September 6, 2020

Why the budget and the budget process is broken in Long Beach California

As there is yet another budget hearing coming up in Long Beach on September 8 2020 we thought we would use our blog post as our comments. Get them into before noon 9/7/20. Heaven knows these "Citywide Community budget meetings" were a waste of everyone's time.(which we also had to pay city staffers for as we are taxpayers)


Long Beach is currently in a budget crisis brought about mainly because of the covid-19 crisis.  Of course it's a double whammy situation where the city spent more money than it had on emergency type services and as a result overpaid for these services (which were under delivered or did not provide much value) For example there were tons of private Labs that were being paid a very costly premium for test results that were being delivered seven and eight days after the test. Anyone that knows anything about testing said that's completely worthless. Any test result delivered after 48 hours should never have been paid for but of course government never demands that kind of accountability from private contractors.

On top of that because of the economic crisis and less sales tax is being generated we have a double whammy.  So now it appears the most local entities are waiting for the state to get a windfall of money from the federal government who of course can print money regardless of its deficit.  State and local governments can't print money but they use other budget shenanigans and tricks to make it look like the budget gets “balanced” every year.

Unlike Lakewood which is mostly a contract City Long Beach tries to provide most services through employees that are employed by the city. This is horrendously cost inefficient because these costs are fixed. Once these people are hired they are basically never fired and you have to pay for their pensions, healthcare vacation and other costs basically as long as they're alive and they are usually very costly employees. The more costly employees are the ones that work in the office and shuffle paper and get very little done in terms of infrastructure and repairs.

In addition there are a number of things that Long Beach claims it has to purchase and it does a very bad job in negotiating good prices. Here are two examples. City spends $372,327 on TWO Chevrolet Silverado 2500HD trucks (2020 Chevrolet Silverado 2500HD start at $34,600) AND $539,331 on TWO CNG-fueled 2021 Freightliner M2112 pothole patch trucks, (LB apparently patches so many streets that we need two new trucks?) Who negotiated these prices for these trucks and why are we buying something NEW that's so expensive right now during a budget crisis? Do we have to have these trucks right now? Are we selling off the used trucks are we trading them in what are we getting for them? These questions are never asked and never presented in the budget or any publicly disseminated documents. As for the pothole trucks no needs were spelled out. Zero. You want them Public Works Dept you got them! No questions asked.

Then you look at outside contracting for services and you have a similar problem. Really no transparency at all in terms of how many hours of time you're getting the hourly rate or bonuses being paid, overhead being paid how many hours of services are you being provided with, what specific tasks are going to be completed etc. Here is a recent example:” a fourth amendment to Contract No. 34265 with West Coast Arborists, Inc., of Anaheim, CA, for as-needed tree trimming services, to extend the term through March 31, 2021, and increase the amount by $3,400,000, for a revised total amount not to exceed $11,340,000. (Citywide)”


So taxpayers are paying almost 11.5 million dollars for tree trimming but there's really not much of an indication as to what exactly were going to get for that. Even if you assume that these people are being paid $15 an hour and you do the math that gives us about 59 hours a day of tree trimming assuming 2080 hours per year working time at 8 hours per day 5 days a week. But again this says “as needed” (determined by who?). So that might mean that no trees are being trimmed or half the amount. Again clear as mud.

Contract costs are too high because I assume the city relies on “low bid”. The city should be setting the maximum contract prices with bonuses for early completion. The city should be setting a (realistic low ball) maximum amount for these contracts before the bids ever come in. We also have to assume that there are multiple bids coming in on these projects and I doubt that seriously.  My suspicion is certain favorite companies that contribute to campaigns are invited to submit a bid with a wink knowing that these bids are going to get selected because they're the only bid that's being made.  Again the city should set a maximum price for an amount of service and then provide some sort of incentives for early completion or other types of Contract objectives that can be objectively verified.

With respect to labor provided by city employees of course the picture is much more grim. There really is no way to significantly reduce the costs of employee labor.  This is why City employees should be rarely hired and outside contractors should be used because it's much easier to control costs over time when you have a budget problem. 

The Police Department and the fire department are classic examples of the two costliest groups of city employees. Lawsuit settlements due to police shootings and arrests are not helpful either. These depts are heavily unionized and the unions control all labor activity and contract negotiations.

We were recently told that the city is budgeting $200,000 per police officer. (That does not include the cost of special units K-9 units, bomb units, helicopters all sorts of special Patrol units, management, office staff, vehicle costs etc) Of course the best way to do the math is to take the total police budget of about 264 million and divided by the number of sworn officers which is about 792 which gives you about $333,000 per year per officer. Now to make matters worse because of the BLM protests and other Union Shenanigans we are now in a situation where every car has to have two officers so we've cut the number of cars in half and so we're spending anywhere between $400,000 to $650,000 a year for each police vehicle you see driving around on patrol.  What's even better with police and fire is they tend to start work at age 25 to 26 or later and then they retire at 50 and their retirement income is at least the highest amount they've ever been paid in their lives. That continues on until they die and also includes Healthcare and a bunch of other cost-of-living perks so you can see how this adds up when you're paying for hundreds and hundreds of officers that don't even work for you anymore. And you're paying for them at a much higher rate than you are for officers currently patrolling the streets. Eventually this house of cards is going to collapse.

