Long Beach City Council approves $1.8M bond

Money will fund retirees’ separation payouts; amount reduced from $2.5 million

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The lack of air conditioning on City Hall’s sixth floor seemed to fan the flames of criticism among attendees at a heated July 3 City Council meeting before the council voted 5-0 to approve a $1.8 million borrowing measure to pay retiring city workers and those who intend to leave in the current fiscal year.

The council had initially considered a $2.5 million bond proposal to fund retirement and separation payouts for 27 police, firefighters and Civil Service Employees Association members who have retired or intend to leave the city’s employ. Council members agreed, however, to scale down the measure.

Councilman John Bendo noted that the city budget approved in May called for $1.8 million in borrowing to cover contractual obligations.

“I had expressed concern about the $2.5 [million] since it far exceeded what we had allocated in the budget and approved,” said Bendo, who thanked his fellow council members for agreeing to lower the amount.

The latest borrowing measure only applies to union employees who are retiring or separating, and does not include non-union, or management, employees who still work for the city. In April, a $2.1 million bond measure was defeated after Bendo and Councilwoman Anissa Moore voted against the proposal to cover payouts to 62 union and non-union workers. The two council members contended that a number of the employees remained on the city’s payroll — and that at least some might have been overpaid.

“We did as much due diligence as we can,” Bendo said. “I still have questions, because some of the same people signing these [payout] sheets are some of the same people who signed some of the previous sheets that we now know had overpayments in them. I’m waiting anxiously for the results of” an audit by the state comptroller.

City Council Vice President Chumi Diamond, meanwhile, said the most recent resolution should be amended to include language stating that the payments would apply to “only those individuals who have actually separated from city service.”

“Bonding and borrowing . . . is not something that any of us like to do,” she said. “But we also recognize that these are employees who have given their service to our city for many years, and who have counted on this as part of [their] retirement. To turn our backs on them now would not be fair.”

Moore called the amendments to last week’s resolution the beginning of a process to reform how separation payments are made — specifically, to whom they are made.

“However,” she said, “budget reform is still desperately needed. The formal process of documenting payouts must be improved.”

Former school board President Roy Lester said that a number of those who are set to receive separation payouts under the borrowing measure also received payments for their accrued time in the 2017-18 fiscal year.

“In order to help the city make these payments, they’re done in installments,” Council President Anthony Eramo said. “These are our contractual obligations. Our employees . . . deserve the benefits that your unions have negotiated.”

Without borrowing to cover the payments, Eramo said the city would have to raise taxes about 6 percent.

In its recent review of the 2018-19 budget released in May, State Comptroller Tom DiNapoli’s office — which announced in March that Long Beach was in “significant fiscal stress” — criticized the city’s handling of separation payouts, saying that its continued practice of borrowing for the payments is not “fiscally prudent.”

Moody’s Investors Service, meanwhile, revised the city’s credit outlook from stable to negative that month, citing “years of operating deficits and the City Council’s failure to approve budgeted borrowing to pay for operating expenses,” a reference to the council’s failure to approve the proposed bond measure in April, which officials said created a cash-flow gap.

Last week’s bond measure was discussed on a 90-degree day. Acting City Manager Mike Tangney drew jeers from a number of attendees when he said that the city couldn’t afford to repair the air-conditioning unit because it “ran out of money” when the previous bond measure was rejected in April.

The city was forced to wait until the start of the 2018-19 fiscal year, which began on July 1, to pay the contractor to repair the unit, according to Newsday. Officials said the unit has since been fixed.