Tuesday, December 8, 2015

The Reckoning: Is Sierra Madre Close To Insolvency?

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Mod: I received the following e-mail yesterday afternoon. The author is an accountant who specializes in governmental financial affairs. He titled his e-mail "The Reckoning," and it is all about things like the effects of $1.4 million a year in CalPERS payments. That and it will be revealed fairly soon that the City of Sierra Madre may be literally drowning in debt.

Sierra Madre has a fiscal year ending June 30.

That means that under Governmental Accounting Standards Board No. 68, Sierra Madre will be required this year (for the first time) to record a “net pension liability” on its balance sheet.  The liability is the difference between the total pension liability and the value of the assets that have been set aside to pay benefits to current employees, retirees and their beneficiaries.

It also requires the recording of interest on the liability.

Sierra Madre’s financial statements are typically completed by mid-January so it is likely that the amount of the liability has already been calculated.

It could be more than $9 million.

For June 30, 2014, Sierra Madre had a total fund balance in its governmental funds of $11,131,838.

So if the adjustment is large enough it’s possible that by recording this liability for this fiscal year (the first year it is required), Sierra Madre will be nearly insolvent in its governmental funds.

The city would still own approximately $200 million in hard assets like roads and sewers / etc, but you can’t pay a pension with asphalt.

So somebody should call the city and find out what the GASB No. 68 adjustment is and if it is large enough you can be the first to report Sierra Madre is nearing insolvency ... something that will not be revealed until January ... after the filing period for ballot measures has closed.

The Reckoning Part II

Mod: This is what I was going to go with today before I received the above e-mail.

You need to step back and take a look at what is lining up for next April's election. Earl Richey and his small band of utility tax fighters are out gathering signatures and seem well on their way to fulfilling the requirements to get their measure on the ballot. This is in direct contrast to what the City Council will be discussing this evening about raising utility taxes back up into the double digit range.

The Sierra Madre Police Department, under the cover of whatever their union might be these days, is trying to get the voters to approve a ballot measure that would guarantee them complete suzerainty over law enforcement in Sierra Madre. Effectively eliminating the money saving Sheriff's Department option. This at a time when nobody wants to be a cop anymore, and Sierra Madre can't even get retirees to put in a little time on its force anymore. Nobody wants to be a member of the SMPD despite all of the community love.

Which is another reason why the City of Sierra Madre needs to bring in the Sheriff's Department. They could be the only law enforcement personnel around that would be willing to work here.

This also sets up the following possible scenario. What if the City Council's UUT increase fails, and the Police Department measure passes. Something that would make it virtually impossible for the city to find less expensive options for law enforcement such as the Sheriffs. With only a 6% utility tax in place almost everything would have to go to paying the Police Department. There would no longer be the money necessary to fund anything else. Like the Library, which would have to close.

All of that on top of a City Council election. Kind of a perfect storm if you think about it.

Mod: To that you can now add potential pension debt fueled insolvency.

The Reckoning Part III

Mod: Yesterday there was a minor ruckus over the lack of an attached UUT increase argument to a staff report that was about just that very thing. City Hall claimed to anyone who cared to listen that this was not a potential Brown Act violation, but what else could they say? If somebody wanted to hire a lawyer they'd have a case in my opinion. Anyway, it finally showed up on the city website late yesterday. Or about 48 hours later than it should have. Here is a portion of that, and as you will see it is pretty standard UUT ballot initiative material. After all, it will be the third time in three elections that we will have seen this stuff.


Mod: It goes on like this for a while. To see the rest click here.

sierramadretattler.blogspot.com

42 comments:

  1. It says that a 10% UUT would allow city services to remain at the current level. I recall hearing a different message at the last city council meeting. Which is true?

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  2. The Sheriff's are now imperative. There is no way out now.

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  3. Almost BK? I guess it really is about the Platinum Pensions.

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  4. Other cities across SoCal are in a mad dash to acquire or set monies aside to be able to keep up with or meet the new accounting standards and all of it's accounting hard core realities. No longer will city managers or city councils be able to brush the liabilities under the rug and dance the night away this is where those savvy residents need to take the reigns away from corrupt local government officials elected or other wise.

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  5. Why hasn't this come out before? I thought City Hall was all about transparency.

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    Replies
    1. Until recently pension deficits were not considered a libality. LOL
      The sh....t has hit the fan.

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  6. It is worse.
    Previous CC have knowingly spent until we are on the brink of BK. Little of lasting value was done with the money.City infrastructure crumbles while Elaine Aguilar continues to embellish Platinum Pensions for her followers. And the Police Dept continue to sue us, coerce us and control who we want to do law enforcement in our own town.
    And the knaves who brought you this disaster claim a little more tax money will solve their problem... Come on folks.We've been taken for the trusting fools we are. Generations of not bothering to stay informed on City matters, not voting and not calling out the criminals on previous CC's has come home to roost.
    The day of fiscal Reckoning looms. Without Tattler we'd be in much worse shape - the CC would have mortgaged everything to fund the Pensions scam.

