Posted on 01/21/2009 10:24:43 PM PST by WayneLusvardi
“Momentum for Success or Momentum to Depress?”
Synopsis:
●City Budget up whopping 8.5% despite Depression (2008 inflation only 3.5%)
●Mayor fails to report City reserves are equal to 14% of all household income at onset of Depression -- $13,469 per household equal to $1,125 per household per month
●City has failed to post Comprehensive Annual Financial Report for 2008
The theme for the Mayor Bill Bogaard’s State of the City (SOCk) report to be held at the Pasadena Conference Center on Thursday night January 22, 2009, was "Momentum for Success." It might as well have been “momentum to depress.”
How can the Mayor even report on the financial condition of the City when the Comprehensive Annual Financial Report (CAFR) for 2008 has not even been posted online nor apparently even adopted by the City Council? Nor has the status of City investments been updated online since 2004? Who knows what the financial status of the City is?
In late 2008 the City of Pasadena proclaimed an emerging General Fund Budget deficit. Like the phony financial emergency the City declared in early 2008 during the election battle over Measure D – the Utility User’s Tax on Telephones – there is no real budget deficit. Technically there is an artificial budget deficit on paper but not in reality. This is because the sub rosa policy of the City has been to create an off-budget endowment of investments which could sustain the entire General Fund of the City for some three years if ALL sources of revenues (sales taxes, property taxes, utility taxes, fees, fines, etc.) were to vanish instantly.
In the first half of 2008, the City of Pasadena was harboring in surplus funds and cash of about 14% of all the estimated private annual household income earned in 2008, reflecting $13,469 per household, during the onset of what appears to be an historic economic depression. This equates to about $40 per day or $281 per week or $1,125 per month per household. Mind you, these are not operational funds but for the most part surplus funds.
According to U.S. Census data for 2005-07, the total income for the 51,973 households in Pasadena was $4.72 billion (51,973 household x $90,825 average income per household = $4,720,447,725). The City Budget for 2008 reveals the City had approximately $646,769,000 ($646.7 million) in reserves, investments and cash; reflecting about 14% of the estimated total annual income for all households in the city for 2008. The audited financial statement of the City's investments, reserves, and cash for 2008 has not yet been released and posted online for public review. Where is the public accountability of the financial status of the City?
The 2008 General Fund budget for Pasadena was $204 million (the General Fund covers public safety, libraries and parks and recreation). The proposed General Fund budget has been increased 8.5% for 2009 to $230,308,674. This increase is 5.0% over monetary inflation and belies the City's official pronouncements of staff and budget cutbacks due to a budget deficit.
The Consumer Price Index for the 12-month period ending December 2008 was 3.5% for Southern California. The Producer's Price Index was a negative 1.2% for 2008 (http://www.bls.gov/ppi/ppidr200812.pdf).
Pasadena Public Information Officer Ann Erdman, wrote on her blog on January 8, 2009:
"The challenge will be to make cuts without affecting the current levels of programs and services, and without having to lay off any employees. After all, there can't be programs and services without employees to provide them and manage them." http://pasadenapio.blogspot.com/
Additionally, Pasadena Police Chief Bernard Melekian has warned in the Pasadena Star News of police service cutbacks due to an alleged budget deficit.
But where are the purported cutbacks in the budget? They are nowhere to be found. Instead we have an 8.5% budget increase for 2009. This is taxation at will.
Moreover, it appears that any rebates promised to rate payers from the Pasadena Water and Power Stranded Investment Fund of $137,526,000 as of June 20, 2008, have not yet transpired and/or are still hidden without any accountability. The City Council continues to refuse to authorize the PWP disclose the amount of the rebate on each electric utility bill.
The Mayor's report also failed to mention that Pasadena continues to levy an illegal 7.67% overage charge without voter approval as required under Proposition 218 on water rates. This overage goes directly into the General Fund.
Even though the City's investments in risky Mortgage Backed Securities (sub-prime loans) is reported to be relatively small at $1.125 million, the Mayor failed to indicate if the City was stuck with this *toxic* investment and what's its current market value is.
The City also reports that $160,531,280 of its Pooled Investment Portfolio is invested in Federal Agencies but doesn't tell us if this is in risky U.S. Treasury Bonds or what? Greater public accountability on these items is needed especially since bond trader Peter Schiff has forecast a bursting of the bubble on U.S. Treasuries in the future.
The City of Pasadena had the highest General Fund revenues per household in 2008, $3,740, of any city in Southern California with a population over 100,000. The General Fund revenues for the City of Glendale for example were $2,307 per household in 2008
Pasadena has momentum for a depression. And that is what we’re getting SOCked with.
Addendum: A Look At City Investments – (not updated since 2004) here: http://www.ci.pasadena.ca.us/finance/investments.asp Comprehensive Annual Financial Report 2007 – (no report for 2008) here: http://www.ci.pasadena.ca.us/finance/fiscal_year_statement.asp Quarterly Investment Report September 2008 to City Council (not posted online): http://www.cityofpasadena.net/councilagendas/2008%20agendas/Minutes%202008/20081124.pdf
Sub Rosa. First attested 1654, from Latin sub rosa, "under the rose", from sub, ("under") + rosa (meaning "rose"). The rose's connotation for secrecy dates back to Greek mythology. Aphrodite gave a rose to her son Eros, the god of love; he, in turn, gave it to Harpocrates, the god of silence, to ensure that his mother's indiscretions (or those of the gods in general, in other accounts) were kept under wraps. In the Middle Ages a rose suspended from the ceiling of a council chamber pledged all present - those under the rose, that is - to secrecy..
The citizens elected these fools.
Maybe next election cycle, they should think before pulling the lever.
In February the author of the above post fought the City of Pasadena over Measure D - an 8.25% tax on telephone bills - and lost by a large margin. More recently, the Pasadena Unified School District won an election over Measure TT - a $330 million bond issue to refurbish school buildings - approved by 75% of the voters. All Democratic Pasadena loves taxes.
I was going to suggest a ‘whiff of grapeshot’ at the city council meeting but a cannon would not fit easily into the meeting hall. If the inhabitants are the problem, well, there is nothing that can be done.
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