The city said it would suspend weekend and night bus service after a $2.1 million bond measure to make up for separation payouts to city employees failed to pass at Tuesday’s City Council meeting, which officials said could lead to draconian cuts in the city.
Officials said that the rejection of the borrowing proposal meant that the city would be unable to make payroll next month, and could lead to layoffs and even a shut down of the city. Without bonding, officials said, the city would be broke before next year’s budget is passed in May.
“Last night’s City Council vote has left the city with dire consequences,” Acting City Manager Mike Tangney said in a statement on Wednesday. “Two members of the City Council voted no on a bond that has necessitated major alterations to the city’s cost structure.”
Tangney said that based on Tuesday’s vote, weekend bus service has been suspended effective immediately and nighttime bus service would be suspended beginning Thursday. Mid-day service and trips to Point Lookout would also be suspended, the city said.
“Staffing levels will be dramatically altered to account for the $2.1 million deficit,” said Tangney, though he did not elaborate on how many positions would be impacted and how services might be affected.
“It is unfortunate, but based on the failure to authorize the bond, these cuts are being made with all options on the table,” he said.
Tangney and Council President Anthony Eramo criticized council members John Bendo and Anissa Moore for casting the dissenting votes that defeated the measure to cover payments the city said it was obligated to make to outgoing city employees for unused vacation and sick days and as part of an early-retirement incentive.
“Long Beach is inching closer to a crisis because two council members are more interested in playing politics than carrying out the business they were elected to do,” Eramo said after the meeting.
“Their vote will leave our neighbors without pay, hurting their ability to put food on the table for their families and damaging our city's economy going into the summer months," Eramo added in a joint statement with council Vice President Chumi Diamond. "There is no doubt that Long Beach City has a tough road ahead. But, council members John Bendo and Anissa Moore have offered no real solutions. We welcome council members Bendo and Moore to any discussion about real solutions. But, their strategy to shut down this City is fiscally irresponsible, completely unacceptable, and is no way to have a functioning city government."
“As the budget will show, this situation wasn’t created by a single vote, but years of fiscal mismanagement,” Bendo said. “My goal is to get the city on a fiscally sustainable track for both our residents and workers. My colleagues on the council that don’t want to take responsibility can either continue to bury their heads in the sand and perpetuate childish snipping or join me in getting to the hard work of fixing this mess they created.”
At the meeting, Eramo said that all part-time employees might be laid off, and that the city would have to look at contracts with its police and firefighter unions, both of which have expired.
“We’re at our lowest staffing in history,” said Kenny Apple, president of the Long Beach Police Benevolent Association President, which represents 66 officers. “Any diminished police services will severely impact the safety of the residents of the city. We’re coming into the summer months when it’s going to be busy, and it’s also a safety issue for our police officers to work at these staffing levels.”
Former Comptroller Kristie Hansen-Hightower, who continues to work for the city as a part-time consultant, said that the payouts — made over the course of the current fiscal year which ends June 30 — were approved in the 2017-18 budget, and that the majority were owed to police officers, firefighters and members of the Civil Service Employees Association. She added that the failure to pass the bond measure would create a hole in the budget through the end of the current fiscal year because the planned borrowing had been included as revenue.
“For the 2018 fiscal year, the city opted to borrow for it,” Hightower said, adding that the city avoided raising taxes 7 percent as a result. “In last year’s budget that was adopted, you did include separation pay borrowing in order to fund these payments.”
Hightower told the council that the payments amounted to about $2.1 million through the end of the fiscal year.
In February, however, Moody’s Investors Service cited the planned borrowing measure in a report, and said “The fiscal 2018 budget included $1.6 million to fund separation pay for employees that left the city. Management now projects that it will need at least $2.1 million to cover separation pay. Implementing structurally balanced budgets and stabilizing reserves will be key factors in future assessments of the city's credit profile.”
Bendo and Moore criticized the bond measure, particularly over large payments made to exempt, or non-union, employees, including former City Manager Jack Schnirman — who received a $108,000 payout in January after he was elected Nassau County comptroller — which Bendo said might have violated the city’s charter. Bendo said some of those employees, including Schnirman, may not have been entitled to the payouts because the charter states that exempt employees cannot have more than 50 days of vacation time and only a certain number of sick days.
Bendo said that a number of people included in a list of the 58 employees received “sizable” payouts while still working for the city.
“I haven’t seen any justification for the amounts that are in here,” Bendo said.
Hightower said that exempt employees do not receive payouts for comp time, and said that individual calculations for those employees would have been done between the city manager’s office and the payroll department.
“That would be determined internally, as to whether anybody received any unjust enrichment by these payments,” she said.
Schnirman could not be reached for comment on Wednesday.
Tangney said that at times, the city has allowed people to “cash in” throughout the year for things such as sick or personal leave, compensatory time or economic hardships.
“What this bond encompasses is all the people who separated from service and we were obligated to pay this money,” Tangney said. “Other people were anticipating separation and did receive some money, and the third category were some hardships.”
Moore called for budget reforms and said that no information about the payments or need to borrow was given when the 2017-18 budget was presented. She told Newsday that she was lied to about the city’s fiscal situation, and said that she had no evidence that the city would be forced to layoff employees and shut down services.
A number of residents complained that a lack of financial controls were to blame for the need to borrow, and criticized council members and the administration for placing the blame on Bendo and Moore.
"Tonight, I learned that the bond for separation payment last year and the year previously was included as anticipated revenue," Moore said at Tuesday's meeting. "This is poor procedure. Now, everything is in question. We must have budget reform; the public cannot be left in the dark. ... This is the first time that I learned exempts were included in this separation payment. For years past, it was my understanding that the numbers that were shared with us were only with respect to police, fire and CSEA, which we've never had an issue with. Now that we have new information with respect to exempts, I will have to vote no."
Diamond, Eramo and Councilman Scott Mandel said that they, too, were unaware of certain payments made to non-union employees, but emphasized that the money could not be retracted.
"I think at this point, what we need to do to be responsible — and to avoid bringing the city to standstill or a shut down — is to go forward with this, and then maybe the answer is to audit to see how the calculations were made," Mandel said Tuesday.
Bendo, meanwhile, called for a meeting between the council, administration and labor leaders to “sharpen the pencils” and reach a solution.