Calexico to begin 2017-2018 budget talks

CALEXICO — Hoping that the worst of its financial woes are behind them, Calexico officials in the coming weeks will now be turning their attention to analyzing and assembling the fiscal year 2017-2018 general fund budget.

The transition was made possible by ongoing advances in the city’s ability to correct its troubled accounting practices, which were largely to blame for general fund overspending that totaled about $9 million over the past three fiscal years.

The so-called “turning the corner” was highlighted at the City Council’s regular meeting Wednesday, where the city’s financial consultant, Susan Mayer, delivered a presentation that was largely devoid of the financial doom and gloom that had accompanied her previous presentations.

“I don’t want to make it sound like it was easy,” Mayer said, “but you have turned the tide, rebalanced and have plans for the current year.”

A FY 2017-2018 budget workshop is proposed for May, leaving city officials a few months to explore strategies and plans to address areas of concern.

“We’re not finished by far,” said City Manager Armando Villa on Wednesday. “We still have a lot of work to do.”

Although the city’s Finance Department has made significant strides toward correcting its accounting practices over the past year, Mayer hinted that the department itself may need an additional boost in personnel to help the city move forward.

“The staff you have is loyal and efficient, but you will benefit from having higher level (employees),” Mayer said. “I don’t think you have any positions with the title of accountant.”

Mayer’s comment came in response to Councilman Jesus Eduardo Escobar’s question about whether the city’s understaffed Finance Department poses a risk to the city as it attempts to safeguard against any future financial problems.

Escobar also had asked whether there was any truth to a claim made by the Calexico Firefighters Association’s financial consultant that the city may have $24 million in funds that could go toward offsetting the fiscal concessions that the city had sought from its employee unions.

“In my eyes, that is an Accounting 101 no-no,” Escobar said, noting that it would be unwise to use enterprise funds designated for long-term projects and services to offset shortterm expenditures, such as salaries and benefits.

In response to Escobar’s questioning, Mayer stated that the funds the CFA consultant spoke of were restricted by law and that in the future any additional cost-saving information or ideas that the CFA consultant has should be welcomed by city officials.

In making his claim, the CFA consultant had relied on financial records from 2014-2015, on account of the city not being able to produce audited financial records for FY 2015-2016. Those records are expected to become available in June, much later than one would expect the city’s Comprehensive Annual Financial Report to be completed.

During Wednesday’s council meeting, Mayor Armando Real praised Mayer’s assistance and likened the city’s effort to correct its financial accounting practices to attempting to build a puzzle in a darkened room.

“You have brought to Calexico the light at the end of the tunnel,” Real said, noting that the city had about $4 million in its reserve fund when he was elected in 2014.

To date, Real said he has been unable to obtain an adequate explanation regarding how the city’s funds were spent during the years in question.

Indeed, 2013 was the last time that detailed financial reports were available, officials said Wednesday. A review of previous financial records also determined that some transactions were incorrectly assigned to an incorrect year, Mayer said.

In spite of flagging tax revenues, the city has been able to maintain fairly stable revenues of about $17 million for the past five fiscal years, officials said. The trouble has been with expenditures, which went from about $15 million in FY 2011-2012 to about $22 million in FY 20142015.

In Real’s estimation, the city has done much to lower expenditures by adopting reduced services, employee concessions and deferring certain equipment purchases. All that remains is promoting economic development that could lead to increased tax revenue, he said.

Hoping to get Mayer to concur, Real asked her whether she would recommend such a focused approach. Instead, Mayer simply responded that such a recommendation would be more of a political recommendation than a professional one, the latter being what she has been contracted to provide.

Mayer also partially deflected Real’s question about whether it is wise for the city to spend nearly three-quarters of its general fund budget on public safety and law enforcement operations. The answer to such a question depends entirely on the values and the priorities the city sets for itself, Mayer said.

“It’s the art of budgeting,” Mayer said. “It’s the toughest job you have.”