, storm drains and the like.
Genis said she would hold back on spending: "We have to make sure we keep that belt tightened until the pension debt is significantly paid down."
Stephens was undecided about paying more to pay down the debt. He wants to "get some real heavy-duty financial advisors to see if that's a right move."
McCarthy calls the pension debt the "big gorilla in the room" and wants to ratchet up the amount the city pays each year. New accounting laws, he points out, will require cities to carry their unfunded pension liabilities on their balance sheets, instead of just as a footnote.
"The bond ratings are going to be looking at that now," he said.
Monahan says the city should first build up reserves before paying down the unfunded liability. "We have to be able to survive through [the next recession]," he said.
The current council majority, led by Mensinger, passed the Civic Openness in Negotiations, or COIN, ordinance. It requires council members to disclose any communication with labor association representatives that takes place between meetings, and other measures that could weaken organized labor's power.
The CM4RG candidates have said they would subject contractors to the same scrutiny.
"I would go further with the transparency initiatives," Stephens said. "You should have that same transparency when the city is dealing with the private sector."
Stephens, an attorney, also said he would reconsider the portion of COIN that requires the city to report past offers and counter-offers. It "could create cumbersome, slow negotiations and maybe a chilling effect," he said.
Costa Mesa's streets, storm drains, parks and other public facilities have millions of dollars of deferred maintenance. To begin repairs, the current council majority has wrangled money out of the general fund through staff cuts and restructuring.
The 2012-13 fiscal year budget includes $14 million in street and alley improvements alone, double the average of the past 10 years.
In total, it spends $20 million on roads, buildings, parks and storm drain improvements, more than twice what was allocated last year for capital projects.
If the court blocks outsourcing and the charter fails, Mensinger said the infrastructure projects “would be in question [and] the city may never gain control of [its] budgets.”
McCarthy wants to build up to spending about 20% of the general fund revenues on infrastructure. The 2012-13 fiscal year budget is at 7%. He is banking on savings from outsourcing and the charter passing, which would eliminate the requirement to pay prevailing wages on city-funded projects.
"It's time to start reinvesting in Costa Mesa," McCarthy said.
The CM4RG candidates downplay the city's street problems. They point to an Orange County Transportation Authority report that rates the city's streets as good.
"Our arterials are in fairly good shape," Genis said, "but there's some room for improvement."
With South Coast Plaza and Harbor Boulevard's car dealerships, Costa Mesa's single-largest revenue source is sales tax. Officials expect $44.3 million in fiscal year 2012-13, or 44% of general fund revenues.
As discretionary spending dropped during the recession, the city had to dig into its reserves, causing many to question if the city should diversify its revenues.
The CM4RG candidates are open to changing the city's fees and taxes, while the 3Ms have said the city could tweak some formulas but essentially should focus on cutting expenses.
"Costa Mesa doesn't have a revenue problem," McCarthy said. "We have to take the revenue that we have and spend it more wisely."
The council majority is ideologically opposed to increasing revenue sources — moves like raising the utility user fees, creating assessment districts for street and alley improvements, charging fees for emergency and fire inspections, or increasing the sales tax rate.
McCarthy, Mensinger and Monahan signed an Orange County Republican Party pledge to not raise taxes.
On the other side, the CM4RG candidates all said they would consider changing the city's business-license tax. For at least the past 10 years, Costa Mesa has toyed with the idea of increasing the tax it charges businesses annually to operate in Costa Mesa. Most Orange County cities do have such a tax. But of the cities that do, Costa Mesa's is among the lowest.
"Our business-license fees are extremely low," Weitzberg said.
Genis said she, too, would reexamine the taxes "to see if they are equitable." Small businesses, she said, may be paying a disproportionate share.
Also, Genis said the city should hire a grant writer to capture more state and federal funds.
At Tuesday's City Council meeting, Mensinger said he was loath to accept a grant for DUI prevention because "we're a net-debtor nation. Philosophically, I do not like taking money from the federal government."
Stephens said he was open to a few revenue options. He said he'd consider assessment districts, where homeowners pay for infrastructure improvements in their area.
The business-license hike and some other politically palatable revenue increases are expected to raise about $2 million to $3 million per year, according to Finance Department estimates. Mensinger and some other council members say they would consider selling bonds for sports field improvements.
A majority of voters would have to approve certain bonds or any increase in the business license tax.
— Joseph Serna contributed to this report.