There are no efficiency studies being done by people that don't curry favor with the unions or with the city. All the efficiency studies are done by the departments themselves or by those individuals that pass muster with the union. Apparently because the fire department is so popular in Long Beach in terms of public polling they basically came back and said we're not cutting our budget at all for 2021…. so take that City Council. The fire department and the police department are probably the least cost-efficient agencies in the city and use up the most tax money. For example the whole privatization of ambulance services in Long Beach has never been realistically looked at. The reason of course is if you do that you will lose union jobs and give jobs to private companies which cost less. With respect to the the police department they're finally starting to get smart and realizing that they have to have more civilian staff to do a lot of the functions within the department that don't require sworn police officers. (de-fund protests no doubt helping that argument) This is just an example of the stupidity and union nonsense involved when trying to get even simple things done like the administrative enforcement Lakewood did with respect to fireworks.

Another budget-busting problem we have is that a relatively small percentage of the payroll of city employees is too low for those that actually hold shovels versus those that shuffle paper and the paper shufflers in the people in the office tend to cost even more money that other low level worker bee employees This is likely the reason why it takes so long for potholes to get filled and sidewalks to get fixed; there's not enough people actually doing the work.

Another problem with the budget is that the airport revenue/fines and the oil revenue, and the port that money is not being allocated wisely. It's typically trapped in a way that keeps it within the particular Department that it comes from. Fix that.

An ongoing problem with infrastructure ( potholes streets sidewalks bike paths trees parks and other sorts of things) is these were all created many years ago when labor was cheap but there were never any budgets created to support the maintenance of these items and the bills are coming due on almost all of these things especially sewers electricity and water supply. The new money is all allocated for all new projects which get federal and state funding but none of that money is ever allocated or can be allocated towards the maintenance of these projects for 20 or 30 years in the future. Bad idea as it leads to where we are now.

The city spends its time chasing objectives of Sacramento. Not enough of our budget is spent on core infrastructure needs. Too much of it is spent on socialism and other pet projects of administrations. The city received budget funding to create “open streets” for covid yet when it did neighborhood surveys no one wanted the streets to be blocked off from vehicles so the children can play in the streets only to be run over by local delivery trucks. But that money comes with strings attached and you have to spend it on things voters dont want. Much of our budget is being allocated to social projects and not for infrastructure and this loss of focus is responsible for the problem with the infrastructure.

The budget process has very little transparency and taxpayers are never given a seat at the table when Union contracts and other issues are negotiated. There are very few people that could take a look at the current 146 page page proposed budget document and make heads or tails of any of these issues raised above and most don't even care to do it. Most rely of course on their city council member to fight for their objectives. And we see how well that has worked out. 

The budget itself is very obscure and does not provide taxpayers with a clear picture of cost increases cost allocations what goes for health care what goes for pensions what goes for office workers what goes for actual people that perform labor for the city. 

Finally we need to stop penalizing departments for not spending all their budget. They need to be rewarded for not spending all their budget on frivolous matters such as new vehicles. Unfortunately many of these things are going to take many years to change.  California as a whole is running out of money and that includes all of their cities. Cities are still allowed to file bankruptcy (states are not) and a number of cities in California have filed bankruptcy including Stockton. In that case the bankruptcy actually helped Stockton to “de-fund” (reduce funding to) their police department and rethink how they look at public safety. "House Democrats included nearly $1 trillion in state and local aid in the relief bill they passed in May, but the Senate majority leader, Mitch McConnell of Kentucky, has said he doesn’t want to hand out a “blank check” to pay for what he considers fiscal mismanagement, including the enormous public-pension obligations some states have accrued. There has been little movement in that stalemate lately."

The reason we have a budget problem is the city is using "other people's money" (yours and mine) and they dont give a damn. Their “solution” to all problems is to shovel more money into the trough (Like Measure is that vote tally suit going? ). At the end of the day it's not really their problem they're going to continue to get paid for going to work, continue to get their nearly free health care, and they're going to continue to get their ludicrously costly pensions. Meanwhile city services and infrastructure spending will just crawl to a complete standstill and our city will decay even further. Until people show up at City Hall with “pitchforks and torches” this is not going to change. The only thing that will really make any difference is to elect a majority of the city council to come in from outside city government not feeding from the trough (real outsiders).  They will have to take a hard look from the outside as to how the budget is going to have to work going forward into these very lean years which we are going to be facing for the next 5 to 10 years most likely ( assuming continued fires, floods, climate change, power outages, disasters, earthquakes, pandemics Etc) California is almost in a constant state of emergency now. Long Beach is in the same situation. It's on life support.


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