Just one day after Mayor Robert Garcia updated the city on the state of Long Beach, a picture of how the state of the city’s finances was revealed in a report from Truth in Accounting (TIA). The report put out by the non-profit group Wednesday lists Long Beach as one of just seven cities nationally that has a surplus leftover after its bills are paid.
The group’s figures are based off the 2015 fiscal year and show that after paying all bills—state bonds, liabilities, unfunded pension and retiree healthcare benefits—Long Beach would be left with a surplus of $600 per taxpayer. The city was joined by Fresno as the only other city west of Texas shown to carry a surplus in the report’s findings in a review of the 50 most populated cities in the United States.
This is the second year the group has compiled this city-centric report. Long Beach was not included in last year’s list which only included the 20 most populous cities.
According to the report, with $2.7 billion in assets and bills totaling about that same amount, the city would be left with a surplus of $79.3 million after its bills are paid.
TIA founder and Chief Executive Officer Sheila Weinberg said that the group takes a broad view of each city in determining where it ranks on their list, taking into account assets each city has available to pay its bills and eliminating those that should not be counted.
For instance, Long Beach has capital assets like roads, buildings and land totaling over $6 billion but the report notes those assets “should not be sold to pay bills.” The group also removed assets that are restricted from being used to pay debts.
“We’re not just looking at their debt, we’re not just looking at their pensions, we’re also looking at the cash and other assets that they would have available to pay bills that they have,” Weinberg said. “Long Beach amounts to about $2.7 billion of assets available to pay the bills but, I really hate to use the word ‘only’, but they only have about $2.7 billion of bills. That’s how we come out with them being ahead of the game.”
The $600 figure may not seem like a large sum but it totals about $79 million and is $6,500 better than the median taxpayer burden for the cities included in the report.
At the bottom of the list were New York City ($61,000), Chicago ($44,000), Philadelphia ($27,500), Portland ($18,000) and Memphis ($18,500). Those figures represent the amount each taxpayer would owe if those cities were to pay their unfunded liabilities.
San Francisco was ranked worst in the state with a taxpayer burden of $16,400 and Fresno was ranked first in the state with a surplus of $2,100 per taxpayer. Charlotte, North Carolina was first on the TIA list with a surplus of $3,300 per taxpayer.
Weinberg said that the things the seven “Sunshine States”, a designation the group gave to those that carried a surplus, have in common is a philosophy that current bills should not be passed onto future generations and they don’t over-promise what they can’t afford.
“The current legislators, council members, don’t have the ability to spend—‘I’m going to get a vote’—without the pain of taxing—‘I’m going to lose a vote’—and by really balancing the budget in a truthful manner, you’re allowing the taxpayers and voters to understand ‘this is how much government costs, and am I willing to pay for that?’” Weinberg said.
Long Beach politicians have been transparent with budget processes, creating a portal for residents to explore and tinker with the city’s budget model, and more recently, creating an oversight committee to verify that Measure A revenue is being spent on the areas they promised to spend it on.
If you’ve been to a city council meeting in the past few years you’d be remiss to say that votes that have the potential to have impact on the city’s finances are taken lightly.
The report noted that Long Beach is one of a few that doesn’t hide any of its debt and includes its pension and retiree health care liabilities on its balance sheets. Those factors are included in TIA’s calculations as it will be the standard for self-reporting in the coming years, Weinberg said.
TIA’s report also stated that “Long Beach elected officials seem to promise only the amount of benefits they can afford to pay.”
Vice Mayor Rex Richardson, who was elected to office in 2014, said that fiscal responsibility is something that has been championed for a long time in the city, starting with former Mayor Bob Foster, and has been carried on by Garcia.
He noted the efforts made to ensure the city’s ability to stay within its financial margins, including reforming city employee pensions and the careful allotment of funds to ensure that services are accounted for with funding that’s actually available. One of the biggest dividends not seen in the city’s bottom line, he said, is public trust.
“The voters invested in Measure A, the voters invested in the city college and school board infrastructure measures largely because our elected officials in Long Beach have a commitment to fiscal prudence,” Richardson said. “I’m committed, and this city council is committed, to maintain the voters’ trust by continuing to make smart decisions on how we spend and invest taxpayer dollars.”
The city, while ranked in the top five of this year’s list, is not out of the dark yet. Even with pension reform, those payments are scheduled to be part of the city’s financial plan for decades. Weinberg said that it would be smart of the city to treat these liabilities like a credit card balance, choosing to pay it off before spending any of the surplus cash in the city’s “checking account”.
Fifth District Councilwoman Stacy Mungo agrees that the city needs to do more to save for its future, noting that while Measure A will cut into the city’s projected $2.7 billion in infrastructure needs, it will sunset in ten years and that source of revenue will dry up.
She said the city needs a long-term infrastructure savings account to sustain it past that sunset.
“Our city council got caught holding the bag for the decisions not to set aside infrastructure funding in a measured way so now we have neighbors who live with 40-year-old streets that are below the PCI [pavement condition index] appropriateness and we don’t have the funding available in a savings account to pay for it,” Mungo said.
She said that Measure B, the rainy day fund established when voters approved it alongside Measure A in June, is an example of what this council and future councils need to institute to ensure that public safety and infrastructure needs are not subject to approval of temporary tax measures.
“It’s extremely important. I plan to raise my family here long after I’m not a council member anymore,” Mungo said. “And in choosing where to live, you want to live in a place that plans. We don’t want to be in a position to have to sacrifice police, fire and infrastructure.”