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  7. Somewhere in the UUT staff reports there is a CalPERS document signed by John Buchanan. 2012. It was his final gift to city employees. Check it out.

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  8. City hall will blame the taxpayer for not bailing them out and giving them more money. Remember, city hall killed the cash cow by comminguling of monies to pay wages and pensions. The taxpayers were left with no well water and now talk of lead in the MWD water city hall is providing the taxpayer to drink. And thee guys think they are entitled to pensions for services for rendered? The question remains UN answered, when is the mayor going to fire the city manager. Will she get a gold Rolex when she gets the boot? We are asking for a reply from mayor sherriff Jon?

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  9. If your hired go mansnge, you gotta manage. When are you going to start managing. You can not continue to be a but kissr. Our residents gotta lot of money at stake.

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  10. I signed Earl Richey's petition and so did my wife and daughter.

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  11. Wait'll people start getting a look at the pension debt their cities have stuck them with.

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    Replies
    1. Entire cities are being bankrupted so employees can retire at 50.

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  12. Where are the taxpayers' pension?

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    Replies
    1. A Pension"? WHAT "pension"?

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  13. Sierra Madre pension backed by amber mine.

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  14. Way back when Karen was still with the City and MaryAnn was on the Council there was a long discussion re: pensions and how to pay for them. This is not something new. The problem now is that the State has imposed on all cities a mandate to keep the unfunded pensions afloat. Sierra Madre is doing what they can to keep up with this mandate.

    Sign Earl's or Stephanie's petition if you must, but remember, No matter what, No UUT, No city. Local Police, no city.

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    Replies
    1. Vote NO on everything.

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    2. A city of 11,000 people can do everything it can to keep up with state pension mandates. Won't work, though.

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    3. "No UUT, no city."
      You really don't understand numbers, do you 12:19. Are you Gene Goss?

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  15. Does anyone have any information on Arcadia?

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  16. 12'19 pm Please be advised that this city no longer chooses to continue to fund this out of control spending spree! If you would like to make the appropriate donations, please go right ahead!

    The Police Department and city hall can turn in those Pensions and Mercedes health plans , the taxpayer is tried of paying for them!

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  17. The SMPD needs to realize that if they drive the city into bankruptcy all deals are off.

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  18. I found the October 13 council meeting revealing. The mayor pretty candidly expressed his belief that a UUT increase to 10% is barely a drop in the bucket. He openly said 10% was simply what they could currently sell to the voters, not what they think will viably sustain services for long. But, the ballot material above just says pass the measure to maintain city services. Curious how many voters assume a single passage of a UUT increase saves the day.

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    Replies
    1. It is not a solution. It is a sales pitch. It takes care of some immediate employee cost needs and buys them enough time to set up a property tax increase.

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    2. Ummmm, Mayor Cappocia, the Walmart is in Duarte.

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    3. Cappocia error #2: Monrovia does not have a utility tax.

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    4. Sierra Madre has a $9 to $10 million dollar unfunded CalPERS liability. Nice.

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    5. Just like today's post said. Though city staff was far more cheerful about it.

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  19. The meeting is late in gerting started....at least, it's not on KGEM yet.

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    1. You're brave to watch it. I took a look at that long agenda, the princesses making their speeches, the farewell to the wealthy head librarian, an annual report from Inman?
      Yikes. Maybe later.

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    2. 6:14, meeting starts at 6:30.

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    3. Almost there!

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  20. It is the policy pension fund that is killing the city. We need the sheriff.

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  21. I know this is old news, but...

    why have the city council girls caved in to the men's way of thinking?

    the city council men, have ruined this towns cash cow and spent all the cash which used to be found in the cash register!

    the yellow water has further ruined all of my clothes and we are even forced to buy bottled drinking water.

    when will the taxpayers terminate the city council and city management?

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    Replies
    1. City Council "girls?" Do you know what century this is 10:04?

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    2. Is this a good century?

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  22. It is obvious as it was many years ago, that Sierra Madre as a "full" service city was not sustainable, regardless of the people's preference. We should have contracted out to the County for police services back then. (Something that would have been very unpopular at the time).
    We would have had a County substation, and many of the local police would have been transitioned to County Police. We would have had our legal liability greatly reduced, and retirement liability would have been manageable.
    The notion of what "full service city" would have to change, the library could be a branch of the County Library system, with Sierra Madre volunteers and board... zoning and planning services would be at the county offices.
    It is a hard a pill to take, including for myself but we need to reorganize and prioritize city services. Otherwise, we should consider bankruptcy court, where a judge will make those decision for us.
    Historically, many of these services were under County control, and seemed to function fairly well.
    However, Sierra Madre's identity will stay unique, much like Altadena, we would still be able to retain much of the decision making power we have. Good luck,
    I wish you all the best through the holiday season.

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