The City’s unappropriated reserves continue to struggle, dropping to $387,000 in November from $1.2 million at the beginning of September. The $1.2 million was previously a loan from the general fund to the Redevelopment Agency, but the Council transferred the funds back into the general fund in September to prop up unappropriated reserves, which had dropped to a mere $39,000 in August. [Source: City Report On Budget Amendments 11/2/2009]
Since September the Council allocated about $800,000 of the $1.2 million, leaving $387,000. Mayor Ury is proposing spending another $150,000 for bleacher shades at some baseball fields. The Council will vote on that expense at its next meeting.
The City has a good credit rating, Standard & Poor’s Aaa, if it needs to borrow money. But the municipal credit rating doesn’t mean much; over 70% of cities are rated A or better, and Moody summarizes the situation in the Government and Municipal Manual:
In the case of American municipalities the importance of an investment rating is not so great as in the case of the obligations of a private corporation. A municipal obligation is issued under carefully framed laws and the risks are largely eliminated by the restrictions in these laws. Thus, under all ordinary conditions, it can be accepted as a fact that a municipal obligation of a well established and growing city or town is substantially secure insofar as the strength of the principal is concerned. Qualifications in ratings, therefore, are limited, and the variations between one type of municipal bond and another are not very great.
The City has an emergency contingency fund of $7.4 million which is designated for natural disasters and economic crises. The remaining $17.8 million general fund balance is designated for unpaid bills, approved pending projects, and future facilities and equipment replacement and maintenance.
The Council majority uses the designated funds to defend its deficit spending by referring to those ”designated funds” as “discretionary funds,” but there is only $387,000 in undesignated reserves. Last week a Dispatch article reported the Council ran a deficit last year, spending $3.2 million more than revenues. It was the second consecutive year for large deficits.
The ’all’s-fine’ defense from the Council majority seems inconsistent with its drastic actions, e.g. 1) cutting over $1 million from infrastructure maintenance, 2) using a selective hiring freeze (which has impacted programs like code enforcement), 3) suspending a previously approved employee salary increase, 3) liquidating investment accounts early, 4) pilfering designated funds, 5) attempting to sell city assets, and more.
{ 4 comments… read them below or add one }
At a time when many are without a home and/or food and many more are struggling just to keep a roof over their heads and food on the table I say it is time for a reality check on the part of our city council. Stop the spending and take a step back so as to have a clear look at the big picture! I think you will find that it is not as rosy as you would like!
How can we spend money on shades for Little League fields as we cut over $1 miilion dollars from infrastructure maintenance?
We had three sons go through the little league system in NMVLL (North Mission Viejo Little League). Yes, it certainly gets hot at the fields; however, parents and coaches know to bring umbrellas.
In a different economy, shades might be nice. However, in light of our reduction in maintenance fees, why are we building something else to maintain? We again should be asking ourselves why we participated in the Rose Parade?!
I continue to be impressed with your desire to twist and confuse the citizens of Mission Viejo with your contorted view of city finances. Maybe you can get Councilman Ledesma to comment on your “perception” since he has also voted with in the majority on our budgets, the total reserves of which total over $26 million.
In June, Standard and Poor’s increased the City’s issuer credit rating from AA+ to AAA and the rating on the City’s outstanding bonds from AA to AA+ as part of a review of 16 western cities and counties. That move was based on the City’s “high wealth and income levels” and “historically strong financial position”.
I will simply leave it at this. You are wrong, and I will point out to Mission Viejo residents that Mission Viejo’s Credit Rating just hit AAA for the FIRST TIME in the city’s history. Less than 5% of cities in California have this rating. We certainly didn’t get the AAA rating by only having $387k in the bank.
[Editor's Note: Attached is the budget document so readers can confirm the City only has $386,999 in the Unappropriated Fund Balance (page 2). All other funds, including the contingency reserve, are for specific purposes as stated in the article, similar to a family's college fund or 401k. Those should not be considered spendable reserves. Mr. Ury implies otherwise; if he believes that, why is he cutting necessary spending (infrastructure, maintenance and code enforcement) so he can engage in unnecessary spending (bleacher shades)?]
Surely Mr Ury must have missed Accounting 101 at the PRIVATE colleges he attended.
Let me help Mr Ury – generally unallocated reserves for all funds excluding Special Revenue Funds, Internal Service Funds, and
Capital Projects Funds shall be maintained at a minimum amount of 25% ( 3 months) of the annual budget
(excluding transfers to CIP, future appropriations, bad debt expense, and reserve for future allocation) for
each fund unless specifically identified.
By basic measure Mission Viejo’s unallocated funds do NOT meet this standard. Mr Ury is not fooling
anyone – except maybe himself.