N■ Melissa Diaz Hernandez / Reporter
o one seems to know if the FY 17/18 budget is balanced. Councilwoman Bonnie Wright commented at the July 25 meeting that the budget was not balanced. When The Valley Chronicle asked City Manager Alex Meyerhoff in a phone conversation on July 26 why Wright had said that, he stated: “I do not know why she said that.”
In our calculation, the adopted budget leaves the city $1,302,800 over budget confirming the state auditor’s stance that “expenditures continue to outpace revenue.”
After inquiring on the status of the budget and whether or not the $2,011,400 for MOUs for non-Measure U public safety personnel was included in the adopted calculations, the Chronicle received an email back from Meyerhoff stating that the budget is balanced.
The same request for information went to Councilwoman Karlee Meyer, who said, “I don’t have the exact numbers; this looks correct and includes MOUs. Alex can tell you the exact numbers I’m sure.”
Meyerhoff’s email response states, “The City of Hemet FY 2017-2018 General Fund Budget is balanced. The City Council approved the budget with Projected General Fund Revenues of $50.3 million and Projected General Fund Expenditures of $49 million. The proposed budgets of two General Fund departments were reduced during the meeting, following extensive discussion by the City Council.
“The City Attorney budget was reduced by $425,000. The Capital Engineering budget was reduced by $278,600.These two departmental budget reductions bring the Projected FY 2017-18 Expenditures to $49 million. The City is in compliance with Ordinance 1880, the City of Hemet 20 percent Reserve Policy.” When looking at page 25 of the budget document, it states that the total estimated resources are $50,359,660 and total estimated uses are $52,366,060. Taking the approved adjustments to the city attorney and capital engineering funds into consideration, the total estimated uses come to $51,662,460. This calculation leaves a difference of $1,302,800.
The budget does balance if you take the total estimated revenues of $49,800,660 and deduct the total estimated expenditures of $49,096,160. Especially after incorporating the $703,600 removed from the city attorney and capital engineering funds. However, what is included after the total estimated expenditures are total inter-fund transfers ($20,000), Reserved- PEG funds and ambulance penalty fees ($340,000) and Reserved for future Measure U expenditures ($2,909,900). Those figures are used to calculate the total estimated uses.
At Tuesday’s meeting, frustrated constituents took to the podium over water bills, lack of transparency, city’s lack of urgency regarding the state audit and the city’s apparent inability to pass a balanced budget, among other items.
“It is important that we pass an operating budget,” stated Councilman Russ Brown in the beginning of the budget discussion in defense of adopting the proposed budget. “I understand the importance of developing a solid and complete strategic plan to serve as road map to a healthy Hemet. We also have a responsibility to constituents and city staff to continue providing services.”
Meyer and Perciful have been reluctant to pass a budget that lacks full transparency. Meyer made a motion to approve the budget as presented with decreases to the city attorney and capital engineering funds, as well as, accounting adjustments removing internal services and retiree medical expenses from departmental budgets to their own separate accounts. Also included in the motion was a hiring freeze for all departments except public safety. The motion failed with Mayor Linda Krupa, Councilwoman Wright and Brown voting against and Meyer and Mayor Pro Tem Michael Perciful voting in favor. After that failed motion, the council passed an amended version of the failed motion, only eliminating the hiring freeze. Wright stated, “We do not have the luxury of a hiring freeze. There are key positions that have been filled but are now vacant and are important to running the city. We need to make sure we don’t regret anything in the near future and be prudent and watch what is going on.” The motion passed with a 3-2 vote with Krupa, Brown and Wright voting in favor. Perciful and Meyer voted against.
Council decided to reduce the city attorney fund from $1,425,000 to a flat $1,000,000. capital engineering fund took a $278,600 hit. The fund went from $728,600 to a council-approved $450,000.
Perciful asked that the retiree medical benefits and the internal services funds be removed from departmental budgets and have their own separate accounts. He presented the argument on the basis that if the police department disappeared, the retiree medical expense would remain.
The city does not have a Finance Director to make the requested adjustments. Administrative Services Consultant Joy Canfield of MV Cheng and Associates is no longer consulting for the city as of Monday July 24, according to Meyerhoff. The fact that Canfield was no longer consulting for the city was addressed during the meeting.
The contract is with MV Cheng through December 2017. The Valley Chronicle previously reported that council approved a contract amendment for an additional $50,000 at the May 23 council meeting. The city initially entered into the contract on Feb 27, 2017 for $50,000. The increase in funds was needed to complete the budget and bring it before council, according to Police Chief Dave Brown. Brown was sitting in for Meyerhoff that night as Acting City Manager.
The budget was passed hours after the California State Auditor posted an update on its website on the city of Hemet’s response noting that the city “provided its first update to its corrective action plan on May 25, 2017, more than three months after it was due.” Members of the public addressed the update at the podium during the budget discussion.
The auditor’s site continues: “In its response, Hemet has revised the timelines of many of the proposed corrective action items, and it has not taken any action on other items. Accordingly, we will continue to maintain the high-risk designation of the city and will reassess that status upon review of Hemet’s next update, which is due in August 2017.” To view the update from the California State Auditor, you can visit https://www.auditor.ca.gov/reports/2015-806/cap/index.html.
N■ Melissa Diaz Hernandez / Reporter