Claremont Insider: The Bill Comes Due

Thursday, July 23, 2009

The Bill Comes Due

It was difficult for Claremont officials to paper over the bad news at last week's State of the City luncheon. The event, hosted by Claremont Chamber of Commerce, was by all accounts well-attended, and all five councilmembers took shots at finding silver linings in Claremont's fiscal state.

Mostly, they had to point to projects already under way or recently completed, from mundane things like road resurfacing to grander projects like the Padua Ave. Park or the College Ave. affordable housing development (thanks, Sam Pedroza, for that bit of sunshine).

The council was wise to tout its public works now. With the City already facing a $2 million budget shortfall for Fiscal Year 2009-10 because of falling sales tax revenues and the state poised to borrow more local funds to balance its books, it may be a while before the Council can spend as freely as they've become accustomed to. The Claremont Courier quoted Councilmember Peter Yao (right), who acknowledged the City's budgetary realities:

“Despite the best efforts of the city council and staff earlier this year to balance the budge, the economies of California and Claremont have continued to deteriorate,” Mr. Yao explained. “Due to further reductions in local revenues and the turbulent environment of the state legislature, the city is facing an addition shortfall of $2 million.”

The Courier also noted that the City will hold a special budget workshop this Saturday from 9am to 1pm in the council chambers at 225 W. 2nd St. in the Claremont Village. Now that the state has a budget deal semi-worked out, the City can make some projections about the size of the hit it's going to take.

From what we've picked up on our Twitter wire, it ain't pretty, folks. Thanks to the state's borrowing of funds owed to local governments, that extra $2 million shortfall Councilmember Yao alluded to may grow considerably. And that has to be added to the pre-existing $2 million 2009-10 deficit, as well as the additional (as yet undisclosed) amount the City will have to pay CalPERS for its underfunded employee pension account (CalPERS reported a 23.4% loss in its investment portfolio for FY 2008-09.)

As a result, at Saturday's budget meeting you may hear talk of staff and service cuts for the first time. You hate to see anyone lose their jobs, and the City is quite understandably pinning much of the blame on Sacramento's inability to manage their own finances without stealing from local governments.

However, Claremont and many other cities and counties bear a certain share of the blame for their own budget problems because of thoughtless spending on things like costly and unnecessary projects (insert Claremont Trolley photo here) and overly lavish employee pensions and benefits in good times. Claremont has also never been shy about feeding at the state grant trough for any number of projects, and, in doing so, it made its own small contribution to Sacramento's current fiscal state of affairs.

Like everyone else, Claremont is having to rediscover the idea of limited resources and deferred gratification. Rather than pointing the finger at the state government, the City ought to take a good, long, honest look in the mirror and figure out what lessons it can take from the present situation. Some city employees and the services they provide may end up suffering because of this mess, and it's a shame that Claremont set itself up for fiscal failure by making revenue projections that didn't take into account the possibility of a recession as severe as the present one.

The good times never go on uninterrupted, but Claremont's movers and shakers have consistently refused to acknowledged this rather obvious fact of financial life. Sustainability, Claremont's favorite buzzword, begins with fiscal sustainability, and the City risk management strategy failed in the most basic way - by neglecting to hope for the best while planning for the worst contingency.